Understanding The Keys to Cross-Selling Success

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:

  1. Customer interest. A customer’s interest in having a deep relationship with her bank is primary. Our research shows that 41% of US adults are interested or very interested in “putting or keeping all of your financial products and accounts with a single firm.” Age is one factor affecting this desire, with younger consumers more open the concept, but another is the level to which the customer is an advocate of his primary provider — a concept we call Customer Advocacy. Customers who agree more with the statement “My financial provider does what’s best for me, versus its bottom line” are far more likely to consider their provider for additional product purchases.
  2. Relationship pricing. Consumers are smart. They know there is a value to a financial firm in their having multiple accounts with that firm. They expect to share in that value; they expect to receive a financial benefit for their patronage. In fact, 60% of US online adults think that getting better rates from their provider is the kind of encouragement they need to have a deep relationship. This shared financial benefit is at the heart of a pricing strategy called relationship pricing.
  3. 360-degree customer view. Metrics are a vital component of effective execution. Next-best cross-sell analyses are valuable, but so, too, are elements like an understanding of what products and services are typically purchased together and a 360-degree view of the customer to know what products she current owns, both with and outside a particular firm. Thirty-eight percent of consumers who purchased a checking or savings account purchased both products at the same time, making packaged selling of those products a logical cross-sell element.
  4. Effective execution. This is the missing link of effective cross-selling. Financial firms have to know where their customers are and where they would most likely consider additional product purchases. Today that occurs in two places: when products are being opened and when products are being serviced. Most product opening is done in the branch, and many firms do an adequate job of cross-selling in the branch. The greater opportunity is when the customer is servicing, and today that 




I reflect many of the sentiments mentioned within this article. As a youth, I was an advocate user of one company. I had come to this decision after being enticed by the FREE student checking accounts that they offered at the time. In this respect, I feel that they did an excellent job as organization in enticing Customer Interest. I also appreciated their "360 Degree customer view", because I was given the option to open a savings account under the same criteria. However, after graduating from high school and starting college they bumped my account up and started charging me, rather than respecting the relationship we had established. I also felt that their execution of this process was lacked tact. Shortly after finding this out, I switch to two other institutions that claimed similar guidelines (except with extended coverage for college students).

I also held an account with

I also held an account with one company. I felt that being apart of more than one company would become a hassle to manage and there would be different offers so I went with the one I felt was best for me as a student. I had the student checking account but suddenly one year they began taking money from my account because they told me I no longer had a student account even though i was still a student at the time. They did not keep their word as a company forcing me to switch my services over to their competition. Since I has a savings and a checking the interest that I made in my savings account got taken away in my checking account when they took money from me that i didn't even have at the time, because of the company failed in the relationship pricing element

This elements of cross

This elements of cross selling strategies mentioned within the article I can attest to their validity based on the fact that I have noticed the same strategies implemented on myself when banking. Especially with the 360 customer view, when used properly can cause a person to open multiple accounts with one bank based on the fact that they will bundle their products together to sell, I had been convinced to open checking, savings, and money market IRA account all at one bank at the same time.

Great discussion

It is clear we are seeing the seeds of cross sell accross many different organizations. Citi, Chase and Wells Fargo all have strong relatinship pricing approaches. Expect to see much more of this soon as the strategy to grow revenue grows much stronger driven primariliy by government regulations.