Jeff Judy

Jeff's Thoughts -July 22, 2009

Cross . . . ?


Having spent several decades in the banking business, I've seen a few changes in how bankers work, over the years.

One of the biggest differences between the way I was expected to work, when I first started, and the way most bankers work today is the emphasis on "cross-selling." There is a lot of interest in "wallet share," where we used to think only about "market share." In other words, at many banks, the marketing effort goes beyond growing the number of customers you have to getting the most business (and profit) you possibly can out of each one.

There are several reasons why this makes good business sense. The obvious one is that every product or service you deliver to a customer carries the potential of collecting a fee. Many institutions have discovered how valuable fee income can be, rather than relying too heavily on interest income to generate revenue.

In addition, new products can be added to a customer's portfolio with your bank at less marketing cost to you. It takes much less effort to persuade an existing customer to add a service than it does to sell that first product to a new customer. That means each additional "sale" to the customer is inherently more profitable for you, as it costs less to achieve.

A less obvious, but powerful, reason for delivering multiple products and services to each individual customer is loyalty. A customer who has only a checking account with you, or only a loan, faces relatively few barriers to moving to another provider. But someone who has a couple of accounts, overdraft protection, and some automated processing will be much less interested in building all of that convenience into a new relationship with someone else.

So what's not to like about cross-selling? While the idea is sound, the execution can actually hurt you.

The problem arises when we get so attached to selling more products that we lose the customer's perspective. You can't find a single one of your customers who starts the day wondering what other products and services you can provide for them.

But you have plenty of customers who start the day wondering how they are going to solve a (financial) problem.

What customers need from you is "cross-solving." In other words, use what you have learned about them, in the process of establishing a relationship around one product or service, to look for other problems you could solve for them. Prioritize your discussions around the size of their need, not the size of your potential fee or profit. And please, don't waste their time pushing the "product of the month" when it doesn't fit the customer's situation in the least.

There are simply too many bankers out there who are looking for the next product to sell, and believe me, they aren't fooling their customers! We all know when we are being sold. We don't mind it so much when we can easily see the benefit, but no customer wants to be the impersonal object of your latest marketing attack.

Customers are smart enough to step around your cross-sell, and to get their needs met elsewhere. They can sense when taking on an array of services from you is just a trap, rather than a convenience.

Take the wrong approach to cross-selling, instead of cross-solving, and you'll just develop a crop of cross customers, with rather cranky attitudes toward working with you any more than they have to. And that's definitely bad for business.