Cross-selling, or persuading customers to purchase additional products, is one of a bank’s most powerful and efficient revenue-boosting tools. Yet, many banks do not cross-sell effectively. In today’s competitive market, banks need to develop carefully planned, measured and specialized programs to engage and target customers effectively through cross-selling.
For the purposes of this article, we’ll consider cross-selling to be the successful promotion of products resulting in additional purchases by account holders, new or existing. According to a 2011 report from Forrester Research, the average bank owns 2.1 financial products out of the approximately seven owned per-household. That’s certainly fairly low, considering that most banks aim for four or more products per-customer. The good news is this metric is not a foregone conclusion, or an absolute.
The potential is there for every bank if management can identify how to effectively leverage cross-selling for the benefit of both bank and customers.
Getting Cross-Selling “Right”
The problem for many banks in achieving cross-selling success is the challenge of creating, monitoring and measuring effective cross-selling programs and then ensuring that employees implement them effectively. Some banks put so much pressure on their representatives to cross-sell that the entire effort loses its focus.
For example, assume that a customer enters a bank to make a $100 deposit into a savings account. The teller, whom management has instructed to promote new money market accounts with a $100 minimum deposit, suggests the customer open a new money market account instead of adding to the savings account.
If the customer opens the account, what happens? The teller succeeds in cross-selling but the bank has more paperwork to process and likely a higher interest rate to pay. If the teller didn’t qualify the prospect first – ensuring that the customer actually needed and would use the money market account – the bank may not reap any real benefit from the teller’s efforts.
Cross-selling programs work best when they connect appropriate prospects with useful products. Furthermore, the bank should also be able to measure staff success with that effort and provide corrective training if they need improvement. Such a program may sound complicated, but it can be implemented fairly easily, if a bank breaks the components into manageable segments and uses the right tools. FMSI’s Lobby Tracking System helped us to identify the following three elements of cross-selling success:
Evaluate and identify appropriate sales opportunities. Have you ever been hesitant to go into a car dealership for fear of being mobbed by hungry salesmen? Account holders feel the same way about banks that are too aggressive with cross-selling efforts. Rather than take a scatter-shot approach that catches customers in the crossfire, banks should target those customers who actually might buy the product.
Data collection and analysis, with action on that information, is an excellent way to begin this effort. Perhaps you already know the demographics of your branches and their customers, but if not, they are worth exploring. For example, families, single professionals and couples preparing for retirement will be interested in different product mixes. Create packages for these different demographic segments and teach bank personnel to match the customer with the product offering.
Another great tool for this particular effort is account-holder-visit data collection. If you have not already implemented some form of lobby tracking software that supports data collection by customer service representatives (CSRs), we urge you to do so. Train CSRs to collect the information but caution them to be cognizant of whether or not they should act upon it. It’s perfectly fine for them to collect data that will be used in future cross-selling efforts.
For example, let’s assume Mrs. Jones sits down with a CSR to order more checks and mentions she is late to pick up her daughter from school. Rather than try to sell Mrs. Jones on a college savings account right then (an idea Mrs. Jones will likely reject), the CSR can log a note in the system that Mrs. Jones has children. The next time she comes into the branch and is in less of a hurry, another CSR can follow up with a pitch for the college savings account. This shows respect for customers’ time and also shows the bank cares enough to choose products that might fit their specific needs.
Improve the customer encounter. Statistics prove that many account holders don’t want to spend much time in a branch. Increasingly, due to online and mobile banking, customers come to branches mainly when they have a problem. Banks must be cognizant of this fact and spend extra effort building relationships with their customers.
Lobby tracking systems are one good mechanism for doing this, especially if they incorporate self-directed sign-in systems, such as tablets or kiosks, that allow the customer to enter in specific information. This approach lets CSRs be prepared with a personalized greeting (and the right product bundle) for the incoming customer.
Other approaches include personal interaction with account holders while they are waiting in line and when they visit CSRs for assistance. Personal interaction is paramount when a new customer opens an account. Banks should train CSRs not only to ask questions but also to listen to the answers and respond appropriately. The dialogue should be natural and not come across as an interrogation. The initial encounter presents invaluable opportunities to collect information for current and future selling efforts.
Communication outside the bank, including email communications and outbound calling, can also be helpful, especially if the communication promotes a value-add, no charge service such as bill payment.
Create and monitor training and reward programs. Nothing resonates with employees like a reward and cross-selling is no exception. However, banks shouldn’t reward personnel for blind selling. Rather, bank or branch management should design a program that rewards all staff for behaviors that nurture the sales environment but restricts sales awards to those who sell the right products to designated targets. (If a sale happens organically, no one should turn it down, of course.) The reward program should include appropriate achievement benchmarks for everyone based on their level of involvement.
Once the program is developed, all personnel should receive appropriate training. Employees identified as salespeople or closers should receive sales training. Of course, not all employees have the personality or talent to sell and management should recognize this. These employees should learn how to foster success through data collection and good customer service.
To execute such a targeted program, management must have a way to effectively analyze the performance of personnel involved in the program, including analyses of products sold, by staff member. This will enable them to both reward the stars and identify under-performing personnel. From that point, management can explore whether the problem is due to lack of training, fear of engagement, aggressive or indifferent sales techniques, etc. and take appropriate action.
Creating a cross-selling program is only part of the effort. As we mentioned earlier, banks must also monitor and analyze their results and tweak the programs accordingly. To do this, having technology that tracks employee productivity and customer engagement, such as lobby tracking solutions, is pivotal.
Additionally, improvement efforts should always involve team members. Ask top-performing employees to provide their insights. Hold team meetings where employees share ideas and success stories.
A final important tweak is to continually ensure sufficient resource allocation through scheduling. Your closers cannot sell effectively when they are trying to juggle too many tasks at once and customers are far less likely to purchase additional products when they are frustrated from excessive waiting.
On its face, cross-selling is about establishing one or more value propositions and then pitching them to suitable customers at the right time. At its core, it is about building and cultivating lasting connections with customers. Implement your cross-selling program at a measured pace and take positive corrective action at each step as necessary. Encourage employees to engage with and care about your customers and respond to their needs appropriately. Finally, use technology to help you monitor, measure and refine your goals. Your customers will reward you with more business, and the results may amaze you.
Mr. Scott is president/CEO of Alpharetta, Ga.-based Financial Management Solutions, Inc. (FMSI), which provides financial institutions with business intelligence and performance management systems for efficient branch staff scheduling and lobby management. He can be reached at firstname.lastname@example.org.