Are you Maximizing Your Current Customer Accounts?
Increased competition and new banking methods make customer acquisition harder than ever. Instead of struggling to acquire a new customer, try switching your focus from acquisition to expansion through cross-selling. Expanding the number of products and services that your current customers utilize allows you to increase deposits or revenue without incurring the costs needed to convince a new customer to switch banks. Cross-selling and customer retention is critical in getting ahead of the competition.
The cost of acquiring a new customer is five to ten times more than the cost of retaining an existing one. (TheFinancialBrand.com)
Importance of Cross-Selling
Cross-selling, or the process of selling related products and services to existing customers, provides continual revenue generation, and is ‘easy money’ compared to new customer acquisitions. It is one of the easiest and most cost-effective activities that can be done to accomplish growth. Cross-selling is a powerful tool because of its ability to connect existing customers with products and services that are relevant to them.
Key Benefits of Cross-Selling
- Enhances customer experience within the bank.
- Encourages customers to use multiple products and services.
- Increases customer lifetime value.
What you need to Start Cross-Selling
Cross-selling is easier than you may think, and you already have the most powerful information source needed to be effective – your customer database. This vital information tells you everything you need to know about your customers to successfully cross-sell to them, like their financial history, behaviors, and what products and services they are using, etc.
It’s completely within compliance regulations (guidelines) for a bank to use all customer information that it has within its archives for cross-selling additional products and services to them. (CBM Cross-Selling Conference)
Compiling the Right Data
Just as important as having the database, is effectively leveraging it to generate qualified customers in which to cross-sell additional products and services. One of the biggest mistakes that can be made is cross-selling the wrong products and services to customers. This will make customers feel like their bank does not know or care about them, especially when trying to cross-sell a product the customer is already using at the bank, like a mortgage.
Know What You’re Looking For
To ensure the right information is captured, start each query with a goal in mind. Are you looking to expand business loans, HELOC, or investment services? Review and analyze existing customers who use the product, then develop parameters that would help determine which other customers fit into the specific product category.
How it Works
Imagine you are trying to grow the investments department of your bank through cross-selling. Start by developing parameters. After analyzing existing investment customers, you have noticed a trend that most customers who use the bank’s financial services have an account balance of $100,000 or more – this will be your first parameter. The second parameter will be customers who are not currently using the bank’s financial services.
To generate the customer list, begin by performing a search of the bank’s database for all customers who match the first parameter. Then complete a search for all customers who are currently using the bank’s financial services. Cross reference the results of the first search against the results of the second search. Remove any customers who appear on both lists. The remaining customers on the list should be cross-sold investment services. Investment services are relevant to this customer segment because they have ample funds to invest, hence an account balance of $100,000 or more, and are not currently utilizing the bank’s investment services.
Connecting Using the Right Channel
Once you have compiled a list of customers to cross-sell to, it’s time to get the offer in front of the target audience. The best channel for delivery of the marketing message may vary by promotion or product offering. When determining the right channel to use, keep the audience and product offering in mind. Who will be receiving the message, is it a tech-savvy millennial or maybe an older generation? Is the offer to download the bank’s mobile application or is it to refinance a mortgage?
Determining the right channel isn’t always easy, and may require some research on previous customer behaviors. For example, if a customer opened an account online, downloaded the mobile banking app, and completes nearly all financial transactions online, a digital message would be the best avenue to communicate a product offering to him or her.
It’s important to put your best practices first. Before implementing your cross-selling plan, take time to review it to ensure it does not incentivize employees to take action on a customer’s behalf that has not been consented to. Employee incentives are great sales tools, but should be continually monitored with a checks and balances system.
You have almost all the services that your customers need, why aren’t they using all of them? Don’t lose out on another opportunity to provide service and bring your customers closer. Make a plan to start compiling customer information from your database that can then be used to cross-sell various products and services. See how much you can grow your bank with your existing customers.