Chasing the Unicorn
By Thomas P. Johnson, Jr.
Cross-selling is proving difficult to achieve in financial services, underscoring the need for a more comprehensive approach.
Effective cross-selling in financial services seems as elusive as the medieval unicorn: often sought, but never actually captured. One reason is that institutions tend to approach things backwards. Entering relationships with the raw intent of selling more to each customer can undermine the "trusted advisor" context that actually makes the sale of multiple products possible.
Selling a universal product set within an advisory context has proved difficult. Customers have a deeply ingrained habit of seeking out multiple providers for financial services. They seem to like being able to choose among competing brand-name products in each category. When they do opt for a multi-product relationship, they want to be assured of no-hassles service.
The upshot is that new and aspiring financial services conglomerates probably would do well to reexamine assumptions about cross-selling and make sure that sales approaches, product offerings and delivery systems truly are aligned with customer needs and preferences. Absent such alignment, players risk alienating clients.
This issue's cover story explores how one progressive company is tackling the cross-sell challenge. Last April, Conseco CEO Stephen C. Hilbert purchased consumer finance lender Green Tree Financial Corp., creating a broad-based financial services company serving moderate-income families. Getting the full benefit from this acquisition will require that Conseco effectively cross-sell consumer finance loans to its insurance customers and vice versa. But building such a capability will require that Hilbert overcome major organizational and logistical barriers within his own company.
The challenge goes even deeper. As Oliver, Wyman & Co. consultants Peter Carroll and John Rosen explain in their analysis of the new Citigroup combination, compartmentalization is an ingrained feature of the way consumers shop for financial services. Overcoming that barrier may require an entirely new business model. Carroll and Rosen insist that cross-selling must be approached within the context of an advice-centered or counseling environment if it is to be effective. In other words, rather than simply push more products at customers, providers who aspire to offer "one-stop shopping" in financial services need to pre- sent those product recommendations within the framework of an objective financial plan.
This highlights the need for customer approaches that go far beyond the statistical. As the author of The Discipline of Market Leaders, Fred Wiersema, points out elsewhere in this issue, "If you over-analyze, then ultimately you're not meeting a major customer concern, which is responsiveness."
If providers really want to play a greater role in each customer's life, then they will have to make a deeper commitment to each customer, one that includes the maximum amount of objectivity, care and responsiveness. Those who succeed will be rewarded with long-term customer relationships -- the true foundation for cross-sales.