A Guide for Improving Cross-Selling

December 17, 2008

Credit unions of all sizes may feel a need to improve the effectiveness of their cross-selling. All credit unions attempt to cross-sell; whether they know it or not! The direct mail sent to members invite a dialogue for cross-selling, that is if the member takes the initiative! What we will discuss in this article is the face to face process of cross-selling, and how to make those efforts more effective. There are too many competitors who market the same products and services to the same consumers with well-trained employees who have been motivated to cross-sell. Some credit unions have been working on improving cross-selling over the past few years and are making progress. They might say they would like to do better. Some credit unions have changed what they call it from “cross-selling” to “cross-offering” to give it a different, more acceptable connotation. Others are still talking about the need to implement cross-selling and are trying to decide how to proceed. Nearly all will acknowledge that it has to be an integral part of the culture of the organization and it will be a major commitment of time and resources.

Most credit unions shine when it comes to member service. Member contact personnel go out of their way to provide a good member experience, and when a mistake is made credit union employees generally bend over backwards to resolve it. Member service has been an integral part of the relationship with credit union members. It is one competitive advantage that most credit unions can say is an organizational strength in a SWOT analysis. So why has it been so difficult to move beyond member service to cross-selling? Credit union employees obviously care about the well-being of their members. They can explain their products and services, but too often they wait to be asked.

The implementation of cross-selling, or improving the effectiveness of cross-selling, is a process that will likely take time, and even then it will take continual reinforcement to keep it on track. Too often good management intentions have led to the introduction of cross-selling training and emphasis programs. But too often there are other organizational priorities and the cross-selling program becomes just one of many projects, or worse it loses momentum until it gets brought up again at an annual planning session as a way to grow loans and increase the number of products and services per household. Like many worthy projects, cross-selling should have a senior manager who is assigned organizational responsibility, like that of a project manager on a core system conversion project, to get the job done knowing it will take more than a year.

Most will agree that there are some very good cross-selling training programs available from firms that specialize in that field. Such training should be considered a part of a long range plan. But the training alone won't get the job done. Cross-selling won't become a part of the culture without the other top down elements of long-range organizational commitment, management direction, project oversight, performance monitoring, and follow-through. This is an undertaking that requires the continual emphasis of the CEO and the entire senior management team. The team has to decide the desired result (member retention, increase in interest and non-interest income, efficiencies, etc.), how to set expectations, how cross-selling activity will be measured, who to include, how to recognize success, and when to move to a higher level.

There are several techniques for managing an undertaking of this scope. And there is plenty of opportunity for customizing for each situation. However, the recommended approach is for the overall project is to have tasks implemented as part of an ongoing process, and not simply an event. How should someone get started? The following suggestions can be incorporated as applicable into a list with two categories: 1) short-term tasks to begin with, meaning those things to work on now and during the next several months, and 2) tasks to undertake during a longer period of time. Why two categories? It is too tempting with a project of this scope to seek a single, grand solution. For example, it might be easy to think the credit union can get there if there is a cross-selling training program for all employees from top to bottom. If this is the approach followed, how long will it be until the training is completed and cross-selling will be underway? What about other key decisions such as how cross-selling activity will be measured, who to include, how to recognize success, and when to move to a higher level?

Short-Term Tasks

Getting Started

The senior management team of the credit union should hold a planning discussion focused on cross-selling and decide the goal of the undertaking, who will be the organizational champion (the COO/VP of branch operations is recommended as the person most of the retail employees report to), how to describe the project to employees, how cross-selling activity will be measured, who to include, and how to recognize when the culture has changed. It might also be useful to perform an informal evaluation of the staffs' current cross-selling skills. If you're in the initial stages of planning a journey it seems logical to understand something about the starting point. This might be as simple as reviewing current reports on new account growth, loan production, and the number of products and services per household. It might be useful to know about recent training efforts and emphasis programs, and revisit what worked and what didn't. It might also be useful to interview a sample of member contact personnel about cross-selling to determine what they think is expected and what they think might be beneficial.

Conduct Initial In-House Training

The senior management team should make sure that there is clear communication to all personnel on the purpose of cross-selling and the reasons for the organizational emphasis. It is advisable to discuss expectations and explain why this project is being tackled, especially with member contact personnel. Initial training should cover basic cross-selling approaches with examples and “scripts.” Employees can be given startup phrases as simple as: “Would you like French fries or onion rings with your hamburger?” If the a credit union has the training resources it might also be beneficial to provide basic training on how to think of topics that might interest members in different market segments or age categories. For example, a CD offer might be of more interest to an older member and promoting a lower payment on an auto loan might be of more interest to a younger member. The credit union should plan to have marketing emphasis programs on specific products and services each month that link with scripted tips for employee use.

Add Cross-Selling Goals to Annual Performance Goals

Employees will typically work on those performance goals that have been explained to them as being an important part of their jobs. Why not make it known that cross-selling is a part of the job for all member contact personnel, including branch managers, and put specific goals in their annual performance reviews? Individual success may not come easy or without training but documenting the goals will give employees an added incentive. Some may begin taking more initiative and asking for guidance and training. The main purpose is to make it clear that cross-selling is expected, not optional. Individual accountability will be a major success factor. A key management decision to be made early in this endeavor is what will be done with those who don't make the change. Will they be ignored, transferred or let go?

What Gets Measured Gets Done

As noted above, employees will typically work on those activities that have been explained to them as being an important part of their jobs. This is especially true if the organization tracks and reports individual results. There are numerous examples that support this point. For example, a call center staff knew that the maximizing number of calls handled per hour and reducing the member wait-time were credit union goals. A noteworthy improvement was realized when these important statistics were monitored and reported by individual. Similarly, a credit union had a goal for promoting credit life and credit disability insurance. When the actual results were monitored and reported by individual, the penetration rate nearly doubled from 35% to over 65%. Measuring results provides the opportunity to reward those who have met or exceeded the goals, and it identifies those who need more coaching or training.

Identify Initial Cross-Selling Initiatives

Rather than dilute the cross-selling effort at the onset with too many different product and service initiatives, it is best to focus on one goal such as loan growth, with a sequential set of cross-selling emphasis programs. Each emphasis program can be rolled out, tracked and reported for two or three months. The purpose is to create the expectation of cross-selling tied to some performance incentives. One emphasis program might be to refinance vehicle loans from other financial institutions. The staff can be trained to read credit reports to identify the vehicle loans members have at other financial institutions. The staff can be coached on how to calculate the rate and how to suggest the possibility of a lower monthly payment as a means of getting a member's interest in refinancing. A monthly incentive bonus can be structured to reward the successful employee for new loans booked when the funding checks pay off vehicle loans at other financial institutions. This type of program can get the staff started with cross-selling and to demonstrate to them that it can be done. The key is to keep it simple at first, and monitor and recognize the results. Using staff events for public recognition is always a good way to reward desired behaviors, particularly if they're new ones.

Recruiting New Employees Who Cross-Sell

Now that the credit union is going to make cross-selling a way of doing business, it makes sense to add cross-selling experience and/or ability as a required skill when recruiting and training new employees. It is important to hire new employees who will be comfortable with cross-selling as well as to set the expectation for cross-selling from their date of employment. The new employee training period is a good time to introduce and cover cross-selling. It will set the stage for getting new employees into the proper mindset about their role in their new jobs. It's equally important that the following steps have already taken place: setting expectations, training, adding performance goals, and recognizing results. The new employees, who arrive ready to begin cross-selling, will conform to the department norm quickly if they are introduced into an environment where cross-selling isn't yet monitored or recognized.

Long-Term Tasks

Tackle a Formal Cross-Selling Training Program

The activities described above can be done in a relatively short period to get started while the task of selecting a more formal cross-selling training program is underway. The credit union can conduct research on the training programs that are available, get proposals, evaluate the merits of each, and conduct reference checks to gain useful information before making a final decision. These steps will take time and should be done thoroughly to find the training program that fits well and meets the needs of the organization. Then a training program will be selected and administered. As noted above, the senior management team should decide who will be the organizational advocate for cross-selling, the desired result, how cross-selling activities will be measured after the new training is done, who to include, and how to ensure organizational success over a period of time. Project management consultants suggest envisioning and defining the target status at the end of the project. In project management terminology the outcome should be “SMART”—that is specific, measurable, achievable, relevant, and time-bounded.

Take Advantage of an MCIF

The many effective uses of an MCIF can be a topic of proficiency by itself. However, this powerful tool can become an integral part of the effort to improve cross-selling. For example, the credit union can identify single service households, and target a specific offering. Or, identify members with large balances in their savings accounts and target cross-selling of CDs. The goal of these efforts is to specifically identify high potential members for cross-selling campaigns and then target-market loan and deposit products to them.

Identify Products and Services of Most Interest to Members

Cross-selling will be at an optimum level when the credit union offers the products and services members really want. It may be necessary to offer CDs but if members think rates are going to rise during the term of the CD, a flexible rate CD might be a more successfully cross-sold. Members in different segments have different needs, and members in different markets may have different priorities. There is no one answer that fits all credit unions uniformly. Each credit union should conduct its own market research to determine what to offer. One approach is to conduct focus groups, and another simpler approach is to closely monitor the monthly mix of new product and services being added. If the credit union has the resources, a contact management system is another tool for tracking member requests.

Offer Consumer Seminars

Credit unions have an inside track as a trusted financial advisor. Many credit unions have been successful with mortgage lending and financial products because of the relationships they enjoy with their members. Although the concept of offering consumer seminars is not new, it is another way to identify member needs and preferences, and to follow-up with a value proposition. Examples include new home buyer seminars and seminars on college financing. Members who attend should be contacted following the seminar but they can also be flagged in the MCIF or CRM systems for future follow-up. The student who is off to college should be started in a career in a few years and will become a future candidate for vehicle loans and a mortgage loan. Members will go through life-cycle needs that change with the stages of their lives. Credit unions should be thinking how they are going to serve members through a life time.

Implementing a solid cross-selling program should be considered a strategic, long-term goal. The credit union that puts together all of the pieces will be the most successful.

Richard L. Sandenaw is managing partner for Strategic Mark LLC, a business consulting firm specializing in credit unions. Contact him at 915-588-9024 or rsandenaw@strategicmark.org.

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