Time to forget about pushing products and sending irrelevant, random offers to customers.  Cross-selling in the digital age is all about personalisation: using data for understanding what clients need and new ways of communication for deepening customer relationships. We’ve put together five approaches and use cases to crank up your cross-selling revenues.  

Trying to get existing customers to buy additional products and services is anything but new. It’s easy to see why: winning new clients is estimated to cost 8-10 times more than selling related products to current customers. What’s more, cross-selling can also dramatically boost customer retention. While someone having just one product at a bank is likely to stay a customer for about 18 months, buying a second or a third product extends the relationship to four and 6.8 years on average, respectively.

But many banks still fall short of realising the full potential of cross-selling. Research has shown that only 19% of retail banking customers have three or more products on top of a current account with their primary bank, compared to 49% who have three or more products with other financial institutions. Building effective cross-selling strategies seems to be quite a challenge for banks, to say the least. And it’s not going to get any easier, with customer expectations changing a mile a minute and digital disruptors entering the market with new digital sales methods under their belt.

Here are five ways to boost revenues from cross-selling in the digital age:

1/ Personalise your cross-selling offers

Customers expect banks to offer them relevant products that are tailored to their exact needs. Financial institutions are no longer just competing with each other but are being compared to large tech companies, media groups and retail giants, such as Google, Amazon, Netflix or Spotify, all of which have long mastered the art of personalisation in cross-selling. Meaning that banks had better get the timing and targeting of their cross-selling messages right.

Banking customers “don’t want to feel as though you think of them as just a prospect for more sales,” personalisation technology company Evergage explains. Financial institutions, however, often annoy clients by pushing additional products to them in a seemingly random way. They could deliver much smarter promotions if only they leveraged CRM data to learn what products the customer doesn’t already have or used behavioural tracking to gauge interest in other products.  

Take the example of a big insurance company, one of Evergage’s clients: they developed a site that could recognise if the customer’s interested in buying multiple products. For instance, when a car insurance customer’s online behaviour indicates their interest in a home insurance offer, the image and message in the hero area of the portal changes to offering a discount on bundle car and home insurance. “This allows the site to illustrate a key benefit of selecting its insurance over a competitor’s”, Evergage points out.

2/ Don’t push products, motivate clients

Let’s face it: persuading customers to buy additional products or services that are irrelevant to them in their current life situation simply won’t cut it. Instead of pressuring, financial institutions should begin considering ‘non-intrusive, pull-based’ approaches to motivate customers to enter into a multi-product relationship with them, according to advisory firm Simon-Kucher Partners. The pull-based approach works best when the number of product choices is manageable, purchasing is infrequent, and the product is a necessity.

For instance, First Abu Dhabi Bank (FAB) offers a digital interactive account configuration, where customers can select and customise their relationship with the bank. For example, clients can commit to a monthly deposit or select other products from FAB, which will waive their current account fee in return. Also, clients can see right away what rewards they can receive (air miles or cash-back) depending on how many products they purchase.

3/ Use data to predict the next purchase

Data-based analytics is a must for new models that try to predict what products customers are most likely to buy next, McKinsey says. The reason why cross-selling often remains ineffective is that banks offer a product that the customer is just interested in. But machine learning tools can complement traditional cross-sell models: by using more data sources, they can come up with insights about what customers might buy next and what the best channels are to reach them.

According to McKinsey’s estimations, banks already applying these models have seen a growth of up to 20% in new sales as well as a 20 times better response rate to pitches for a long-term lending product. In an example, a top Asian consumer bank used advanced analytics to explore various big data sets (demographics, products held, transactions or digital transfers) with the aim of cutting its lag behind competitors in products per customer. The bank discovered surprising similarities in its customer base, which resulted in defining as many as 15,000 microsegments. Then the company went on to develop a next-product-to-buy model that enhanced the likelihood to buy three times over.

4/ Messages shouldn’t be all about sales

True, deepening customer relationships can lead to cross-selling opportunities. But that doesn’t mean that communication with clients should be restricted to offers. Quite the contrary: sometimes a meaningful exchange will do much more to build trust and improve customer experience – and it will pay off later.

For its part, digital-only Ally Bank takes a different approach to strengthening customer relationships. Clients get a thank-you message when they sign up for an account or a loan and they also receive birthday greetings. In addition, Ally Bank occasionally picks several customers randomly and send them a thank-you gift card. “Our point of view has always been, let’s not just email with our customers when we’re asking them for something, when we’re trying to cross-sell products to them,” the bank remarked.

Ally Bank goes to great lengths when it comes to personalisation: the bank automatically generates a customised website for each and every new customer with the help of a software from marketing solutions firm ChannelNet. The company receives detailed daily customer data updates from Ally Bank, which is then used to personalise each site, including adding information about other relevant bank products.

5/ Generate income from merchant offers

Digital sales channels provide a great opportunity for banks to offer products from third parties, such as retailers or other financial services companies like insurance companies. Customers tend to think about their credit or debit card as part of the buying process, so “it’s a natural fit for financial institutions to insert themselves further into the buying value chain”, financial services technology company Fiserv suggests. Selling third-party products can drive credit card use, increase interchange income and generate referral revenues.

US lender America First Credit Union runs a merchant’s programme under the name ABC Deals, offering cash-back to customers on credit and debit card purchases at several retailers, including McDonald’s and movie and video game rental company Redbox. The programme is available both online and through mobile. Digital customers can browse the newest deals, see which deals are ending soon and search for offers by category or location.

Digital-only banks, such as N26, Starling or Monzo, have been busy building financial services marketplaces. Their Amazon-like platforms allow banks to offer other providers’ financial products and services without the need to forge individual partnerships or one-off integrations. And they let disruptors generate income from referral fees and save costs on product development.

Starling Bank, for example, runs a marketplace with links to travel insurer Kasko, investment adviser Wealthsimple and PensionBee, which allows employees to combine various pension plans from past employers into a single platform. Customers can also use free online mortgage broker Habito and YoYo Wallet to collect points and rewards when shopping with their Starling card.    

These five examples prove that there are many ways banks can increase cross-selling revenues through digital channels. Besides technology, financial institutions should also rely on new strategic approaches to boost cross-selling – like personalising offers instead of pushing products and strengthening customer relationships through communication that doesn’t necessarily include product offers.


Segments of one: Customer insights in digital banking

Segments of one: Customer insights in digital banking

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