According to the recent 2012 Bank and Credit Union Financial Marketing Survey developed by Jim Marous of Bank Marketing Strategy and Jeffry Pilcher of The Financial Brand, cross selling is at the top of the list of marketing priorities. With fee revenue under pressure from new federal regulation, it is not surprising that generating more revenue per customer is so important. This is nothing new. Looking at this year’s Grant Thornton LLP’s 18th Annual Bank Executive Survey, along with previous years’ surveys, you will see that organic growth (cross selling) has been a top priority for quite some time.
It stands to reason. One bank that seems to be a leader in cross selling is Wells Fargo. Their former CEO, Dick Kovacevich has said that cross selling to an existing customer only costs them 10% of what it would cost to acquire a new one. Well, we all know that selling a couple of more products is not that easy. Industry share of wallet continues to hover around two of the average ten financial products that people own.
What is Standing in the Way?
It is not for lack of product to sell or people to sell it. It is estimated that many financial institutions have over a hundred products on the shelf. At Truebridge, we conducted research to to provide some insight into the cross sell problem. Three hundred and seventy five individuals from over 120 financial institutions across the US participated in our Truebridge Survey. We found that two of the biggest barriers to cross selling were that people viewed their financial institution narrowly as the place to go for transactional products, but not much more. Another problem was the inability of the frontline employees to make referrals.
Using Education to Sell – A New Approach to Marketing
The answer is a new approach to marketing; an approach that goes beyond today’s continual string of product messages. Sales expert Chet Holmes in his book “The Ultimate Sales Machine” sums it up well. He says that at any one time only about 3% of people are in the market for a particular product. On the other hand 100% of people may be interested in learning more about a particular topic that is important to them. Let’s think about how this would work. Suppose a financial institution runs an ad for a home equity loan. By Holmes’ estimate only 3% of the target is actually looking for a home equity loan while 97% are not interested. On the other hand if they ran an ad that offered free information about how to take advantage of today’s low rates to eliminate high cost debt, you may find that message strikes a chord with 100% of the target audience.
This is called education based marketing. It enables financial institutions to start dialogues based on what is on people’s mind not just what they have to sell.