Strategies for cross selling success - Banking

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Cross-selling can boost institutional profitability if banks identify the appropriate sales opportunities, improve the customer encounter and monitor training and reward programs.

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
effectiv ely through cross-selling.

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Strategies for cross selling success - Banking

  1. 1. Strategies for Cross-Selling Success Cross-selling can boost institutional profitability if banks identify the appropriate sales opportunities, improv e the customer encounter and monitor training and reward programs. BY W. MICHAEL SCOTT Feb 1 0, 201 4 | 2 Comments Cross-selling, or persuading customers to purchase additional products, is one of a bank’s most powerful and efficient rev enue-boosting tools. Y et, many banks do not cross-sell effectiv ely . In today ’s competitiv e market, banks need to dev elop carefully planned, measured and specialized programs to engage and target customers effectiv ely 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 ex isting. According to a 201 1 report from Forrester Research, the av erage bank owns 2.1 financial products out of the approx imately sev en owned per-household. That’s certainly fairly low, considering that most banks aim for four or more products percustomer. The good news is this metric is not a foregone conclusion, or an absolute. The potential is there for ev ery bank if management can identify how to effectiv ely lev erage cross-selling for the benefit of both bank and customers. Getting Cross-Selling “Right” The problem for many banks in achiev ing cross-selling success is the challenge of creating, monitoring and measuring effectiv e cross-selling programs and then ensuring that employ ees implement them effectiv ely . Some banks put so much pressure on their representativ es to cross-sell that the entire effort loses its focus. For ex ample, assume that a customer enters a bank to make a $1 00 deposit into a sav ings account. The teller, whom management has instructed to promote new money market accounts with a $1 00 minimum deposit, suggests the customer open a new money market account instead of adding to the sav ings 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 prov ide correctiv e training if they need improv ement. 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 Sy stem helped us to identify the following three elements of cross-selling success: Evaluate and identify appropriate sales opportunities. Hav e y ou ev er 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 aggressiv e 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 analy sis, with action on that information, is an ex cellent way to begin this effort. Perhaps
  2. 2. Data collection and analy sis, with action on that information, is an ex cellent way to begin this effort. Perhaps y ou already know the demographics of y our branches and their customers, but if not, they are worth ex ploring. For ex ample, families, single professionals and couples preparing for retirement will be interested in different product mix es. 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-v isit data collection. If y ou hav e not already implemented some form of lobby tracking software that supports data collection by customer serv ice representativ es (CSRs), we urge y ou 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 ex ample, 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 sav ings account right then (an idea Mrs. Jones will likely reject), the CSR can log a note in the sy stem that Mrs. Jones has children. The nex t time she comes into the branch and is in less of a hurry , another CSR can follow up with a pitch for the college sav ings 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 prov e 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 hav e a problem. Banks must be cognizant of this fact and spend ex tra effort building relationships with their customers. Lobby tracking sy stems are one good mechanism for doing this, especially if they incorporate self-directed sign-in sy stems, 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 v isit 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 inv aluable 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 v alue-add, no charge serv ice such as bill pay ment. Create and monitor training and rew ard programs. Nothing resonates with employ ees like a reward and cross-selling is no ex ception. Howev er, banks shouldn’t reward personnel for blind selling. Rather, bank or branch management should design a program that rewards all staff for behav iors that nurture the sales env ironment 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 achiev ement benchmarks for ev ery one based on their lev el of inv olv ement. Once the program is dev eloped, all personnel should receiv e appropriate training. Employ ees identified as salespeople or closers should receiv e sales training. Of course, not all employ ees hav e the personality or talent to sell and management should recognize this. These employ ees should learn how to foster success through data collection and good customer serv ice. To ex ecute such a targeted program, management must hav e a way to effectiv ely analy ze the performance of personnel inv olv ed in the program, including analy ses 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
  3. 3. them to both reward the stars and identify under-performing personnel. From that point, management can ex plore whether the problem is due to lack of training, fear of engagement, aggressiv e or indifferent sales techniques, etc. and take appropriate action. Measuring Results Creating a cross-selling program is only part of the effort. As we mentioned earlier, banks must also monitor and analy ze their results and tweak the programs accordingly . To do this, hav ing technology that tracks employ ee productiv ity and customer engagement, such as lobby tracking solutions, is piv otal. Additionally , improv ement efforts should alway s inv olv e team members. Ask top-performing employ ees to prov ide their insights. Hold team meetings where employ ees share ideas and success stories. A final important tweak is to continually ensure sufficient resource allocation through scheduling. Y our closers cannot sell effectiv ely when they are try ing to juggle too many tasks at once and customers are far less likely to purchase additional products when they are frustrated from ex cessiv e waiting. On its face, cross-selling is about establishing one or more v alue propositions and then pitching them to suitable customers at the right time. At its core, it is about building and cultiv ating lasting connections with customers. Implement y our cross-selling program at a measured pace and take positiv e correctiv e action at each step as necessary . Encourage employ ees to engage with and care about y our customers and respond to their needs appropriately . Finally , use technology to help y ou monitor, measure and refine y our goals. Y our customers will reward y ou with more business, and the results may amaze y ou. Mr. Scott is president/CEO of Alpharetta, Ga.-based Financial Management Solutions, Inc. (FMSI), w hich provides financial institutions w ith business intelligence and performance management systems for efficient branch staff scheduling and lobby management. He can be reached at mikes@fmsi.com. ©2014 BAI. All Rights Reserved.

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