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Cross-Selling in Banking Industry: Definition, Strategies & Tips

Instructor: Maria Airth

Maria has a Doctorate of Education and over 20 years of experience teaching psychology and math related courses at the university level.

Loyalty is required for cross-selling in the banking industry. This lesson offers tips and strategies to improve the success of cross-selling endeavors in financial institutions.

What Is Cross-Selling?

Think about the last time you bought something, maybe at a fast food restaurant. Did the employee ask you if you'd like to purchase another product after giving your order? If you ordered a hamburger, you were probably asked if you would 'like fries with that.'

Lots of companies attempt to sell their customers additional items at the point of sale. This is called cross-selling. You can even see it in online shopping now; just before you check out, a pop-up window will show you additional items you may be interested in based on your purchases.

So, cross-selling is common in fast-food restaurants and retail shops (including online retail), but can it work in a service industry like a financial institution?

Yes! This lesson will reviews strategies and tips for cross-selling in the banking industry. You'll learn several methods for increasing sales of secondary products to existing bank customers.

Importance

We know that many companies push cross-selling, and sometimes, it can become annoying to the customer. When a customer is in a hurry and just wants to make a quick purchase, having the employee try to sell more than he or she has asked for can cause hard feelings. So why should banks consider cross-selling at all?

To answer that, let's consider a number of the most common products a bank has to offer: savings accounts, checking accounts, business accounts, savings bonds, mortgages and credit cards. A customer who uses different agencies for each of these products isn't necessarily loyal to any of them. If another company gives a better rate for a credit card, for example, the customer won't hesitate to transfer his account.

However, if a person has all of her financial accounts with the same company, she may feel more loyal to that company; there's a sense of ownership involved in maintaining all financial products at the same place. Thus, it would take a great deal of enticement to lure this customer away from her primary bank for banking services.

Engendering loyalty accomplishes two primary goals of any business: repeat customers and reduced costs associated with gaining new customers. It costs far less to cross-sell items to existing customers than it does to attract new customers.

Strategies and Tips

The focus on cross-selling should be customer relations management (CRM). This means that all aspects of your strategy should keep the customers' needs at the forefront of your objectives.

Sticky Services

Start with sticky services, those services that the bank offers for an additional fee that make it easier for customers to use their existing products. This could be mobile or online banking services or unlimited atm usages. Finding ways to enhance the customers' experience will help to develop brand loyalty.

Counsel, Don't Sell

When conducting business, many customers may be put off by a hard sale, meaning an employee that pushes them hard to purchase a product they may not need or want. Think about the stereotype of the used car salesman; nobody wants to be pushed into a sale. Approach customers with a counselling or advising tone. Mention the products they have and suggest what may be helpful to them in the future based on their current products. For example, You have our basic checking account which is a wonderful product for a young person starting out. You may be interested in upgrading to the deluxe account.

Know Your Customer

Staying connected to your customers and anticipating their needs helps to endear them to the company. Having a finger on the heartbeat of your clients helps them to perceive the bank as a friend instead of a cold company. This, in turn, deepens loyalty in the customer.

Sending birthday greetings is one way to stay connected. Another is to offer specials on financial packages that are particularly relevant for a customer, like an infant growth account for a customer who has recently had a child. Personalizing your communication with customers helps to tighten bonds of loyalty and ease cross-selling attempts.

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