For decades, retail bankers have been trying to increase their share of the 'customer wallet' by inducing customers to take out additional banking and related products. The promised payoff is higher customer profitability, improved customer retention and lower customer acquisition/sales costs.
Recent survey results on cross-selling performance suggest that, among Australia's 'Big Four', the CBA averages around 2.7 separate products per customer, putting it slightly ahead of the other three majors, although each bank has improved its cross selling performance in recent years. Still, the cross-selling experience of our local banks falls short of what has been achieved in countries like France and Japan and certainly short of their own aspirations.
While alignment of enablers across sales force, customer analytics, products, processes and infrastructure is required, successful cross-selling starts with customer understanding and engagement. Good cross-selling focus on enabling frontline staff to have better quality conversations with their customers:
- They will draw on robust customer analytics and insights. Customer data is enriched by capturing and using relevant information from multiple sources, including call centres, online banking and account activity. The data is kept up to date and the quality of analytically driven leads is monitored and fed back for continual refinement. Leading organisations know that the quality of a lead reduces over time and ensure the shortest possible time from data capture to customer contact.
- Meaningful customer insights is disseminated to relationship managers and other sales staff via desktop tools that not only deliver targeted and prioritised leads, but also provide a coherent, consistent framework for initiating and sustaining effective customer conversations.
- Cross-selling initiatives seek to improve the capabilities of individual bankers. Relationship managers and other sales staff possess detailed knowledge of relevant products and processes ('hard skills'). However skills to identify customers' real needs and aspirations, and develop a customer/prospect dialogue that builds trust and confidence ('soft skills') are often more important and less developed.
- Well-designed incentives will be relationship focused (not product focused) and should reward customer satisfaction and the proper mapping of customer financial needs, including wealth management and insurance needs.
- Development of capacity management systems will provide staff with sufficient time and resources to pursue their cross-selling objectives effectively and avoid distractions on sales staff’s time.
The results of empowering frontline sales staff to engage with customers can be compelling. For example, one bank found that customers who had had a 1-on-1 needs based discussion had on average 0.7 more products than other customers.
Although customer engagement is important, cross-selling programs are likely to fail if the products and packages being promoted are uncompetitive or do not deliver perceived value to the customer. Cross-selling should never be used in an attempt to extract additional mileage from tired, outmoded and competitively outgunned products. Likewise, tighter targeting of cross-selling initiatives is simply a lot more cost-effective at the same time as it helps avoid the unnecessary and counter-productive customer aggravation that results from a scattergun approach to increasing share of wallet.
"Understanding the needs of your customer and providing a great customer experience, based on organisational alignment of brand, customer proposition and sales force capability are critical to cross-sell."
Head of Consumer Products Bundling and Cross-Sell, NAB
Recently KPMG has been observing the emergence of several exciting innovations in cross-selling activity among certain banks and other financial institutions in Australia and elsewhere. We are also seeing examples of more traditional cross-selling strategies being very well executed, resulting in substantial benefits to the organisations concerned. We would be delighted to share these insights in more detail with our readers.