Banks (And Credit Unions) Have To Earn The Right To Cross-Sell

If you’re a bank marketer, what can you do to improve your cross-selling success? The answer, although easier said than done, is still ignored by most firms: Engage your customers before cross-selling them.

On the Verity Credit Union blog, Joe wrote (with some editing on my part):

One of my job responsibilities is to make service calls to members who have recently opened an account. The first call usually happens about 2 weeks after the account is opened. After having reviewed their accounts, I offer the member other products or services that may fit their needs. This call is always well received. The member realizes that we are following up on the new account and they’re appreciative that we want to make sure they’ve received their checks or debit card.

A second call is placed about a month later, without the guise of a check up, to offer other products. Again, having reviewed their accounts, I determine the products that are advantageous for them and explain how they can profit from them. While these calls are solicitations, and beneficial for the credit union, we have the member’s best interest at heart.

These second calls aren’t as well received, and sometimes people are stand-offish, especially those who don’t understand our cooperative nature.”

Before I describe what’s wrong with both the assumptions and actions described above, let me just say that I’m not criticizing Verity specifically. I think it’s commendable of both Joe and Verity to even post this in the first place (would this have passed the “brand voice” edits at Wells Fargo, Ed?). I’m citing this example because I believe it’s representative of what goes on in many banks and credit unions.

So what’s wrong with Verity’s approach?

1) It doesn’t know “the products advantageous for them.” Few consumers have all, let alone a majority of their financial products with one provider. So, in trying to determine what products to offer, a financial provider is at a serious disadvantage — it doesn’t have a complete picture of what any one customer owns and doesn’t own. YOU might think a credit card is “advantageous” for someone, but what you don’t know is that she already has five cards — and resents you calling to sell her something she doesn’t “need.”

2) The timing is all wrong. Yes, I’ve seen the BAI study that says 95% (or whatever) of all additional products are cross-sold in the first six months after a new account is opened. But nobody ever asks why that’s the case. I’ll tell you — because that’s the window in which the customer is still in the honeymoon period, and their bank (or credit union) hasn’t done enough to piss them off yet. But the reality of the matter is that it’s incredibly unlikely that someone’s financial situation has changed that much one month after opening a particular account (which is when Verity is making its second call). If you were to call me a month after I opened an account and tried to pitch another, I’d ask you why your firm was so incompetent as to NOT tell me about this a month ago.

Successfully cross-selling products requires a relationship. And relationships do NOT get built overnight. Not in the real world (our personal lives), and not in the business world. Relationships require trust, and it takes time to build trust with customers.

And, as I’ve written about before, that means different things to different people. For us Crankys it means: Don’t Screw Up. For other consumers, trust is built by providing objective advice and guidance. And for some, it means have friendly, helpful people to talk to and interact with.

So when is the right time to cross-sell? After one of two things happen:

1) You’ve sufficiently engaged a customer. Don’t listen to the advertising folks when they blather about “customer engagement”. Engagement isn’t about how long you watch a commercial. It’s about the level of emotional connection a customer has with you — and that connection can be measured by the types of interactions and transactions he or she conducts with you. When a customer starts moving up the emotional scale of transactions from simply checking balances to asking for help on making financial decisions, you’re getting closer to the point when you can cross-sell.

2) A customer has a successful high-emotion interaction. I’m sure you have at least one friend who you originally bonded with because of some memorable shared experience. (I can think of a few, and if you buy a few drinks someday, maybe I’d share those stories with you). It’s the same with a business relationship. Helping customers through stressful situations creates bonds. [Screwing up these situations works in the opposite direction]

Not only are these criteria for determining when to cross-sell, they’re indicators of a growing relationship. Which implies that trust is building, and in turn, implies that a customer is willing to share more information with you — information about their financial lives, needs, etc. Which helps you make smarter decisions about what products really are “advantageous” for them.

Despite the sincere belief of many credit unions that they “have the member’s best interest at heart”, they still have to prove it. And that proof comes from first building trust and a relationship.

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10 thoughts on “Banks (And Credit Unions) Have To Earn The Right To Cross-Sell

  1. Ron-
    Cross selling is getting to be a pretty hot topic in CU land. Years ago when CU’s first started implementing Sales & Service cultures, “having the member’s best interest at heart” was always pretty easy. After all, we’re credit unions. But as the need for growth continues to be greater and greater, CU’s need to balance the need for growth and sales with the needs of the member.

  2. Interesting, Robbie — I’ve been hearing grumblings that in big bank land, cross-selling is slowly dying as a hot topic since so few firms have been successful at it. And fyi, at the risk of ticking off a client, I don’t buy the cross-sell claims of some of the big banks.

    It all comes down to how you define “product”. So let’s see… checking account is 1, overdraft protection is 2, savings acct tied to checking (although there’s no balance) is 3, and online bill pay is 4. Look at that! We’ve cross-sold three additional products!

    That’s what I call “depth of relationship.” I measure cross-sell success in terms of “breadth of relationship” — how many different TYPES of products did you sell, not how many product FEATURES did you add on to the sale.

  3. I’ve been in the movement long enough to remember the days of member loyalty. That beautiful blind loyalty that kept them coming back for all their needs. No rate shopping cherry-pickers (albeit it was way harder back then to shop rate) but rather that sufficiently engaged customer came to us first.


    Because we took a chance on them. We took the time to look at the pictures of their new puppy. We listened to them bitch about their spouse or their job or the weather. We knew them by name (and many times had their account number memorized). We had a common bond.

    We have to stop begging for business — you are so right. Now we have to EARN it.

    I know your post is not intended to pick on Verity. I think they do some amazing things AND I’m a member. However, my first impression with them was not great. I was ignored at the branch. My second was a little better. I never received a call to follow-up on my new account. If they had I would’ve told them that we didn’t receive a card for the joint owner on the account.

    Cross-selling is less about “fulfilling my needs” and more about just getting to know me. Like dating. We want our needs fulfilled? We’re going to have to go to dinner first.

  4. What’s been bugging me about the Verity example, Denise, is that on a number of sites (opensourcecu for one) I keep reading comments from credit union people saying “we’re different.” And based on what Joe at Verity says his firm does, I’m not convinced. What Verity is doing is the SAME overly aggressive sales tactics based on the SAME misguided underlying assumptions as the big banks.

  5. “Product Propensity”

    I’ve actually heard vendors shlep products that can determine this with complicated algorithms or some crap like that.

    The pitch went something like this:

    “Our fancy computer can determine based on lifestage, current product usage and dna what next product your customers are likely to buy. Then your highly trained employees can PUSH that on them and receive an incentive.”

    I replied, “Dude, we only have like 8 products, I can look at their account screen and see which ones that don’t have.”

    But the BIGGER point is we’re not buying a bra from them. It’s one size fits all baby……a checking is a checking. I want it as cheap as humanly possible. You figure it out. Don’t make me decipher your chart with five different types of accounts. I get sick and tired of the “game” of cross-selling.

    Sometimes I just want to scream “It’s the culture stupid!!”

    Whew — that felt good. I gotta go watch Sanjaya win.

  6. Ron, your point number 2 really stuck with me. I can think of several times as a CU loan officer/collector/personal debt and credit counselor/IT guru when members would just open up and let you know all the difficult things they were going through. There are so many members whose clock-card numbers I still have memorized even though I don’t work for that CU anymore. There’s a bond there. It’s funny, the members with the biggest problems are the ones I felt closest to.

    Every cross-sell opportunity is unique as every CU member is unique. A computer just can’t do it. I can’t imagine that anyone could get to know a member well enough in the first 6 months to effectively cross sell to them unless they just come right in and bare all. Friendship and trust are built over time by doing things like Denise said. Looking at puppies and complaining together about things. It would be interesting to see a study on how many people actually pay attention to the pricing at their financial institution. It’s probably been done. Personally, I pick a restaurant based on the atmosphere and how comfortable I will feel there. I think alot of finances are the same way. People want comfort, safety, and friendship.

    I think in my city that credit unions truly are different. This was evidenced when a local bank manager was hired as the lending manager at one of our credit unions. He literally had culture shock. He had been in banking for over 20 years and really didn’t know how to relate to someone with less than a 640 credit score.

  7. Thanks for the comment, Dan. For years, while I was at Forrester, we’d ask consumers in our surveys how important rates and fees were to their financial decisions. And they’d ALWAYS say, “oh, VERY important.”

    Here’s what I regret having NOT asked: “The last time you opened up a checking account, savings account, or applied for a mortgage, what was the DIFFERENCE between the rate you got and the next best rate from some other firm?” I would, if I could have, asked that for each separate product.

    I am willing to bet that FEW, if any, consumers would have been with in a reasonable range, IF they even hazarded a guess at all.

  8. Ron – I love your blog and wish that the first comment I made did not involve my credit union… because I really think this topic is interesting but I can’t help but defend myself (and therefore not really participate in the conversation on a theoretical level).

    Sooo…. In defense of Verity

    1. Saying two follow up calls after an account is open is an ‘ overly aggressive sales tactic’ is not quite fair. We took a long time to find people who were comfortable with making calls who are NOT overly aggressive. If you met them, I think you would agree (Denise – you’ve met Colby!) I can understand how Joe’s post could lead you to believe otherwise, but Verity does not have, nor do we want, an aggressive sales culture. Our intent is to connect with members, via the telephone, to strengthen our relationship with them.

    2. We have seen our account penetration ratios increase since we started this experiment a year ago (and no, we don’t count overdraft services and mandatory savings as accounts to increase that ratio). I will certainly look at the study you referenced. But for today, in our shop, the calls seem to be increasing our business.

    3. We don’t have a fancy CRM system that thinks for us. The follow up calls are based on the Relationship Associate looking at the accounts (and a credit report) and looking back on their notes from when the account was opened.

    4. Having said all that, this post and the comments make me stop and think… Perhaps we should move our second follow up call (the one that happens in 30 days) and move it to the first anniversary (one year after someone opens an account). It would be interesting to see what happens.

    Thanks all.

  9. Shari, thanks for the comment. First off, in no way did I mean to imply that the rep who’s calling is overly aggressive, or even that the sales culture is aggressive. A couple of thoughts in response…

    1) One lesson to take away from the Ponemon study — consumer perceptions are often unpredictable.

    How do you KNOW that members aren’t hanging up the phone and wondering why in the world you’re suggesting these products NOW and not a month ago when they were in the branch. How do you KNOW that they’re not hanging up the phone wondering what in the world changed over the past month that would lead them to have new product needs? And if they are thinking these things…then even if the person they spoke to on the phone is courteous and personable, they might conclude that the credit union is inappropriately selling.

    2) Well, um, er…. it’s hard for me to argue against something that’s working. But then again, your results are in line with the BAI study. The big question is… how successful are you at increasing acct penetration ratios after the acct has aged to 1 year and beyond?

    3) Unfortunately, your implicit charge is that, at some FIs, there’s a CRM system thinking for them. You’re right. But CRM systems can be helpful if used appropriately. A CRM system, in and of itself, isn’t bad — it’s how a firm uses it that makes it successful or not.

    4) Based on Joe’s comments, if I were at Verity, I would be doing some analysis. What is it — demographically, behaviorally, attitudinally — between the members who ARE responding positively to the one-month follow up call and those who aren’t responding positively. I have some theories about who would fall into which camp, but don’t want to share my unsubstantiated biases.

    Thanks for the comment, and again, my apologies if my comments got too personal in any way. I was trying to criticize the “practice” not the “person”.

    p.s. Please tell Laurel it’s Shevlin not Shelvin, and that anything is better than referring to me as “Mr. Shelvin”. Thanks.

  10. Pingback: Banks, and the downside to aggressive selling « The Bankwatch

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