Financial services companies consider cross-selling to be extremely important but find barriers such as a lack of product knowledge, trust among salespeople, and sales support standing in the way of success, a Towers Perrin survey found.
Cross-selling is a hot topic at banks these days because “they’ve sort of seen the light,” said Ron Burke, a principal at Towers Perrin in New York. “They’re all believers in sales now; they believe that everybody needs to be selling.” But problems occur when a disconnect exists between what a financial services company wants from cross-selling and what it does to carry out such programs.
Though 74% of the survey respondents said cross-selling was extremely or very important, only 52% said the results were in line with expectations, and one-third said performance had been below expectations. Just 9% said cross-selling results had exceeded expectations. Seventy-five executives at 61 financial services companies answered questions.
The survey of bank and insurance companies also found that satisfaction with cross-selling efforts was lower in companies with a broader product roster — 50% of respondents whose companies offered three or more major product categories reported being dissatisfied, compared with 30% of those with two or fewer product categories.
Concern about product knowledge was one of the easiest for banks and insurers to address, Mr. Burke said. Strong wholesalers can help salespeople learn about products, especially when a bank or other financial services company adds a fresh product category.
Vendor wholesalers are less helpful when it comes to sales support, he said, because they are so focused on their own products rather than sales skills in general.
In many financial institutions, “the thing that is missing so many times is really good sales management skills,” Mr. Burke said. “In many organizations you don’t have a good sales manager that is able to reinforce the message that the incentive plan is supporting.”
Banks may need to look outside the financial services industry for the right people to motivate their sales forces, he said, since the banking culture has not normally developed this sort of manager.
Another difficult issue is trust among salespeople, Mr. Burke said. People with established customer relationships are often loathe to pass along those customers to a salesperson who may be pushing a product that the main relationship manager does not fully understand, he said.
On the flip side, he added, expert salespeople like licensed insurance agents may worry that the less knowledgeable front-line relationship managers are doing poorly at prequalifying people and even making mistakes.
One survey result Mr. Burke singled out was the gap in satisfaction levels — “the different ways that people felt their cross-selling incentives were aligned.”
Though 71% said that sales incentives and compensation were aligned with business strategy, only 47% said these incentives were driving the desired results. “People were much more satisfied that things were aligned with their business strategy and not with their business results,” he said.
Banks and other financial institutions feel that their incentives are strong on paper but seem not to be working in practice.
“You need to make sure the incentives are aligned with the nature of the role,” Mr. Burke said, in other words, that the amount and type of incentive payment matches the importance of a person’s role in making the sale. “Cross-selling incentives or sales incentives, applied broadly, are not going to be very effective.”
The fact that compensation was not mentioned by more respondents as an obstacle to cross-selling may be due to the people questioned — predominantly managers. Mr. Burke said he suspects, based on anecdotal evidence from working with financial companies, that the satisfaction level among salespeople is much lower.
Of the 12 survey respondents who said they were personally eligible to participate in cross-selling incentives, most said the incentive was “not at all motivating.”
Many compensation plans are complicated, with various formulas for compensating sales and referrals on various products, he pointed out. And often the money people get for a referral or a small sale is a small amount.
Mr. Burke suggested that some financial services companies, like banks, might do better by offering other kinds of incentives for cross-selling. For example, he said, companies could make it clear that branch employees who do well on cross-selling will get raises and be in line for promotions to higher paid sales jobs.
Companies also need to make sure they do not ask low-level service people — like tellers — to handle too many products or to focus on cross-selling to the exclusion of the main aspects of their job, he said.
