Four Ways Banks Can Improve Cross-Selling in the Digital Age

Banks and credit unions avoid calling it 'cross-selling' now (the Wells Fargo effect), but marketing additional products to existing customers is more important than ever. A key difference now is that cross-selling requires using data, empowered staff and automation to discover and deliver what products customers need.
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Every bank and credit union needs to grow new accounts — it’s their lifeblood. But it’s expensive to acquire new customers organically. The best short-term revenue growth potential is often found in their existing customer base. Marketing additional products to customers already on the books is more effective, more efficient and often more profitable.

The chances of converting an existing customer to an additional offering are substantially greater than going after cold leads. Banks can generate a 70% return on initiatives targeting existing customers versus 10% when targeting new customers, according to PwC. “In a time where every bank is focused on revenue growth in a constrained and competitive environment, making smart choices with limited resources can provide a fast track to higher-margin growth,” PwC states.

From ‘Cross-Selling’ to ‘Increasing Wallet Share’

Public use of the term “cross-selling” practically disappeared after Wells Fargo admitted in 2016 that employees had opened as many as two million additional accounts without customer authorization. Publicly traded banks used the term “cross-selling” in investor presentations only 86 times in 2019, down from 302 times in 2015, according to SPS Global.

Whether they call it “expanding relationships” or “increasing wallet share,” cross-selling remains a critical component of banking strategy.

Increased Urgency:

Commoditization of banking services and the growth of fintechs have made cross-selling necessary not only to add accounts but to retain existing ones.

Because customers often open new fintech accounts without closing accounts at their traditional institutions, banks and credit unions may already have hidden attrition that they don’t know about. Here are four ways to reduce the attrition and grow revenue.

1. Use First-Party Data to Customize Offers

Banks and credit unions typically reach out to customers with broad-based marketing, but a data-driven strategy with a narrow focus is typically more effective. PwC recommends designing a customer insight model based on multiple data sets and then targeting higher priority segments with campaigns that include specific solutions.

Fortunately, many financial institutions already have valuable insight into their customers, including payments behavior, borrowing data, channel preferences and other first-party data. By leveraging this data, banks can learn to anticipate customers’ needs and offer more personalized value rather than random products.

Taking a “needs-based” approach to cross-selling increases conversions and reduces the risk of bothering customers with unwanted offers. Instead of focusing only on the bottom line, banks and credit unions should view cross-selling as “cultivating a relationship” based on helping customers and members succeed financially, state Mary Ellen Biery, Senior Strategist and Kylee Wooten, Account Executive at Abrigo, in a blog in ABA Banking Journal. “Throwing the kitchen sink at customers, so to speak, can diminish credibility and trust,” they said.

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2. Empower Staff with Customer Insight and Training

The high-pressure cross-selling strategies of the past will backfire in today’s environment. Nowadays, it’s all about nuance and training and empowering staff with the right information. Or should be, if the industry has learned from past excesses.

Banks and credit unions should practice conversations for different situations. Whether in the branch or on the phone, front-line employees should be well-educated on products with the information to match them to consumers’ needs. For example, when a customer comes in to make a deposit, a branch associate could mention a higher-rate CD. “The key is for tellers and other front-line staff to make relevant suggestions based on the customer or member’s current situation,” say Biery and Wooten.

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3. Employ Marketing Automation in Cross-Selling

With the right data and targeted campaigns, marketing automation can significantly improve cross-selling success and incrementally increase wallet share, says Ianai Urwicz, Chief Revenue Officer with Prisma Campaigns.

He notes that the average number of financial products U.S. consumers carry (excluding investments) is 8.5. So a bank or credit union that has a consumer’s checking account, savings account and an auto loan can attain half the person’s banking wallet with one more account.

The most effective way to increase the share of the wallet is to become a consumer’s primary financial institution. Many people equate PFI status simply with where a person’s paycheck is deposited. Urwicz, however, says becoming a PFI is driven by four main factors: frequent use, recurring payments, the availability of physical channels, and longevity.

He notes several critical activities to improve share of wallet. These include using data for insights and targeting and leveraging digital channels for targeted cross-selling. At the same time, banks and credit unions must ensure their automated messages are personalized and relevant.

Read More: 7 Common Sense Ways to Increase Bank Cross-Selling

4. Create a Fast and Frictionless Digital Experience

Financial institutions also need to refine their digital capabilities around account opening and onboarding. With high expectations for convenience and speed, consumers have little patience to jump through hoops to open accounts.

Good Digital UX Is Table Stakes:

A clunky digital account opening experience will kill cross-sales no matter how good your people and marketing are.

A fast, frictionless digital experience is critical in acquiring new customers and essential in cross-selling. Research by the Digital Banking Report indicates that if a financial institution can’t open a new account or complete a new loan application in five minutes or less, abandonment increases by 60%.

“The longer a process takes, the more likely a consumer will try elsewhere,” says Jim Marous, CEO of the Digital Banking Report and Co-Publisher of The Financial Brand. “The digital consumer expects simplicity, an intuitive design and speed of completion.”

Finally, it’s essential to start small and learn fast. “Develop and improve your bank’s ability to be hyper-relevant and serve customers more effectively by sensing and addressing their changing needs,” says Mike Vien, co-founder and CEO of Wallit in a post on Bank Director. To develop that capability, start a pilot with employees, he says, then extend it to scale with a portion of your customers.

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