Cross-Selling Should Not Be Part Of On-Boarding

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The banking industry has an odd definition of the word on-boarding. Or at least to me it does, considering it’s not a real word in the first place.

To me, the term implies the process by which a firm helps a new customer become a satisfied new customer. To me, the concept implies that simply closing the sale isn’t enough — that some, if not many, customers need help when initially using, establishing, or setting up a product or service.

But why do so many banks seem to think that on-boarding means the process by which a firm tries to sell more products to new customers immediately after those customers purchase their first product or service?

The cover story on on-boarding in the December 2007 issue of the ABA’s Bank Marketing magazine says banks need to:

Create a structured program to cross-sell new people and lock them in — so that deposits don’t go out the back door as fast as they come in the front.”

My take: The logic behind this advice is sorely twisted.

It presumes that customers can be “locked-in.” This is an outdated notion. Sure, there was a time when it was a hassle to switch accounts from one bank to another. But this is increasingly not the case. Bank marketers have got to drop the notion that they can “lock customers in.” It’s a losing proposition.

In the course of some market research I did a few years ago, I noticed a not-insignificant percentage of bank customers who were very dissatisfied with their banks, yet very unlikely to switch. Why? Because, they said, it was just too much trouble to switch.

As consumers, we want to do business with firms we want to do business with, not firms we feel consigned to do business with because it’s too much trouble to go elsewhere. And as marketers, do we really want customers who remain customers because they feel they have to? I don’t think so.

There’s another side to the article’s advice to cross-sell that makes it wrong: It ignores the realities of what it takes to develop a customer relationship.

In many respects, developing a customer relationship isn’t very different from developing a personal relationship. There has to be some mutual trust, mutual benefit, and some degree of engagement.

Sorry for the crude analogy, but cross-selling new customers practically immediately after they become customers is like asking someone you just met at a bar back to your place. (Note: If this is accepted behavior among normal, well-adjusted single people please let me know, and I’ll delete this whole post). Granted, they might say yes, but that is not a relationship.

Here’s my advice to banks: Remove cross-selling from your on-boarding program. Focus on helping your new customers make the best use of the products or services they’ve ALREADY signed on for.

Cross-selling them as part of your on-boarding process potentially sends two messages: 1) You care more about selling them more products than you helping them with the ones they have, and 2) Your sales people are incompetent for not having suggested the products you’re trying to cross-sell (if they were good, they would have uncovered the need for the product already).

Today’s rule of bank marketing is this: You earn the right to cross-sell. You earn that right by delivering on the expectations that were established in the initial sales process — expectations that the product value will be as good as promised, and that the service provided will be as good as promised.

Technorati Tags: Marketing, Banking, On-boarding

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