Marketing more investments to customers who have already bought them could pay off big time for banks, a consultant is advising.

The reason is that most banks are not doing enough of these so-called repeat sales, said Kenneth Kehrer, president of a Princeton, N.J. firm that bears his name.

Mr. Kehrer came to this conclusion after surveying 41 major banks and thrifts, ranging in size from $7.1 billion to $314 billion in assets.

Mr. Kehrer said he made the inquiries on his own initiative, and not at the behest of any of his clients, which include firms that run retail brokerages for banks.

"Banks have done a terrible job at doing repeat sales," Mr. Kehrer said.

Of the banks and thrifts surveyed, two did not have any repeat sales in 1993. Those institutions, which Mr. Kehrer declined to name, could "double their sales" by systematically targeting existing customers, he claimed.

Mr. Kehrer said that on average the surveyed institutions made just over a quarter of their sales in 1993 to people who had already bought an investment from them.

The institution that fared best with repeat sales was American Savings Bank, Irvine, Calif., which made 53% of its 26,000 sales to existing customers.

Ferris D. Weber, acting president of the thrift's brokerage affiliate, said there was "a strong correlation between repeat sales and profitability."

American Savings sold a record $530 million in mutual funds and annuities through its brokerage in 1993, Mr. Weber said.

Mr. Kehrer said he discovered that even modest improvements in repeat sales ratios can boost profits. For example, he found that banks and thrifts that made 30% or more of their investment sales to existing customers had an average profit per customer of $17 in 1993.

By contrast, banks that made 26% of their investment sales to existing customers - the average ratio - made about half as much profit per customer.

One reason for the relative profitability of repeat sales is that it costs less to sell investments to an existing customer than to a new one.

Mr. Kehrer said he figured that if banks and thrifts could have doubled their repeat sales ratios in 1993 they could have added a combined total of $775 million to their bottom lines.

Another reason to boost repeat sales is that proposed regulations could make them more important. Specifically, rules proposed by the National Association of Securities Dealers could greatly reduce referrals from branch employees.

If enacted, "repeat sales become more important just to maintain sale levels, let alone increase the sales to compensate for fewer referrals," Mr. Kehrer said.

But getting brokers to make more repeat sales can be tough.

"The people who run bank investment programs across the country tell me that this (repeat sales) is their No. 1 management problem," Mr. Kehrer said.

This is because many brokers find it easier to make sales to new customers referred through the branch network than to people who are already customers, Mr. Kehrer said.

And given that most bank-affiliated brokers earn the same commission regardless of whether the sales are from new or current customers, there isn't any financial incentive to act differently.

"The people who run these programs tell me it's so easy to work with referrals from the bank that brokers have stopped working for their money," Mr. Kehrer said.

Another reason for lagging repeat sales could be that, as relative newcomers to retail investment sales, banks are still learning how best to proceed.

In his study, Mr. Kehrer found that thrifts did better than commercial banks at repeat sales. One reason could be that thrifts have been selling retail investments longer than commercial banks, which only started getting into the business in the late 1980s.

Mr. Kehrer found that with the exception of one big bank in New York City, the banks with the best repeat sales ratio were the ones with older, more mature programs.

"Banks with programs that are six years old have had time to get it right," he said.

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