9 Requirements for Effective Cross-Selling in Financial Services

As a part of their Future of Financial Services series, the World Economic Forum released a comprehensive and far-reaching report on the “New Physics of Financial Services” and the impact that digital transformation and the rise of Artificial Intelligence is having on the financial services ecosystem.

There is no doubt that these trends will change the operating models for certain firms and continue to impact the competitive dynamics of the industry in a number of different ways in the medium-term.  In the short-term, they are creating challenges and presenting opportunities for how traditional FSI’s acquire, grow and retain customers.  This is especially true in the area of cross-selling and retention. If traditional FSI’s aren’t accurately anticipating the needs of their customers or understanding their risk of defection, they are at greater risk for disintermediation by new entrants or competitors who do.

Cross-selling is the fastest, most profitable path to incremental revenue growth, period. Assuming a firm has a 30% wallet share within an account, attaining just 5% more in account share grows account revenues by 17%. And with the cost of customer acquisition generally estimated to run from 3x to 25X more expensive than cross-selling, the economics of cross-selling are very compelling.  Recognizing this, cross-selling has become a strategic priority for many financial services firms in recent years – yet many firms still appear to be far from realizing the potential of cross-selling.

Why is this? Some firms may be hesitant given the number of actions and warning directed towards FS firms contained within the CFPB Enforcement files where the cross-selling culture was perhaps a bit too aggressive – “Detecting and Preventing Consumer Harm from Production Incentives” as they refer to it.

For others, it may be the challenges associated with overcoming organizational complexity that spans multiple lines of business, diverse functional areas and disparate technologies and business processes that must be coordinated to deliver effective cross-sell programs.

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In many instances, it may be the fact that cross-selling responsibility is often left to “the last mile” (the end of the buying journey) in that relationship managers or sales resources often simply don’t have the time or skills to effectively implement programs at scale. Or, efforts are driven by product owners who take a product-centric view of cross-selling as opposed to the customer-centric view of successful cross-selling programs.

Here then is our list of nine requirements for building effective and scalable cross-selling programs in the financial services industry:

1) Adopt a customer-centric view.

Too many cross-sell programs are still organized around lines of business and driven by a product-centric view of cross-selling. Effective cross-sellers build a customer-centric view of opportunity and take a longer-term view of customer value. The most effective cross-sell efforts are led by segment marketers who have responsibility for specific customer segments, working with the product marketing teams and sales channels to coordinate on execution.

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2) Establish a single view of the customer.

Patently obvious, but many firms still have a difficult time building a unified view of the overall customer relationship. This includes all product usage and transactional history, service and support history, etc., as well as identifying and integrating external data sources that provide additional insights into buyer behavior and attitudes.

Identifying patterns of behavior across products is essential for understanding and anticipating customer needs. In turn, it informs segmentation and personas in #3 below.

But don’t wait for the completion of an expensive, multi-year data warehouse project. Agile firms today are taking advantage of low-cost storage and data lake architectures to quickly build data repositories. This allows data science teams quick access for specific use cases without processing overhead associated with large inflexible data warehouses. Liberate insights from the tyranny of workflow tools and warehouses!

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3) Build actionable buyer segments and personas.

Utilize data from # 2 – supplemented with primary research – to build actionable segmentation and personas. These will allow you to personalize your interactions with existing customers in ways they have come to expect; based on the totality of their relationship with you and reflecting an understanding of their needs. Maintain assignment of segments and personas in your customer database to ensure segmentation is actionable.

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4) Create a scalable analytical engine targeted to specific, prioritized use cases.

Use an agile, reproducible approach to developing and managing a library of predictive cross-selling/retention models. Consider segmentation, RFM, CLV, next logical product, retention, Marketing mix optimization, among others.

Customer growth, share growth, wallet growth, account expansion—all of these strategic goals beg the same question; how do I get a given customer to buy more, or buy something new? Cross-sell models use data about the current installed base and compare this with data on other accounts that have upgraded. These are a close cousin to market basket models on the consumer side, analyzing how customers’ ”baskets” of products typically evolve as new items are added.

Deploy a disciplined, scalable approach to managing your data science operations to ensure reproducibility, scalability, and accountability of your investments in AI.

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5) Listen to your customers, stalk your competition, foresee your disruptors.

Robust cross-sell programs require a deep understanding of your accounts. This includes how they perceive your brand, what competitors are selling into those accounts and what new disruptors are emerging.

Best-in-class FSI’s leverage “always-on” market intelligence capabilities. Those that track customer feedback, competitive movements, and emerging disruptors. This intelligence is fed back into the product development process, innovation centers, marketing messaging, Account-Based Marketing activities, and sales enablement programs.

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6) Create content aligned with personas and buyer’s journey.

Today’s FS customers engage with your organization via multiple channels. With 24/7 availability of your content and resources, it can be challenging to provide a consistent experience across every channel. Think of a potential buyer researching new savings and investment options to kick off 2019. This buyer can easily research opportunities online, get side-by-side comparisons from financial providers, chat online or over the phone with an investment expert, and then set up an appointment at the bank or financial institution for a face-to-face deep-dive discussion.

If the user experience across all these channels isn’t integrated – and customers receive different responses across different channels from the same company – the likelihood of successfully cross-selling or even retaining those customers goes down considerably. Utilizing a consistent framework and taxonomy to map content to the buyer’s journey is critical to ensure a consistent, personalized and relevant experience regardless of product, channel or stage in the journey.

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7) Implement a disciplined cross-channel contact strategy and cadence.

Disciplined cross-sellers implement and adhere to well-structured contact strategies that are based on analytics and insight (i.e., using the scores developed in # 4 above). These strategies help determine what that cadence should be, which channel should engage, and what the product/solution and message should be.

This requires close coordination between marketing and sales. One of the most successful cross-sell programs we have ever seen actually rescored their entire customer population each week. They did so using updated transactional and market response data, and then prescribing a set of dynamic business rules to determine where the opportunities were to be routed the following week. A well-defined nurture stream for the next logical product was presented or the prospect was routed to a sales agent.

In either event, the contact strategy and cadence were well-defined for each product and each step in the buyer’s journey. Content and messaging for each segment were defined and utilized as “fuel” for each outreach and delivered into the marketing automation tools and the CRM (See #8 below). The business rules were dynamic and could be modified weekly based on underlying business conditions. This forced an interlock each week between sales and marketing and helped develop shared accountability for results.

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8) Insert insights and content into workflow tools.

The best insights and AI are useless unless they can be easily understood and acted upon by your sales and marketing channels. Delivering predictive analytics, relevant content and personalized messaging into existing customer contact workflow platforms is critical for successful cross-selling at scale. We have found that loosely coupled architectures are dramatically better over the long run than tight integrations with SaaS MarTech platforms.

Most companies are using multiple platforms to manage the end-to-end customer journey. The need to insert insight into each one of these platforms—and to gather feedback from the customer interaction directed by those platforms. This is critical to managing the process holistically, and understanding where the customer is in the process at any given point in time.

Rather than working to integrate multiple systems, the better alternative is to deliver analytics and content via a set of standardized endpoints that any CRM or MarTech platform can use. Then, writing quick integration layers for specific systems. When that next great piece of technology is rolled out—or when Salesforce raises its prices by 20%— it’s no problem.  It just requires updates to an adaptor layer, vs. tearing out a bunch of proprietary APEX code from Salesforce and trying to remember what the developer was thinking.

Fortunately, all CRM and marketing automation systems—including Salesforce—share the same basic architecture. The objects Account, Contact, Lead, Opportunity, Product, etc. don’t really vary, and haven’t for 25 years.

Cross-selling recommendations also share the same DNA. Typically, the API calls for cross-selling include several microservices that, when taken together, form the basis of the contact and content strategy outlined in #7 woven into the CRM / Martech stack.

9) Relentlessly test, measure and track:

Finally, any successful cross-sell program – in fact, any sales and marketing program – requires a relentless focus on test and learn, agile pilots, on-going measurement and optimization from start to finish.

This process starts with establishing a proforma ROI when any new cross-sell model is slated for development. Writing down what you are trying to accomplish, and estimating how its effectiveness will be measured, puts the entire team on much better footing for success. This should be done before a single line of code is written or a query is executed.

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Implement agile pilots using test and learn methods such as A/B testing to quickly gain insight into optimal combinations of factors that drive the best results and then scale.  As every direct marketer’s learning method, the A/B test divides marketing into test and control cells, and the response is then compared using simple z-tests of proportions to pick a winner. This approach is simple and effective, and given sufficient volume, can be turned into a learning factory for the organization.

Finally, develop and deploy a holistic customer-centric marketing analytics framework that will allow you to consistently track, measure, manage and optimize all of the activities occurring with your customers across all products, marketing and sales channels.   This will provide visibility into the overall results and allow you to make more informed decisions on how to effectively grow your installed base. Dont forget to optimize your customer contact strategies and cadence on a continuous basis.

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Remember this: “If traditional FSI’s aren’t accurately anticipating the needs of their customers or understanding their risk of defection, they are at greater risk for disintermediation by new entrants or competitors who do.”

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