2014 Outlook: The Year of the Cross-Sell

The economic landscape looks brighter than it has in five years. Sure, there’s still the uncertainty of interest rates, political gridlock and an ever-increasing regulatory environment.

But the economy is growing modestly, the job market is steady and consumers are slowly starting to spend again. That’s why there may never be a better time for cross-selling than now.



Consumers are eager to learn about additional financial products and services that address their needs, according to a recent study by the Bank Administration Institute (BAI). However, the study finds that only 39% have actually been proactively approached by their bank about buying additional products.1

This presents an unprecedented opportunity for financial institutions and insurance companies to cross-sell products and investments. Cross-selling, especially to receptive consumers, is one of the best ways to increase your return on equity (ROE).

In the banking sector, for instance, the average household owns roughly 16 products across various institutions. These products include checking accounts, savings accounts, mortgages, 401(k)s, credit cards, IRAs and various insurance policies. Yet, the most successful cross-selling bank only averages 5.9 products per customer.2

Just imagine how much your ROE could grow if each customer bought just one more product.  Cross-selling is valuable because it not only increases revenue but also increases loyalty. The more products a customer owns, the less likely he or she is to leave your organization. The problem, however, is that many companies have not mastered the art of cross-selling. It’s a difficult strategy to implement because on one hand, you’d like customers to buy more products but on the other hand, you don’t want to burden them with too many offers.

So how do you strike the perfect balance? Here are five tips that can help:


1) Know Thy Customer

Organizations can no longer afford to market their products to the masses with generic value propositions. In fact, even segmenting customers by age, ethnic background and income may not be enough. In today’s competitive arena, financial institutions need to invest in data and analytic technology to develop robust segmentation models. With accurate segmentation models, you can better understand the habits, attitudes, nuances and preferences of your customers. As a result, you can develop new products and cross-sell existing products that are more tailored to your customers’ needs.

2) Share Your Expertise

Offering advice or referring a customer to a partner to help them solve a problem is a sound  strategy. Although this strategy doesn’t offer immediate gratification, it does invoke trust and loyalty, meaning your customer will most likely come back to you in times of need. 

3) Find the Need

This relates to the first tip in that a successful cross-selling strategy targets your customers’ needs based on their segmentation profile. In other words, you need to know your customers well enough to know what products would help them improve their lives. You don’t want to try to cross-sell products that your customers don’t want or need, as this will only cause frustration for both parties, and you may end up losing that customer altogether.

4) Divide and Conquer

Another effective strategy is to divide your products into tiers, starting with a bare minimum product at the lowest price – or even complimentary – and increasing to the most comprehensive product at the highest price. The lower-tiered products may attract customers who would otherwise not buy the product at all. And, if they like the lower-tiered product, there’s a strong probability they’ll upgrade to the next level. Plus, they may upgrade again and again until they reach the top tier.

5) Incentives, Incentives, Incentives

Oftentimes when organizations are very large, divisions do not communicate with each other and, therefore, do not know when there is an opportunity to cross-sell a product. Incentives, such as commissions paid with an internal referral program, can break the barrier and get executives from one division to refer business to another division.

These are just some of the techniques that can be used to perfect the art of cross-selling. But regardless of what technique you use, don’t miss the opportunity to cross-sell this year as consumers are hungry for products that can help them get into better fiscal shape.



1 The New Dynamics of Consumer Banking Relationships, BAI Research Study, April 2012.

2 The Art of The Cross-Sell, Forbes Magazine, February 2013



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