Cross-selling has the potential to improve customer profitability and loyalty for banks. PA identifies five keys to successful cross-selling: 1) commitment from senior management, 2) objectives embedded in targets and incentives, 3) a sales coordination center, 4) systems to bridge different sales applications, and 5) training the sales force. When implemented correctly, cross-selling can dramatically increase a bank's market share.

1. PA perspective on European banking
Cross-selling:
five keys to success
in banking
Cross-selling can help banks to improve their market penetration through the
application of cross-selling techniques. PA’s ‘five keys’ approach has proven
particularly efficient for new product launches.
BY: ALEXANDER HUUN AND VEGARD EID MEDIAS IN NORWAY
Cross-selling has risen up the strategic agenda at approach to cross-selling that can be applied to
many banks in recent years, thanks to its potential to expand in new markets, or to increase share in
improve customer profitability and loyalty. But making existing, mature markets:
cross-selling work is not always easy. Organisational
inertia can prevent companies from being able to gain 1. Commitment from senior management
market share in a new product, meaning that large 2. Objectives embedded in targets, incentives
companies with massive distribution power end up and budgets
being outmanoeuvred by more specialised, light-footed 3. A sales co-ordination centre to generate and
competitors. Clawing back a market-leading position distribute prospects
can be a slow and costly affair. 4. System solutions that bridge various
sales applications
In cross-selling financial services, the key difficulty 5. A sales force trained in products and
is how to organise the sales force given product, sales processes.
geography and customer segments. This is further
complicated when an organisation has a two-layer sales Let’s consider each of these five keys in turn.
force, for example with key account managers who are
independent of the product or geographic segments
but align to customers with the goal of optimising the
cross-selling of products. The complexity of this key
account model increases for larger, institutional clients.
PA’s client work has enabled us to develop a ‘five-key’
12 © PA Knowledge Limited 2008. All rights reserved.

2. Senior management commitment Embedded objectives
Cross-selling has the potential to sharpen organisational No objective, no matter how important or glorious,
politics, increase uncertainty and meet internal is likely to be fulfilled if it is not embedded in targets,
resistance. It is therefore critical that the initiative is incentive systems and budgets. A surprising number of
managed by strong, visionary and respected leaders companies have failed to address this fact adequately
who are firmly involved in day-to-day operations. when it comes to cross-selling. We have identified three
Formal authority will prove ineffectual if divisional common pitfalls:
leaders are not firmly behind the initiative, and its
• failure to align targets all the way through the
results will be negligible if the organisation is not strongly
organisation, either vertically or horizontally
motivated to succeed. In short, cross-selling’s success
and sustainability depends on a successful change of • failure to align the incentives for cross-selling with
organisational culture. those set for other sales-related activities
• failure to proactively handle conflicts of interest.
As with any major change initiative, managers must
constantly reiterate the message and reinforce it with The introduction of cross-selling is likely to change
appropriate monitoring and management. Not only must the roles of some salespeople; for example, they might
they ensure that the organisation falls into line, but they switch from being ‘trusted advisers’ to ‘product suppliers’
must themselves be seen to be personally committed, – potentially in the course of a single customer interaction.
making it evident that the initiative is one of their key Acceptable behaviour may vary from market to market:
priorities. Cross-selling is not a one-off initiative or what is perfectly normal in one market may be considered
something that can be implemented as an ‘overlay’ – unethical, even if legal, in another.
it must become part of the organisational culture.
© PA Knowledge Limited 2008. All rights reserved. 13

3. PA perspective on European banking
Sales co-ordination
The distribution channel with primary responsibility In other cases, the sales co-ordination centre might
for a product is not necessarily well placed to take have to proactively generate leads through direct mail,
responsibility for its cross-sale through other distribution telemarketing or other types of one-to-one customer
channels. Cross-selling usually presents a challenge to communication. A sales co-ordination centre must be
the organisational hierarchy, and promoting cross-selling set up carefully to avoid conflicts with the distribution
can be perceived as ‘giving away the market’ to other channels and in particular with the key account
divisions. The product’s ‘owner’ may thus have little managers’ roles.
enthusiasm for the idea of cross-selling it.
Typically, a sales co-ordination centre is free to recruit
These problems can be overcome by introducing a sales new customers, but will meet resistance from the
co-ordination centre, a single entity that takes primary distribution channels if it tries to contact their existing
responsibility for the success of cross-selling across the customers. Salespeople are also very sensitive to the
company. The main role of such a centre is to collect and fairness of the rules governing the distribution of leads
generate sales leads, and to distribute these leads down across distribution channels; they will react strongly to
to individual sales representatives or units according to a any skewness misalignment that they believe affects
set of agreed rules. Lead generation might be as simple their personal provision or bonus entitlement.
as receiving customer enquiries or centrally registering
enquiries received throughout the organisation.
14 © PA Knowledge Limited 2008. All rights reserved.

4. Implemented correctly, cross-selling
has the potential to create dramatic gains.
Bridging sales systems Training the sales force
One frequent obstacle to cross-selling in banking is Training the sales force increases motivation,
the prevalence of extensive and disparate portfolios not least by removing uncertainty about the personal
of IT systems – even where there is good reason for implications of cross-selling, and ensures quality
standardisation across divisions, as with customer throughout the sales process. The more complex the
relationship management systems. The backbone product, the more training is needed: in fact, this is a
systems specific to individual divisions are often good test of the suitability of products for cross-selling.
managed by independent IT units, resulting in lack If the training seems too costly, the product may
of standardisation. This makes cross-selling more well be too complex to be cross-sold effectively.
difficult, but there are many ways to work around this
problem without having to implement a company-wide Implemented correctly, cross-selling has the potential
customer relationship management solution. Bridging to create dramatic gains. In one recent example,
various sales systems requires careful planning and a regulatory change had created a gap in the insurance
appropriate resources; in their absence, the lack market. Our client used cross-selling, among other
of system integration can become a show-stopper things, to meet the challenge more efficiently than
for cross-selling. permitted by the traditional reliance on key account
managers. It won a substantially higher market share,
relative to its distribution capacity, than its competitors
– putting it in the (shared) top spot in the market.
We believe that the five-key approach outlined above
has the potential to unlock similar value for many
other companies.
© PA Knowledge Limited 2008. All rights reserved. 15