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Targeted Cross-Sell Programs Will Increase Profitability

Cross-selling products and services to existing customers is a proven approach to increasing products and services per household. Through deepening relationships and share of wallet, marketers can impact account openings, balances, customer retention, and bank profitability while putting marketing efforts on ‘auto pilot’.

The concept of cross-selling existing customers at its core is the implementation of a repetitive communication program where customers receive periodic messages from the bank offering different products and services. Many institutions rely on a matrix mailing program whereby cross-sell offers are made via traditional mail. The offers should be targeted and delivered at multiple touch points over time to enhance frequency of message. Targeting can involve approaches from business rules selections to sophisticated customer product profiles, which allow the offer of the customer’s next-most-likely product purchase. Many programs will establish distinct product and service segments and customers will be selected for the offer they are most likely to respond to. Cross-sell offers should be aligned with the strategic goals of the institution. Program execution can be structured to automatically generate letter offers at specific time intervals. This allows for marketing automation of cross-sell offers and the understanding that the institution is continuously connecting with customers.

Targeting of offers for specific products to customers most likely to respond is accomplished by customer product profiling. Simply put, a profile of existing customers with a specific product is built and other customers with similar profiles but without the product would receive the targeted offer. WordCom’s proprietary modeling process, known as MicoModeling, builds a profile of these customers by appending over one thousand demographic, behavioral, and lifestyle attributes. This process uses key differences to gauge what makes the target customers unique. Once the model is trained and verified, it is used to score households within the existing customer file. The model then rank-orders records based on resemblance and likelihood of responding to a marketing campaign. MicroModeling also determines what portion of the customer file appears very unlikely to respond to a given product or service. This modeling can be further enhanced by appending specific demographic, affluency, and credit risk data to the household records.

It is recommended that a multi-offer segment program use all communication channels available. While the mailing may be a centerpiece of the program, email should be used in tandem with the letters, reinforcing the offer before and after the mail is received. Likewise, digital marketing involving social match to accounts and social media follow-up can keep the cross-sell offer in front of customers.

Understanding the results of a cross-sell effort is important not only for evaluating the organizational impact of the mailings, but also to make program adjustments in order to improve results. Direct responses (the customer opens the product or service offered) are critical, as well as purchase responses (the customer opens a product or service other than the one offered). Understanding open rates, balances generated, and the ROMI based on revenue spread data will help assess the profitability of the program. Segment offers and selection criteria can be adjusted according to the tracking results on an ongoing basis.

Bank marketers looking for a way to increase products and services per household while driving customer retention and profitability can accomplish both objectives with a robust cross-sell program.