Sovereign Bank’s Brokerage Reaps Referral Windfall

Posted by Luke Owen on Mon, September 14, 2009

BOSTON, Sept. 14 – Evidence shows that financial institutions’ cross-selling efforts have come up short, but Sovereign Bank is a major exception.

The $78 billion-asset bank has increased referrals to its retail investment unit by 15% or more for three years straight, according to senior vice president Casey Roberts.

“And the quality of those referrals has been higher as well,” he says.

Sovereign is one of several banks and credit unions that have significantly boosted their referrals while the industry at large has struggled in its attempts to do so. The institutions credit their success to an innovative system that replaces the traditional hard-sell approach with one that is built around customer education.

“In a financial institution, you can’t turn the staff necessarily into salespeople,” says Steve Ryerson, a vice president with United Nations Federal Credit Union, in New York, which reports similar success in boosting its customer referral rates.

Sovereign (www.financialanswers.com), United Nations FCU (www.unfcu.org) and a growing number of other financial institutions credit their success to a system developed by Truebridge Financial Marketing, in Boston (www.truebridge.com).

The approach effectively throws away the traditional playbook used to generate referrals, and replaces it with a system that educates customers and encourages them to initiate meetings with investment reps and other product specialists.

The approach may seem counter-intuitive, but it’s been welcomed by banks and credit unions looking for a better way to sell multiple products to their customers.

“Their concern has been that, under the conventional cross-selling model, they were just missing too many opportunities,” says Stewart Rose, president of Truebridge.

Indeed, financial institutions are dissatisfied with their cross-selling results, according to a survey of 120 U.S. financial institutions by the Bank Insurance & Securities Association and Truebridge. Customers don’t realize that the institutions offer things like investments and insurance, and most front-line employees don’t produce enough referrals, survey respondents indicated.

“Probably no bank is entirely satisfied with their cross-sell efforts,” agrees Sovereign’s Roberts. “I don’t think anyone would say they’ve met their objectives in terms of return on investment.”

Cross-selling is more important than ever, according to financial institution executives, as banks and credit unions present themselves as trusted partners for consumers bewildered by the financial crisis.

What’s more, selling additional products to existing customers is far cheaper than acquiring new ones, they add. And it’s lucrative: Just five new appointments per week can add $160,000 in gross annual revenue, according to industry experts. Not surprisingly, 80% of senior bank executives in a survey by Grant Thornton said they planned to increase cross-selling efforts this year.

Contact: Investment Services at Sovereign Bank
Casey Roberts
617-757-5613
www.financialanswers.com

Truebridge, Inc.
Stewart Rose
617-956-5020
info [AT] truebridge [DOT] com