A result of the recent and continuing rash of government regulations is a renewed desire on the part of banks and credit unions to drive new sources of revenue and profitability. One outcome of drive for revenue is a renewed interest in cross-selling to deepen customer relationships.
Cross-Sell Strategy Is Not New
Cross-selling as a strategy is nothing new. Wells Fargo has been a champion of the concept for decades. Cross sell efforts in general have been marginally successful, with the average bank owning just 2.1 financial products out of nearly seven owned per household. The struggles of cross-selling to customers are two-fold. On the consumer side, there is a natural inclination that one provider cannot have the best product in all situations. On the bank side, organizational silos and a general failure to appreciate the impact of effective cross-selling on metrics like customer retention hinder success.
The Elements Of Effective Cross-Selling
So what makes for successful cross-selling? A well-defined strategy is an important but relatively easy part of the question. An analysis of the problem shows that execution is what separates success from also-rans. Effective cross-sell execution requires four key elements:
No topic has straddled the chasm of hype versus ROI as social media. The last few years have been a never-ending array of stories around successes using social media as well as pundits questing the validity and value of the social area. The financial services industry is increasingly playing a role in the social space, and the last two years have also provided clarity to the value of the social channel.
Like other industries, the majority of the efforts in the social space in financial services space were initially focused on the marketing area. The last two years have resulted at least four areas that show promise for social outside of pure marketing including:
Product development and innovation. Who better to ask about new product development or product enhancements than existing customers who own and use the product? Firms such as Chase tap social communities to drive product innovation that starts with the customer are using social very effectively
Community support. While financial decisions may be a personal activity, the path to these decisions is often steeped in social with segments like investors or small business looking to one another for peer comparisons and best practice sharing. American Express, TradeKing, and most recently E*Trade are using closed communities to drive service utilization and segment engagement by getting customer to interact with each other in the social space.
A few days ago at Oracle OpenWorld 2011, I attended a presentation from one of the major consulting companies. The topic: banking in 2020. I heard about big data, the need for real-time analysis of information (in particular from the Internet), and a few other trends. While many of these trends were not new, I could only agree that they would be important in the future, as they align with Forrester’s 2008 research on what banking will look like in the future. (If you are interested in details regarding Forrester’s research on this topic, please see “Financial Services Of The Future: Collaborative Competition Will Be The Norm” and “Banking IT In 2023 Updated,” keeping in mind that 2023 is a metaphor for a longer-term perspective.) However, there was one statement within the presentation that I seriously disagree with.