Wednesday, December 15, 2010

Worldwide Response to the Importance of Cross-Selling

Last July, I posted a question on the Retail Banking Network Group on LinkedIn asking how the goal of cross-selling is prioritized in relationship to the goal of new customer acquisition at banks today. Since my posting, I have had more than 80 comments from bankers representing large and small financial organizations all over the world.

For instance, Lance van Wyk, Regional General Manager at Nedbank Ltd in South Africa believes that education, reward and recognition of employees is needed to improve cross-selling. In addition, he believes the timing of cross-selling is important and states, "Proactive investments in cross-selling at the acquisition stage could prove highly rewarding".

An ongoing contributor, Serge Milman from Optirate in San Francisco believes that smaller community banks and credit unions can only compete with the much larger financials that provide both a more innovative product set and greater convenience if they expand their view of their marketplace beyond their own back yard. He also believes that in addition to better cross-selling, these smaller organizations need to pursue more aggressive growth and strategies. In later posts, he emphasizes the importance of marketing products nationwide by smaller institutions but acknowledges that the skills needed to effectively gather customer insights and build segmentation strategies may be beyond the skill sets (and budgets) of a smaller bank or credit union.

He further believes that differentiation is needed to achieve cross-sell growth objectives. Serge states, "Why is it that a typical bank has a portfolio of 60%+ customers with just one product? It is not because customers are unaware that Bank XYZ offers other banking products; it is because Bank XYZ has not convinced customers that its products are in any way differentiated from the 16,000 other banks and credit unions".

Nikhil Datar, a management consultant from the U.K., agreed with Serge that an understanding of the customer is needed in order to be effective in cross-selling. He further emphasizes that a bank can't only cross-sell when the bank has product needs. According to Datar, this type of effort becomes unsustainable. "Many customers are irritated when they are contacted only when the bank wants to sell something".

As a training specialist from Australia and a frequent contributor to the Linkedin discussion, Simon Offer suggests that a key to effective cross-selling begins with a well trained staff. Simon states, "A life cycle is used to help identify at what stage the the customer is at and what is the main priority for that customer. This technique enables the staff to target their discussions to customer. Using different channels, the techniques and targets will be different depending on the communication needed. To be effective, the education needs to be reinforced on a regular basis and tools made available to the staff such as desk charts, manuals etc."

Jay Kassing, the owner of Dallas-based financial services solution provider Marquis reminded his fellow bankers that achieving growth of 12-15% annually is made exceedingly difficult when annual attrition rates for most firms average 15% or more. He believes the focus should also be on stemming attrition, thereby reducing the level of sales needed just to break even. Bob Isola from Content Critical, LLC. in New York also reminds bankers of the power of the monthly statement to reinforce sales messages on a personalized basis.

Probably the most active contributor to the cross-selling discussion was Bob Critchfield from RLC Performance Management in Detroit. One of his ongoing themes has been that most current customers are not fully served by any particular bank and that we should not confuse product sales with providing solutions to customer needs. As he mentions, each of these needs provides the opportunity for sales, revenue and even enhanced customer satisfaction. In addition, he provided a real life example of where secondary business signers on an account are not normally pursued for personal relationships.

Finally, a dose of reality was provided by Jan Floyd-Douglass, a Director from The 9 Situations in the UK, who reminded us that many of the internal sales policies and targets can actually result in artificial 'sales' that divide a customer's relationship to the disadvantage of the customer. This type of activity also has a negative revenue impact on the bank.

I encourage you to visit and participate in the Linkedin discussion around cross-selling within the Retail Banking Network Group. Or you can visit my original Bank Marketing Strategies Blog entry.

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