What is Cross-Selling In Banking?

Author Erin Petro
Read time 6 minutes read time

Cross-selling is a powerful and efficient credit union marketing tool. It helps generate revenue for a financial institution and improves customer satisfaction.

Targeted cross-selling can help you further when developing a plan. But what is cross-selling, and how can you use it to help credit union members while generating more revenue?

Cross-Selling Products in Credit Unions

Cross-selling involves selling a related banking product to a customer. For example, if they are depositing in their savings account, suggest opening a CD. You may want to offer life insurance to go with a retirement plan.

The point of cross-selling is to increase a credit union’s revenue while at the same time helping the customer fulfill their banking needs.

It comes down to services per household. You want to increase the services each household uses.

Why Cross-Selling is Important to Credit Unions

Cross-selling allows a credit union to increase revenues without acquisition costs. Having employees suggest services to complement the customer’s existing services adds to the bottom line without any additional investment.

Because a customer is committing more of their banking to your credit union, it creates brand loyalty. They are less likely to move their accounts; they have committed to you.

Cross-selling in banking fulfills the customer’s needs. They may not realize they need a product you have to offer. By pointing out a product or service to them, you reach important goals and financial life milestones.

Cross-selling isn’t meant to trick a customer into buying something. Instead, they are directed towards a needed service. This endears them more to your credit union.

Targeted Cross-Selling

One category of cross-selling products in credit unions is targeted cross-selling. This occurs when a target individual is identified among existing customers.

One example is to target messages to heavy revolvers and offer them lower-cost refinance opportunities. By examining payment patterns in the ACH data, Nickels can identify the members who are paying competitor cards.

By further looking at the payment behaviors, you can infer whether those members are revolving or transacting on those cards. Properly identifying who to cross-sell is the most crucial step in the process.

Once you understand your membership base further, your outreach can be strategic and personalized. Nickels will identify, reach, and engage existing customers so you can cross-sell low-interest credit card products to the members who would benefit the most. Knowing this helps not only the credit union cross-sell, but benefits the members overall financial wellbeing.

What is the Difference Between Cross-Selling and Upselling

Both cross-selling and upselling are meant to generate revenue. But they use different tactics. Upselling is meant to increase the value of a purchased item.

Cross-selling increases the total number of items a customer purchases.

For example, a buyer intends to purchase a product or service. An upsell tries to have the buyer purchase or upgrade to a more expensive product or service.

But, cross-selling offers different products that the customer didn’t intend to buy. The added service or products create a more well-rounded or balanced outcome.

Strategies for Cross-Selling Credit UnionProducts

There is a progression of ways to initiate cross-selling to your customers. But always remember that although cross-selling products generate revenue, they should also benefit customers. You want to build trust, not erode it.

Analyze Credit Union Customer

Ensure you understand your customers’ needs, goals, preferences and behaviors. Nickels does that with their checking account analysis. It gives you data and segmentation to identify opportunities for credit card conversions.

Asking the customer directly about their satisfaction and expectations is also essential. Listen to their feedback.

Right Channels and Timing is Everything

Use the right channels and timing to reach out to customers. Avoid spamming or interrupting them with irrelevant or excessive offers.

For example, Nickels will reach out to members once the credit union has appropriately identified the member segments that could benefit from the products or services the credit union has available. Nickels has ready-to-use playbooks that a credit union can easily implement into an email campaign to educate customers on the credit union’s low-interest credit cards.

For heavy revolvers, the timing is probably right to make a change. You’ll be available with a product that meets the customer’s needs.

Communicate Value and Benefits

Communicate how your offer will solve a customer’s problem. For example, a member with a revolving balance and a high-interest rate may be open to hearing about your low-interest credit card. Highlight the advantages and differentiations you have to offer.

Nickels can help you with that. They provide credit unions with a white-labeled product, Card Check. Card Check allows the member to analyze what the competitor’s credit card is actually costing them. It also shows members how much they can save by switching to a credit union’s low-rate card.

Don’t Be Pushy

You don’t want to be overly pushy with sales tactics. Respect a customer’s disinterest; no means no. Cross-selling doesn’t mean hawking a product but helping customers with their banking needs.

Although some financial institutions incentivize employees to cross-sell, be careful about putting too much emphasis on it. Don’t instill quotas. This can lead to aggressive sales tactics and turn off customers.

Cross-Selling Ratio in Banking

The cross-selling ratio is one way to benchmark and compare your performance to industry standards. It measures the average number of services or products that a member purchases.

The cross-sell ratio is determined by dividing the total number of products or services sold by the total number of customers.

Challenges of Cross-Selling for Credit Unions

Although cross-selling is an important strategy to increase revenue, there are some challenges. They include:

  • customer resistance
  • lack of trust
  • limited product knowledge
  • regulatory compliance.

It’s imperative to have the proper framework in place to ensure a good customer experience.

Following Regulatory Compliance

Products and services have different legal and ethical requirements. Some of these include ethical requirements like:

  • disclosure
  • suitability
  • privacy
  • anti-laundering

There is also the risk of conflict of interest. There should be a sound compliance program that ensures all cross-selling is aligned with relevant laws and standards. The customer’s interest should always be put first.

Establishing Customer Trust and Satisfaction

It’s essential to build trust and satisfaction. Cross-selling should not interfere with this. Members should receive transparent and relevant offers.

It is essential to have a customer-centric approach to cross-selling banking products. All cross-selling outreach must have the customer’s needs and preferences first. The goal is to deliver solutions.

Cross-selling in Customer Success

By effectively cross-selling banking products, you can simultaneously help members while generating more revenue. Customer loyalty will be enhanced if you offer products that accentuate their banking experience.

Helping revolvers convert to low-interest credit cards is one way to enhance the banking experience. Nickels can help. They can implement their identify, reach, engage program to help grow your credit card portfolio. 

About Nickels

Nickels is a CUSO that helps credit unions cross sell credit cards, shift spend to their cards, and refinance members’ competitor card debt. Founded in Ann Arbor, MI, their mission is to improve members’ credit card health, in part by shifting members from high interest competitor cards to lower rate credit union products. For more information, please visit nickels.us.