WEEKLY ADVISER: Card Programs a Handy Avenue for Cross-Selling Efforts

Cross-selling new services to customers who use your present ones has always been a source of new income to the bank. It's also a way of locking in your customer base.

Marketing professionals say people who use the bank for two or three services are unlikely to defect to another provider - unless they leave town.

Cross-selling has another advantage: You have direct contact with the potential user of secondary services through your day-to-day provision of the initial service, so your marketing efforts can hit home.

The opportunities for this effective type of cross-selling abound.

Recently, on a trip to California, I was looking at a Bank of America ATM machine and saw the following message on the screen awaiting each new user:

"If your bank is charging you to use this ATM machine, why not switch your account to us and avoid this charge?"

In other words: If we are providing you with a convenient place to get cash, why not give us more of your business if the price is right?

Statement stuffers may not be as grabbing a cross-selling technique as a message on the ATM screen, but they also can work.

My favorite is telling customers they can buy stock in the bank, with a message like "Put your money where your money is."

Few customers realize they can do this, and the pitch taps a new market for the bank's shares as well as forging a more solid link with the customer.

American Express' Optima True Grace Card recently had a statement stuffer that helps with marketing while leaving customers with the feeling that Amex is working for their best interest.

Included was a postage-free reply card asking cardholders to tell of any incident in which they had trouble using the card.

The query specifically asked whether a merchant requested another form of payment or added a fee for using the card. It then offered space for cardholders to list other businesses where they would like the card to be accepted.

Community banks can surely do the same with their credit card and its ATM card as well.

KeyCorp has sent a letter to shareholders telling them they will receive special opportunities not available to the general public. These will include lower-cost loans and higher-yielding CD's.

The bank enclosed a reply card asking what banking services the shareholders need and which banks they now use.

Finally, shareholders are asked if they have ever been KeyCorp customers - and if they no longer are, why not?

Your shareholders are also top prospects, as they will share in the profits on the business they give the bank. So such promotions are among the most effective direct marketing ploys available.

Postage stamps can also be a great marketing tool for the community bank.

According to Financial Technology Review, $165 million First State Bank of Key West, Fla., saw an opportunity for itself when the local post office moved to an out-of-the-way location.

First State decided to sell postage stamps through its ATM. Now 90% of its customers have ATM cards, the bank reports, and "customers come in to open accounts and then request ATM cards because they have heard about the stamps.

"We have created a product that the people are demanding."

When banks make charitable contributions, their basic goal includes building friends and balances in the community. National Cooperative Bank goes a step further.

The bank, in the nation's capital, hosts an annual reception and invites representatives from each charity it supports. This event cements the relationship more strongly than if the bank had just sent out the checks - and it leads to cross-selling opportunities.

Finally, you can even bolster customer relations by giving customers a chance to dodge other companies' marketing.

Some card issuers are informing customers that they can avoid mail solicitations from other companies by "opting out" - that is, asking the issuer not to distribute their names and addresses to other mailers.

In line with growing interest in consumer privacy issues, most companies should be happy to control all outside use of customer information on request.

Does your bank provide this relief?

Mr. Nadler is a contributing editor of the American Banker and professor of finance at the Rutgers University Graduate School of Management.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER