Online Banking: Is Cross-Selling a Taboo?

  As some banks and credit unions have improved their online-banking services by adding access to more account information, a growing number of institutions are approaching their logged-on customers with careful pitches for additional products and services. The trick to successfully cross-sell, experts say, is to provide the data customers want and keep the online banking experience simple, fast and secure.
  Many financial institutions today encourage customers to receive their account statements electronically, thereby lowering their cost to distribute paper statements by mail. In doing so, though, the institutions are missing out on sales opportunities through statement-stuffer inserts. As such, some institutions are turning to online advertising, using their online-banking sites as a means to get the attention of a captive audience.
  Recent survey data from Pew Internet and American Life Project show that 49% of male Internet users nationally bank online, while 39% of women do (see chart, page 50). Pew estimates that 53 million consumers, or 44% of Internet users and 25% of all adults, use online banking.
  Though some bankers fear such marketing tactics could annoy customers, not everyone agrees. Indeed, some experts say bankers can afford to be more bold.
  A recent study by JupiterResearch, a New York-based research advisory firm, found that online banking customers are three to five times more likely to be interested in other financial services online than are customers who do not bank from their computers. Such findings suggest that financial institutions should re-evaluate their perceptions of online customers, says Asaf Buchner, a JupiterResearch analyst.
  "There still is a big separation between the general public part of the Web site and the customer part," he says. "There isn't a lot of marketing being done in the Web area after accountholders have signed in."
  A chief cause often is the fact that different entities within banks, or different third parties, manage the home Web sites and the secure online-banking sites, Buchner says. Moreover, there is a perception that when customers log in to their institutions' online banking sites, they usually just want to check balances or pay bills.
  So, is this the right time to pitch a new card or home-equity loan? "Absolutely," says Catherine Palmieri, director of Citibank.com.
  More than 50% of Citibank's checking-account customers use online banking. Of those, about 26% use online bill pay, Palmieri says. Like other banks expanding their online-banking services, Citi allows customers to view and move money between accounts, pay loans and bills, and see images of personal checks.
  Palmieri says any product or service Citibank offers is fair game for ads within the secure online banking area. These include home-equity loans, individual retirement accounts, investments, additional checking services, certificates of deposit, money-market accounts and credit cards. Citi pitches many of those under the moniker "Smart Deals," which offers better rates to existing customers than prospective ones.
  In cross-selling, it is important not to overwhelm or inconvenience-and therefore annoy-customers. "We focus on making sure the download speed is not slowed by the advertising," Palmieri says. "If we slow it down with heavy graphics, we get negative feedback from our more vocal customers." She says Citi strictly limits the number of pixels in banner ads or those that appear along the sides of customers' online account statements.
  Buchner agrees that institutions that want to advertise within their secure Web pages should do so discreetly.
  Indeed, while most financial institutions use their Web home pages to promote their products and services, they should tread lightly in their secure online area, where customers have logged in to perform specific tasks, not window shop, says Ron Shevlin, vice president at Forrester Research Inc., a Cambridge, Mass.-based technology and market research company. "Why do consumers go to their online secure site? Because they've got a balance to check, funds to transfer or a bill to pay," he says. "They're not on the site to look for a credit card."
  One institution pitching products that their online customers might actually appreciate is Wells Fargo & Co., Shevlin says. After customers log in to their secure banking sites, Wells promotes products to them based on a number of profile indicators, including account activity, he says.
  For example, if a customer's balance, pending bills and direct payroll deposit dates indicate an upcoming financial crunch, Wells slips in an ad for its payday-advance loan, called Direct Deposit Advance. "No flashing ads, no flashing banners, just a link to what that customer was doing and their needs," Shevlin says.
  Another bank, Cleveland-based National City Corp., is planning to test cross-selling within customers' secure online-banking pages next year. The bank will do so very carefully, placing small banner ads and links to other products that customers can ignore if they are not interested, says Scott Linabarger, the bank's senior vice president and manager of Web marketing.
  "It is a challenge," he says. "You've got to be subtle. You can't get in the way of consumers performing the tasks they came to perform. At the same time, you need to make them aware that there are other options that they can explore if they wish."
  Shevlin says timing also is important with sales pitches to new customers. "You have to earn the right to cross-sell," he says, adding that good customer service during the critical first nine months is more important than trying to build stickiness with multiple products.
  But if longtime customers are finally getting around to signing up for online banking, they may be better candidates to register for other services as well. "If 4% of online checking accounts resulted in savings accounts or CD applications as well, that's good," Shevlin says.
  Charlotte, N.C.-based Wachovia Corp. also sees opportunities to cross-sell while customers are banking online. About 40% of the bank's customers are enrolled in online banking, and 27% of them have used it in the past 90 days, according to Greg Cardinali, Wachovia vice president of product management for online services, deposit and access services.
  With that potential market, there is no problem with cross-selling some products even as customers are completing the online-banking enrollment process, Cardinali says. "We cross-sell services that are relevant to the online channel," he says. Messages such as, "Would you like free online bill pay with that as well?" help ensure customers know what products are available.
  Bankers who believe sales pitches should be kept out of the sanctum of secure online banking sites still have the chance to cross-sell along the path into it. Many consumers log on to online-banking sites from their institutions' home pages because they have not bookmarked the login page or do not remember the secure site's Web address.
  While National City customers can log directly into their online banking sites, many do not. "A good percentage are coming through" the National City home page, Linabarger says.
  Forrester's Shevlin says consumers are more likely to apply for some financial products online than others. "It relates to the complexity of the product, the frequency with which it's purchased and the perception of savings, whether it's a time or dollar savings," he says.
  No matter where cross-sell happens on a bank's Web site, existing customers who apply for advertised products should not have to fill out long forms with information the bank already has, JupiterResearch's Buchner adds. "Consumers hate filling out long forms," he says. "That's a huge pain point."
  At Wachovia, if customers start to fill out application forms online and do not finish, they can call customer service representatives who will help them complete the process over the phone.
  Citi's Palmieri agrees that keeping the process simple is important. If existing customers decide to buy a CD they saw advertised while banking online, for example, the form they fill out need not ask for their name and address because the bank already should have that information. The institution also should make it easy for the customer to transfer funds to purchase that CD, whether from an account within that institution or from another one, Palmieri says.
  In designing online banking Web pages to both serve and cross-sell to customers, financial institutions should remember what draws customers to online banking in the first place: easy, ready access to information they need and want. As Palmieri says, "The number one best practice is to keep it as simple as possible."
  A LOOK AT WHO BANKS ONLINE
   10/02 11/04
  Sex:
   Men 31% 49%
   Women 29% 39%
  Age:
   18-27 29% 38%
   28-39 34% 60%
   40-49 33% 42%
   50-58 26% 49%
  Household Income:
   Less than $30,000 21% 32%
   $30,000-$49,999 31% 44%
   $50,000-$74,999 33% 51%
   $75,000 or more 35% 55%
  Source: Pew Internet & American Life Project. Findings based on a national telephone survey 537 Internet users.
  (c) 2005 Cards&Payments and SourceMedia, Inc. All Rights Reserved.
  http://www.cardforum.com http://www.sourcemedia.com