Virtually every financial institution is struggling with cross-selling, particularly as an offshoot of service-related transactions.

Unfortunately, a lot more is known about what doesn't work than what does, since there have been many failures and relatively few successes.

One thing is clear: There is no silver bullet. That is because achieving meaningful cross-selling from customer-initiated service calls requires interdependent changes in strategy, processes, people, and technology.

A prerequisite to cross-selling is having a top-notch customer service organization. Trying to sell to customers who are already irritated because their calls have been transferred two or three times will only add fuel to the fire.

Research indicates that most customers are receptive to certain cross- selling prompts but only after the customer service representative has "earned" the right by handling the original inquiry promptly and accurately.

A company should be sure its service makes the grade before trying any significant cross-selling effort.

Assuming the company passes the service hurdle, the starting point for successful cross-selling is comprehensive, accurate, and up-to-date customer information-easy in concept but devilishly hard to accomplish.

Most customer information today exists in silos (deposit processing, mortgage processing, call center, Web site) in different technological environments, different data architectures, and separate management structures. Integrating the information to get a comprehensive picture of a customer can be a nightmare.

When it comes to building a customer profile, many companies have found that taking an incremental approach simply does not work.

Information that is relatively easy to get often does not offer insight sufficient to support action, and quick fixes generally do not produce much payback. Far better to establish the right criteria from the beginning.

What kind of customer information is most valuable? A knowledge of each customer's current profitability and recent transaction behavior is at the top of the list. Developing algorithms or other methods for predicting a customer's potential profitability and-or lifetime value is also a must.

Having knowledge of unusual transactions, such as large deposits, can also prove valuable. Much less certain is the value of reams and reams of routine transaction activity-something many financial institutions are building in the form of large and unwieldy customer data bases.

Though it's too early in most cases to declare defeat, a more selective approach may be advisable.

Once the right data have been captured, cross-selling requires explicit strategy decisions related to customers, products, and channels.

Many cross-selling programs fail because the company tries to sell something to almost everyone who calls. Experience suggests that focusing on a much smaller group-the 20% of customers who generate 80% of profits-is more likely to produce acceptable results.

Simple products are generally more appropriate than complex ones. Some products are appropriate for some service channels but not for others. And the "right" product will vary for different customers. All of these factors must be considered in developing a cross-selling strategy.

Cross-selling also requires changes in core processes. Selected customer inquiries will now have a sales back end.

The right approach is generally subtle and usually requires speaking to a customer's potential needs. For example, saying "I see you often have a high balance on your card. Are you concerned about the lack of tax deductibility of interest versus alternative forms of borrowing?" would be better than directly asking, "Can I interest you in a home equity loan?"

Cross-selling also requires changes in behavior among your customer service representatives. Again, a key success factor is focus. Trying to get all customer service representatives to cross-sell might be overwhelming. With annual turnover running from 20% to 100% in entry-level jobs, it's not economical either.

Better to create a special tier of experienced customer service reps, teach them how to cross-sell as inquiries from high-value customers come in, and support them with different performance measurements and incentives.

In terms of technology, developing the data environment required to support cross-selling is by far the largest component.

Creating linkages to all legacy processing systems, building a customer contact repository (which generally does not exist today), and enabling statistical modeling are key components.

Additional investments might include tools to help customer service representatives make a sales pitch-such as customized calculators for easy what-if scenarios-and sales tracking and fulfillment software.

Turning service into sales is a worthy objective, but most financial institutions have underestimated the breadth and depth of the changes needed to bring it about.

A focused message, well-trained service representatives, a strategically segmented customer list, and comprehensive view of each customer are among the key items that must be addressed before a cross-selling program is likely to produce big benefits.

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