Cross Selling by Banks-Part II

This is the second and concluding part of the article.

Benefits of cross selling:  In cross selling, Bank is essentially leveraging its relationship with an existing customer, to generate new business, and consequently earn more income, and profits.

The following are some of the beneifts of cross selling by Banks:

It is economical:  Cross selling results in cost-cutting.   The Bank incurs less expenditure in cultivating an existing customer than in acquiring a new one.   The Bank is relieved of the work associated with opening a new account, with all the attendent procedures with regard to KYC norms etc.   On the other hand,  Bank is familiar with the background and the prospects of an existing customer.

Economies of Scale:  With an existing customer it is easier for the Bank to offer a variety of products and services needed by the customer.   Communicating to a existing customer is relatively easy.   It is also easier for the Bank, because of familiarity with the customer, to structure a combination of products required by him, at an attractive cost.   Economie of scale can be achieved customer-wise, to reduce the overall cost to the Bank.

Relationship Building:  By tapping the existing pool of customers, and consolidating the relationship with them, with the help of a slew of products and services, Bank can build up a solid relationship with the existing pool of customers, who would stay with the Bank long term.   And also bring in new ones.

Advertising and Publicity:  When a customer avails of several services from the Bank, he becomes a source of word of mouth publicity and advertising, for the Bank.   The will help the Bank garner more business, apart from reducing expenditure.

Multiple Revenue Streams:  Multiple services offered by the Bank result in the generation of multiple streams of income.   As incomes and revenues from different sources are not uniform throughout the year, this strategy of offering multiple services to existing customers will ensure a steady flow of income to the Bank.

Branding:  Cross selling of Bank products and services leads to more visibility of the Bank, and add to the brand value of the institution.   Brand building, being a critical function for long term success of an institution, the existing cusomter is a very convinient vehicle to spread the message of the Bank.

Retention of Customers:  In the competitive environment that businesses are operating today, it is equally important to retain existing customers, as it is to acquire new ones.   Offering a bundle of products and services, at competitive rates, to existing customers, will help in retaining them.

Profitability:  In view of the benefits of cross selling discussed above, if cross selling is executed as a business strategy, with proper planning, and care, it is bound to increase the profitability of the Bank.

                                                                                                                   Concluded.