Financial Marketing and Cross Selling Blog
For years the financial services industry has researched over and over again what their customers are looking for. What are the most important attributes to the relationship they have with their customer? What promises would be most likely to attract new customers? The word service is always at the top or near the top of the list. So what did the marketers and ad agencies do? They all claimed to have great service. But that misses the boat. People define service differently.
When I was in Citibank’s credit card marketing group in the late 1980s we realized this. We found that we needed to define service in our marketing communications in order to make it a meaningful benefit. We were astonished to find that the strongest relationships were actually the ones that had previously had a problem. An inaccurate statement suddenly became an opportunity. It was the handling of the problem that built the stronger bond. A problem that was well handled was like glue to the relationship. We learned quickly and soon our TV commercials were demonstrating real people getting their problems solved by Citibank. We had defined service in the consumers mind and clearly put ourselves as the leader in providing that important benefit.
According to a recent article entitled Piloting for Multi-Channel Marketing by Alan Schiffres and Jim Bramlett of the bank consulting firm Novantas LLC, about 25% of retail bank customers almost never visit a branch after opening their first account and 50% are big users of remote channels instead of a branch. So how is a bank supposed to increase its cross selling when fewer customers are coming into the branch? That question is especially pressing now, when cross selling is seen as a necessity to shore up fee revenue lost under the new Dodd Frank regulation.
There is a way. Let’s think about how educational information links to a sale. Imagine that you want to build a fence in your back yard. It’s likely that you will seek information on how to build the fence before you buy the fence posts. Lots of top retailers are well aware of that. It is why Home Depot has educational information on fence building not only in their store but on their website where they can catch your eye while you are looking for help. They know quite well that if they provide the helpful information that you are looking for, you are likely to come to them to buy the fence posts.
The impact of life event marketing in the financial services industry has been known for years. When someone gets married, they may be looking to buy a house. When someone has a baby, they may be in the market for life insurance. When someone changes jobs, they may be thinking about rolling over their 401(k) plan. And when someone is getting into the retirement zone, lots more comes into play; retirement income, rollovers, and on and on. A recent Forrester Research study of 26,000 online households shows that consumers are 43% more likely to buy a financial product around a life event.
We all know the phrase “you only get one chance to make a first impression.” This is never more true than with banks and credit unions today. Based on research completed by Truebridge, Cross Selling Success Factors, one of the biggest problems that financial institutions face when it comes to cross selling is that they are seen narrowly; as the place to go for transactions involving deposits and loans and not much more. How much easier would it be for banks and credit unions to cross sell if they were also seen as the place to go for so many other financial products that people buy as they move through life from sending kids to college to living in retirement. Research shows that people only buy an average of two out of ten financial products from their bank or credit union. That’s because these financial institutions often fail to take advantage of a golden opportunity to change perceptions.
At Truebridge, we have done research to identify the barriers to cross selling and published the results. In a nutshell, we identified the need for banks to shape their image as the place to go for more of their customers’ financials needs beyond deposits and loans. We also highlighted the fact that banks needed to do a much better job in creating referrals. There are several ways that these barriers can be overcome. Why aren’t banks attacking these problems with more force?
A recent conversation with the president of a community bank gave me a good understanding of their points of pain and it sets up a real catch 22 for the whole industry. The low interest rate environment has squeezed margins and driven down revenues forcing expense cuts. On top of that, new regulations are adding to the cost of banking. What is needed most now is revenue growth. But growth takes money. Money that is not there to spend. Read more >>
What does customer service mean to you? Personally when I think of customer service, I can’t help but have my thoughts be overshadowed by frustrating experiences, automated call services and plenty of dead ends. If you provide any product or service, no matter what it may be, you have to be 100% dedicated to assist your customers when something goes wrong. You can’t simply provide a service and then turn a cold shoulder on your customers when something goes wrong. Customer service is a HUGE factor in how your brand is viewed and when your customers need help with your products or services, they should be able to count on you to provide them the information that will help them, which in turn will increase their loyalty to you in the long run. You may be reading this now and thinking that the connotations attached to a brand’s customer service is something that is hard to change. However, I was recently involved in a scenario with a certain internet service provider that left me utterly amazed.
Mary Beth Sullivan from Capital Performance Group, in her recent blog article The Future of Branches: Reinvention in the Banking Strategies section of the BAI website proposed an interesting solution to retail branch profitability. It’s called sales. She referenced a huge market that banks can own by leveraging their branch network. This market is people who are looking for advice. Martha Stewart realized this a long time ago and built a business around it. People want to be told what to do. It holds true in personal finances as well. People are looking for simple and easy to understand information and guidance from someone they trust. And they will do business with the one who is there to provide it. This includes the enormous baby boom generation that has been turned upside down by the Great Recession. They want to be told what to do as they face retirement – without the confusing jargon.
It is the classic battle between WE and THEY in the financial banking arena. You know your consumers (THEY) need the products and services that you offer but you struggle to find a process that effectively allows them to buy multiple products and services. How can you bridge the gap between WE and THEY and make it an US relationship?
In the May 2011 issue of Bank Investment Consultant, Elizabeth Wine brings up some very valid points about the importance of cross selling and the poor execution that is happening inside many financial institutions.
Managing the cross sell is a task that does not have an end. To do it well, you should never be ‘done’. The art of cross selling involves all parties within the financial institution to be working together. The same BIC article also stated that “ninety percent of a recent BIC survey respondents said the support of senior management was critical for the successful implementation of a cross sell program.” Read more >>
This story goes back to the mid 90’s but I will never forget it. It was a Saturday morning and I was standing in the kitchen when the phone rang. (This was before the “do not call” lists that we have today.) My young daughter answered and said, “Daddy, it’s for you.” As she handed me the phone, a pleasant sounding woman on the other end said, “Hi, I’m from MCI, and I’m calling to explain how our long distance service can save you money.” Now flash back to the time that MCI was making inroads into the long distance business that had been dominated by AT&T by offering lower long distance rates. I had always been with AT&T. In my mind, they were the standard and I was not interested in saving a few cents per minute for what I assumed was an inferior service.
Having been in sales as a cold calling stockbroker early in my career, I tried to be polite in my response, but I also wanted to be direct. I responded, “For the past two years I have seen your advertising, I have had countless direct mail pieces show up in my mailbox, and I am really not interested, but thank you for the call.” As a sales person knowing what you’re up against in cold calling, I was absolutely floored when I heard her response. She said, “You’re just the person I want to talk to?” How could I be just the person she wants to talk to when I said, “No thanks”? She continued without hesitation, “Most people don’t understand one key fact about long distance service; all carriers use the same transmission lines.” I responded immediately, “You mean to say that MCI uses the exact same lines that AT&T uses?” “Yes”, was her answer. “Then why the difference in price?”, I said. “That’s just my point”, was her reply.
In a recent GonzoBanker newsletter, Steve Williams makes the case that sales culture in banks is dead and a new chapter of sales culture is about to begin with the hope that banks have the chance to get it right this time.
In this well written piece, he states, “Across the country, many banks have 10+ years of effort on sales culture without significant improvement in results, but fail to question if they are even building the right mouse trap.” He challenges banks to develop a new type of sales culture built by creating value for customers. In other words, provide a service that customers find valuable that, at the same time, initiates dialogues and creates sales.
What kind of service will do this for banks? To find the answer, you only need to look at what customers are facing today. Customers are scared. For many, the bottom has fallen out of their retirement savings. They are fearful of losing their job. They feel they have no place to turn for answers. The world as they knew it has changed.
And the world too has changed for bankers. In many cases – trust – the backbone of the customer relationship – has eroded. For banks to acquire and retain customers today they need to focus more and more on the value customers see in their bank relationship. The new customer experience needs to go beyond an array of product offerings.
To build strong relationships, banks... Read More >>