Anyone who has ever made a purchase on Amazon (so, pretty much everyone) knows that simply looking at an item listed on the online retail marketplace will elicit recommendations for other items for sale on the platform. Instead of just suggesting alternate listings or brands of the item viewed, Amazon informs shoppers about articles that people who purchased that specific item have also bought or things that are frequently purchased along with it. For example, viewing a listing for a kitchen sponge on Amazon will trigger a message noting that it is frequently purchased along with a listing for a dish soap available on the site. This kind of targeted recommendation is a powerful tool in driving additional sales and can be highly effective when applied thoughtfully.While unsolicited ads or product recommendations can often annoy consumers, strategic and relevant suggestions, like those Amazon makes, can enhance the customer experience and boost sales — the essence of successful cross-selling. Community financial institutions (CFIs) looking to improve their cross-selling strategies might benefit from adopting these similar tactics:
- Rethinking the Approach. Cross-selling has long been a common practice for CFIs, but in today’s competitive landscape — where both traditional banks and non-traditional financial institutions are vying for customers — it's no longer enough to simply pursue cross-selling opportunities. CFIs must adopt a more intentional and strategic approach. As consumer behavior increasingly shifts towards digital platforms, with 78% of adults preferring to use websites or mobile apps for banking, effective cross-selling lies in offering customers digital opportunities that are accessible 24/7. This ensures that customers can engage with your products and services whenever and however they choose. More importantly, success in cross-selling depends on offering services and products that genuinely add value to customers' lives. By focusing on what truly benefits the customer, CFIs can not only enhance the effectiveness of their cross-selling efforts but also significantly improve the overall customer experience, fostering deeper loyalty and satisfaction
- Dig Deep. Diving into data on customers’ past transactions and behavior can reveal key information that can enable financial institutions to identify individual customer needs and preferences. This information can then be used to tailor personalized offerings and increase the likelihood of converting such offers to new business. For example, if a customer is constantly checking their account balance, it may signal a need for additional financing, making it likely they will be receptive to offers for products such as loans or insurance. Such data should be available to any sales staff within your organization who interact with customers and can turn the data into an opportunity for more business.
- Personal Touch. While data analytics provide powerful insights into customer behavior and preferences, the human touch remains invaluable in cross-selling efforts. Frontline staff, such as tellers, play a crucial role in these interactions, as their face-to-face engagements with customers can uncover personal details that data alone might miss, like a teen beginning to explore college options. These personal connections allow frontline employees to build trust with customers, fostering relationships that are often more challenging to establish through digital channels alone. By combining the strengths of data analytics with the nuanced understanding that comes from in-person interactions, CFIs can create a more holistic and effective cross-selling strategy.
A Balancing ActApproach cross-selling too aggressively, and you may turn customers off. Given this reality, CFIs should execute cross-selling thoughtfully and intentionally. Here are a few best practices to keep in mind when doing so:
- Timing is key. Present cross-sell opportunities when customers are most likely to be receptive, such as during product renewals, upgrades, or life events that may prompt new needs.
- Be transparent. Clearly communicate how your organization will use customers' data and information. Ensure that customers fully understand the products or services being offered to them, fostering trust and informed decision-making.
- Offer bundled solutions. Whenever possible, provide bundled products, especially if doing so offers additional discounts. This can be particularly attractive to both individual customers and small businesses, making it easier for them to see the value in cross-buying.
- Maintain engagement. After customers purchase or subscribe to cross-sell products and services, follow up to offer support and invite feedback. This feedback is invaluable for refining and improving your cross-selling strategies.
- Prioritize security and compliance. Keep customer data protection at the forefront of your efforts and ensure all cross-selling activities are in strict compliance with relevant financial regulations.
- Avoid conflicts of interest. Ensure that cross-selling initiatives do not conflict with staff incentives or quotas that might encourage unethical practices. Your team’s focus should remain on providing value to the customer.
Performance IndicatorsWhile adopting a deliberate approach to cross-selling is essential, it's equally important for community financial institutions (CFIs) to validate the effectiveness of their strategies. Key performance indicators (KPIs) can provide insight into which tactics are working and those that are not. Following are some of the most common KPIs used to measure the effectiveness of cross-selling efforts:
- Cross-sell ratio. This metric measures the average number of additional products or services sold per customer account. A higher cross-sell ratio indicates that customers are engaging more deeply with the institution's offerings, which can signify a successful cross-selling strategy.
- Compliance scores. Ensuring that cross-selling activities adhere to regulatory requirements is paramount. Compliance scores help CFIs track their adherence to industry standards, minimizing the risk of legal issues and enhancing the institution’s reputation for ethical practices.
- Revenue per customer. This KPI assesses the overall financial contribution of each customer, providing insight into how cross-selling impacts the bottom line.
- Retention rates of customers. Cross-selling isn't just about generating more sales — it's also a key driver of customer loyalty. High retention rates suggest that customers find value in the additional products or services offered, which can lead to long-term relationships and increased lifetime value.
- Customer satisfaction. A satisfied customer is more likely to engage in cross-selling opportunities. Regularly measuring customer satisfaction through surveys or feedback mechanisms helps CFIs understand how their cross-selling efforts are being received and where adjustments may be necessary to enhance the customer experience.
The Involvement of CRM Systems in Cross-Selling A robust Customer Relationship Management (CRM) system can significantly enhance cross-selling efforts by providing valuable insights into customer behavior and preferences. Tracking how effectively the CRM is utilized in cross-selling can reveal opportunities for optimization and improved targeting.With more and more financial institutions competing for customers’ business, cross-selling has become increasingly important and offers a lower-cost way for CFIs to enhance their revenue. If approached thoughtfully and intentionally, cross-selling efforts tailored to individual customers can not only help CFIs sell additional products and services but can also help boost overall customer satisfaction.
