An informed and candid assessment of the challenges and
opportunities inherent in cross-selling as a driver of revenue
Get the answers to these key questions:
- What are the cross-sell strategies that currently work
- Which critical success factors are at the core of best-in-class
- How do you avoid, or minimise channel conflict?
- What's the best approach to motivating and rewarding sales
- What lessons can usefully be learned from other banks recent
- Why are some commercial banks so much better at cross-selling
Who should read this report?
Heads of retail banking and marketing managers who want to
understand industry best practice and the lessons they can derive
for their own business, from others recent experiences both
good and bad - so they can make a realistic assessment of their own
prospects for cross-selling success.
Management Consultants who need to know what lessons from others
experiences they can take to their own banking sector clientele,
who want a source of comparative data they can use in their own
work and who want to ensure they are up-to-speed with industry best
Banking Sector Equity Analysts who need hard data and rigourous
analysis that they can use to arrive at a more realistic assessment
of real, ongoing growth in earnings per share, be it across the
banking sector as a whole or for individual banking stocks.
Business School Academics and MBA students who are looking for a
reliable source of information on current banking sector practice
in the area of cross-selling, including hard data.
Plus anyone else in retail banking and financial services who
wants to know more about the opportunities, challenges and possible
pitfalls of cross-selling as a core strategy for growth.
To purchase this report, or to request a report summary or list
of case studies, call Jeannie on +44 (0) 207 563 5640
or email firstname.lastname@example.org
Cross-selling in retail banking – the marketing of additional
products and services to the existing customer base – has become a
strategic priority for commercial banks across the developed
world. As other sources of organic growth such as loan
demand, have slowed, and adding new clients becomes more expensive
in increasingly competitive markets. Investors have focused on the
metric of cross-selling as one of the key performance
To evaluate the results of these efforts and
identify strategies which may be relevant for the future, our
methodology in this report first examines studies by independent
researchers and consultants, as well as material in the trade
press. We then undertook in early 2006, a series of in-depth
interviews with about 20 leading retail banks in the US and Europe,
as well as specialist consultants and other experts in the retail
banking sector. From this material, we identified 10 case
studies of successful cross-selling employing a variety of
strategies. The report concludes with our own findings and
conclusions from this research and our view of future trends in
More specifically, after the introduction in
Chapter 1, chapters 2 and 3 analyse the key dimensions of product
and client. Chapter 4 discusses the major cross-selling models
used. In Chapter 5, we review the findings of four major
pieces of independent research in the US and European
markets. Chapter 6 summarises the barriers to success in
cross-selling based on our desk research and interview
series. Our own analysis begins with the 10 case studies in
Chapter 7, where we review different approaches to cross-selling
success and evaluate their likely future evolution. Chapter 8
provides our findings and conclusions, with the final Chapter 9
suggesting possible future trends.
Of central importance in this report, is the
analysis in Chapter 5 of several major independent studies of
cross-selling, each of which takes a different approach to the
subject. In its comprehensive review of the commitment of
over 30,000 retail clients of some 100 banks in 12 European
countries, a study by Citigroup (Schroder Salomon Smith Barney) in
2002 finds that banks in Scandinavia, France and Belgium score
higher in number of products cross sold than those in the UK and
Germany. Yet there is no exact correlation between customer
commitment and cross-selling success, as other factors, such as
competitive providers and proximity to the client, also play a
role. In 2005, the consulting firm AT Kearney examined the US
financial institution sector in terms of so –called ‘wallet
momentum’ – the willingness of clients of 31 major banks and other
financial institutions to buy additional products from their
leading provider. The scores of major banks ranked below such
providers as stockbrokers, smaller banks and specialists such as
American Express, and there appeared to be little interest in
buying additional products from the lead provider.
Another approach was undertaken by the
investment bank JP Morgan, which undertook to estimate the product
profitability by European country in an effort to evaluate the
attractiveness of cross-selling. They found wide differences
in such core products as the current account and mortgage loans,
which call into question the widespread assumption that incremental
product sales per se increase overall profits.
Finally, a telephone interview series conducted by the consulting
firm Celent of 20 European banks, provided the banks’ own estimates
of their cross-selling performance. These estimates roughly
corresponded to the ranking established by the Citigroup study.
These findings, combined with those from our
case study and interview analysis, are provided in Chapter 8 of the
report and can be summarised as follows:
- the fragmentary and contradictory data base on cross-selling
results invalidates, in our view, any significant inter-bank and
inter-country conclusions. The cost of producing more
reliable data would appear to limit the value of cross-selling
research to time series for an individual institution.
- several studies question the interest of banking customers in
buying additional products from an existing bank. There would
appear to be significant proliferation of the number of accounts
per client as new product purchases are made from the institution
offering them rather than a core account relationship. Banks
may make more money from clients buying multiple products, but that
does not imply customer preference for a core relationship.
- price competition, usually under the guise
of product packages offering a price discount, is becoming
widespread in many developed markets for traditional banking
products. A growing number of banks reward customer loyalty
with price differentials.
- long term investment and savings products
such as life insurance and guaranteed capital products not only
provide higher margins but also are more ‘sticky’ in retaining the
client relationship. As price competition spreads to more
traditional commercial banking products, the profit contribution of
these long term savings products becomes more significant.
- many banks are making strenuous efforts to
establish a culture of disciplined sales processes in order to
improve cross-selling results. By thus setting rigourous
sales targets, however, they increase the possibility of
mis-selling and conflict with customer satisfaction ratings.
- smaller or decentralised community-oriented
banks are much better positioned to provide superior customer
service than large, more complex institutions, which focus on
volume of transactions rather than building customer
- CRM – customer relationship management – is
a necessary element of the cross-selling equation, but its merits
have been exaggerated. Many systems are too complex to be
used by client-facing staff, and they only provide the sales lead,
whereas for many banks the problem is to persuade the bank staff to
make use of that lead and build the relationship
- channel conflict – the lack of seamless
interface between delivery channels – remains a problem for many
large and complex banks. In some cases the technical
interface is not effective, and in others there is conflict over
which channel should handle a relationship or transaction.
- co-branding or joint ventures in
cross-selling – essentially leveraging the customer base of a
- have produced limited results for
commercial banks. Monoline credit card companies have been
successful in exploiting their partners’ client base, but in the
arena of supermarket banking there have been few major successes of
banks winning substantial market share through sales to a
retailer’s client base.
- successful segmentation of the client base
has taken many forms, with affinity groupings among the most
successful. Such success usually requires the discipline to
focus on a limited number of priority groupings.
- the process of cross-selling is a complex
one involving a number of variables such as the nature of the
market, a bank’s own profile, and relative profitability. But
underpinning all these success stories is discipline in actually
executing a cross-selling strategy.
- most cross-selling strategies are based on a
limited number – perhaps only two – key products which reflect a
bank’s core strengths as well as relative profitability and the
competitive environment. Such products often include the
current account, which is usually the basis for the overall
relationship, and the mortgage product or other form of consumer
- the SME, or small business segment, has
become an increasing focus for many banks in view of its overall
profitability, the stickiness of the relationship, and the number
of different products which can be sold.
- we found no ideal approach to the issue of
incentive compensation in the cross-selling model. Much depends on
the bank’s culture and the use of the metrics in a balanced score
- cross-selling success may vary widely across a bank’s retail
network, and management’s challenge is to reinforce ‘best practice’
by ranking these units and, if necessary, changing the people
involved in the process.
- we sense that an increasing number of banks
are making successful use of customer satisfaction measures in
their efforts to improve cross-selling and reduce customer
attrition. Such externally-derived measures are increasingly
used to evaluate performance at branch or individual salesperson
Our vision of the future for cross-selling
incorporates a number of these findings and conclusions:
As price and other competitive forces continue
to depress retail banking profits, cross-selling will become both
more difficult and, for the winners, more rewarding. There is
no one single winning cross-sell strategy, but four possible ‘roads
to Rome’ will be particularly successful if well executed: a
disciplined sales culture, success in marketing long term
investment and other higher value products, disciplined focus on a
limited number of attractive client segments, and truly superior
The Internet will play an increasingly
important role in the cross-selling process as more clients prefer
to access their relationship managers through direct contact.
Banks will become increasingly selective in their priority client
and product focus, with an emphasis on high value in each
dimension. Success in selling long term investment products
against the competition of independent brokers will be a key
achievement of banks in markets like the UK and US.
But overall progress in cross-selling will
probably be disappointing, especially given the expectations
aroused by bank managements in their analyst presentations.
As pointed out in this report, cross-selling in the developed
banking systems is a zero sum game in a well saturated market, and
there is little evidence from our research that customers actually
want to buy more from existing providers.
Thus the recent fragmentation of banking relationships is likely to
continue. The issue of mis-selling, which has been present
primarily in the US and UK, could well spread to other markets.
And as banking consolidation continues, it will become
increasingly difficult to offer the customer service and
disciplined focus which are the keystones to so many successful