The endeavor to cross-sell (CS), i.e. to sell more than just one product to a customer, is not new. The reasons are complex and range from profitability (falling customer costs, cross-sell products in banking, often without capital consumption) via the house bank claim (most important bank partner, holistic / comprehensive advice) to defending against competitors.
The approaches for this are just as diverse: statistical potential analyzes, sample customer profiles, financial and consulting concepts and individual customer planning with the involvement of specialist sales.
Despite all this, the effect usually falls short of expectations. Why?
- The acceptance of the employees for the CS idea varies. So does the commitment with which the field is processed.
- The timing of the CS topics must always be right. The customer must be approachable, if necessary also ready to change an existing partner at that time.
- The competition may be perceived as more competent or cheaper (or was simply faster at the moment)
- The identification of employees with individual (CS) products and solutions varies. This can be a topic of professional competence, a different horizon of experience (customer company, competition) or just a question of attitude
- Sales management rewards the old world: higher-faster-further
As long as „much“ is better than „good“ everything will stay the same.
Of course, lending is and will remain an anchor product in many banking business models. It demonstrates identification with customers, solves an important customer problem and at the same time offers good customer loyalty.
If you look at a bank profit and loss statement, most of the time 75% -85% of the income comes from net interest income – essentially the lending business. The rest is then represented by 10-30 other product.
What do you do? The main focus in bank management and planning is on the loan. Greatest balance sheet effectiveness, highest profit contribution, strong regulatory focus (RWA, LCR) – and possibly also the highest risks via loan loss provisions.
The result? The lending business is and will remain the most important planning factor. In addition to profit targets, there is also a volume target (the balance sheet also needs to be planned). And nothing changes. Without the lending business, the institute’s planning cannot be achieved, but in addition to the highest contribution to earnings, there is a second target area (volume). The small (insignificant?) services (“Cross Selling”) fall even further behind.
What has to change?
First of all, sales steering must separate from bank steering. Sales must have customer goals, not bank goals. For example, it doesn’t make sense to give an sales man, hired to win new customers, a new customer target of „0“ because the bank doesn’t want to grow.
In addition, the customer portfolio must be understood as such and, above all, managed. Unprofitable customers have to become profitable – or they have to part ways.
Above all is a value-based management that works via net contribution margins (according to risk and direct costs). As a result, the risk-cost burdened and labor-intensive loan is trimmed to a different level. And the effect of CS products on the profitability of customer relationships is strengthened.
If you have just switched to the model, you can also consider including equity or capital costs in the net contribution margin calculation. This then strengthens the importance of the CS again, but it also weakens the lending business. Costs of equity in the management system are only (permanently) useful, if equity is a real bottleneck or if the entire loan portfolio is structurally poorly priced.
Any change can only be achieved with a targeted steering and management approach!
Vertriebsmanagement 