Take a look at these bankingfacts below and you'd conclude that successful cross selling wasthe key to profits in the banking industry. And you'd be right.

Cross-sell moves the needle

According to research by Bain published on this website by Gerard du Toit and Maureen Burns, U.S. banksacquired new customers at a paltry rate of just 3.6% over the pastyear, but some 41% of customers opened a new banking product overthe past year, and half of those people bought from their primarybank. Cross sell is also significantly cheaper than new customeracquisition. It's easy to see that success in cross-sell is theprize everyone ought to aspire for.

That prize isn't small either. Research published by BradStrothkamp of Forrester Research shows that increasing the averagenumber of products owned by a customer from 3 to 5 doubles theprofitability of the financial institution. Beyond five, theprofitability grows even faster.

Further, the more products a customer owns, the more she islikely to come back to you for her next product and stay longerwith you. The rich truly get richer!

Some things in life are for the asking. You don't getthem because you don't ask.

Here is a quote from the Bain article that shook my world and ought to shake yours too:“About one-third of banking products in the U.S, are sold, notbought. Customers did not plan to buy a particular product, butthey received an offer and then decided to get it.”

At Micronotes, we develop and run interview marketing campaignsfor a variety of banking products and we frequently see someamazing conversion numbers for these campaigns, but this fact fromBain made us realize the opportunity is even bigger than werealized.

If you could efficiently sell 33% more products to your averagecustomer because you bothered to ask about their needs and proposerelevant products, how much bigger could your top and bottom linesbe?

Why aren't you cross-selling?

Despite how important cross selling is, banks and credit unionsare not doing enough of it because the landscape of digital bankingis changing so rapidly (witha big emphasis on mobile), leaving cross sell to playcatch-up.

The real opportunity in moving customers to self-service on theonline channels is using that time to serve the higher valuefunction of cross-sell.

In the words of Gerard Du Toit and Beth Johnson, “Branches will notdisappear, but their role must shift from high-cost processing ofroutine transactions to guidance, sales and high-value servicing,often through lighter, but sturdier formats.”

The cross sell engine of yesteryear was the insightful andfriendly teller who frequently conversed with customers about theirupcoming financial needs.

In the brave new world where branch visits are dwindlingrapidly, we have no replacement – not even a close substitute.

Banks and credit unions have borrowed banner ads and emailmarketing from the broader Internet but they have disappointed us.Direct mail has not yielded better results either. Despite thesheepish absurdity of using direct mail to address online bankingusers, many financial institutions continue to use thismailbox-to-trashbox channel with unsatisfying results.

We have realized that these marketing mechanisms which are goodfor sneakers, energy bars and cable TV don't make the cut forselling complex, high consideration products like mortgages andauto loans.

Let's talk about it

Banking needs a cross sell mechanism that engages customers tounderstand their needs before making them an offer. Banks andcredit unions need the ability to have conversations at scale ondigital banking channels. Generated leads need to be qualified andserviced in a way that makes careful use of scarce humanresources.

Adding new channels without a strategy for how to cross-sell onthat channel is counterproductive. Banks and credit unions need torevise their strategy to put the cross selling horse before thedigital banking cart.

Banking needs a cross sell strategy that makes a distinctionbetween products best sold through self-service channels (overdraftprotection, e-statements) and those that need more hand holding(mortgages, auto loans) from a call center or a branch. Banking isinherently an industry that has sold using conversations and weneed a digital channel to continue doing what works.

Service doesn't always lead to sales

As Paul Hyde and Ashish Jain of Booz and Co. write in their2013 Retail Banking Industry Perspective, “Since the financialcrisis, many banks have tried to improve customer service at thebranch level to restore confidence, boost loyalty, and lowerattrition. This is an understandable impulse, but it hasn't worked;service does not lead to sales. Instead, banks must balance theirinvestments in service with tangible improvements in frontlinesales.”

Sell online and sell it right

The phrase frontline sales used to mean in-branch sales.

It does not anymore.

Starting the sales process in the digital channel and directingthe user to the appropriate venue (self-service, call center orbranch) after understanding their needs and preferences is the wayof the future in banking.

Designing a cross sell strategy that investigates customer needsand a implementing a product suite that meets the specialized needsof the banking industry may sound like business as usual but it mayjust be the magic pill to halt the tide of anemic growth and lowmargins that plague our industry.

Venkat Rangamani is the chief technology officerat Micronotes Inc., a digital marketing company inCambridge, Mass. He can be reached at 978-549-6592 or [email protected]