The inconvenient truth in banking is that banks have less than 30% of their customers’ wallets. Massive marketing and front line resources are expended to capture the rest. There are 7 questions that even if partially answered will improve the effectiveness and efficiency of your cross-sell efforts.
There is a painful fact in banking: Across its base, a bank has less than 30% of its customers’ share of wallet. The rest is with competitors or, even worse, is an unmet need.
Banks approach this problem from their vantage point and bombard customers with offers to gain the share of the wallet they do not have. Yet these efforts typically fail to understand human choices driven by psychology, logic, or just habit. Typical cross-sell efforts are uninformed by the answers to the 7 questions below:
Answers to these 7 questions can transform the power of your customer relationship management database and open the doors to powerful targeted cross-sell tactics. Tactics that are both (a) more effective, and (b) more efficient. No bank can outspend another’s marketing budget and stay profitable. But a bank can outsmart its competition.
Why does Customer Q who has Product X with our bank have Products Y and Z with another bank? Is Customer Q building a “best-of-breed” product portfolio? Does Customer Q want to keep accounts in separate banks to ensure no single bank has full access? Is the disjointed portfolio the result of a haphazard buying process?
What would compel Customer Q to accept an offer to switch one or more products?
When should we approach Customer Q in his customer lifecycle? There are “micro-moments” that are attractive and others where the failure rate will approach 100%.
Who should make the offer to Customer Q?
What channel should we use to approach Customer Q?
What else is there in the wallet of Customer Q? With which bank or non-bank competitors?
What is the scope of Customer Q’s household? Which other prospects are inside it? Are there any other entities like a small business or a non-profit that are part of Customer Q’s household?
The more of these questions that your bank can answer for each customer, the more likely your bank will be able to win the cross-sell battle against its competitors. The more accurate your bank can be in answering these questions, the better. But you do not need to answer all 7 and with 100% accuracy to win! Even incremental improvement to the default "random" answers will have incremental cross-sell benefit.
If you believe in this approach, the challenge becomes: “How do I answer these questions for my 100,000 or 1,000,000 or 10,000,000+ customers?”
The answer is no different than how a spy agency collects information: technical and human intelligence. For example, a technical review of transaction history with the right algorithms can reveal the contents of the wallet, the scope of the household, and channel preferences. A technical review of social media and public records can corroborate household makeup, including businesses associated with the household. The capture of human intelligence from the front line can answer questions of when is the right (or the wrong time) to make cross-sell offers. The front line can also ask targeted questions, embedded in natural conversation, to answer other questions. These questions can be systematically offered to the front line through sales systems and be customized for each customer. The answers can be captured back into the sales system and the customer database.
A lot of this has an air of Big Brother and may raise questions of ethics. However, it is no different from how a Private Banker who has a portfolio of 30 or 50 High Net Worth clients conducts her business. A successful Private Banker will know the answer to all 7 questions for her clients. She will ask questions, she will do research on her clients, and she will closely monitor their transactions. Her clients would not mind because, in the end, the Private Banker can offer better service.
At Delos Advisors we help banks deploy algorithms and processes to develop a higher level of understanding of their customers (consumers and small businesses) so that our clients can be relevant to customers across their entire spectrum of financial needs. Absent this approach to cross-selling, banks are reduced to spending marketing fortunes to repeatedly ask their customers misplaced questions, at the wrong time, through the wrong channels, for the wrong product, based on wrong assumptions of what drives the customers’ choice.