Cross Selling at Banks: Adopting the Right Strategy for a Healthy Bottom Line

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Cross Selling at Banks: Adopting the Right Strategy for a Healthy Bottom Line Cross-selling is a concept all banks seem to be harping on, but is it worth all the hoopla? Selling new products to existing customers has long been on most banks' agenda and has been constantly discussed in various internal/external meetings. Yet historically, few banks have had significant cross-selling success. When establishing cross-selling strategies, banks must remember that the ultimate goal is improving the bottom line. Cross Sell

Selling of banks products/services to an already existing customer—is the broad definition of what cross sell means. It can be selling an existing checking account customer a credit card or selling an existing credit card customer a mortgage. Banks have been using cross sell as a marketing approach to expand their footprint and also increase their customer base. Every bank has its own logic of how many relationships it would like to have with its customers. It can be 1:2, 1:3, etc. The more relationships the bank has with a customer is tantamount to one having a better wallet share of the customer. More spends on all the products of the bank leads to better top- and bottom-line performance. Conversely in pursuit of selling newer products to existing customers, banks tend to forget that profitability of a customer is very important aspect and just not addition of another product. If banks tend to attract customers with free checking in the hope of getting other business from those customers and if this does not happen then the purpose behind cross-selling is defeated. As well, some banks forget that the objective was profit—not a higher cross-sell. Many tactics merely increase cross-sell—not profit. Offering discounts for additional products and services, but at the cost of forgone revenue, results in losses. Banks in the past and some banks in the present also have been traditionally organized in product silos, with their own marketing and...
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