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Cross-selling gains steam as banks widen quest for revenue

An emphasis on marketing products and services to current customers has led bank managers to leave their offices and work the lobby much like a maître d in a dining room.

“Our store managers don’t have offices, per se. They can be in an office assisting a customer,” but otherwise “they are encouraged to be out on the floor interacting with the customers. That’s a key change.” Tommy Solomon Community Banking District Manager for Central Mississippi

With that visibility comes a new inquisitiveness about the financial services and products you may need.

With loan demand stuck on stopped and deposits growing slowly, the difference between a strong quarter and a weak one is beginning to rest with everyday customers and the non-interest revenue potential they represent. So customer contact has become key in an era in which every branch manager knows that when the going gets tough the tough cross-sell.

Just having you in the bank represents an opportunity to achieve a cross-sell or up-sell. Whether you’re a wage earner or business owner your bank manager and his staff have a pitch for you.

Home and business insurance, renters insurance, commercial lending, treasury management, international wire, trust and 401k services, foreign exchange, letters of credit, brokerage, fixed income, money market trading, payroll services, merchant card processing, health savings accounts – the key is for the banker to connect you with what you need.

When he addressed a May gathering of the Mississippi Bankers Association in Sandestin, Fla., veteran banking consultant David Kemp put increased cross-selling to current customers atop his list of ways to drive revenue growth. Look to Wells Fargo for how to do it effectively, Kemp said.

The national banking giant, which acquired Wachovia two years ago, cross-sells to an average of 5.4 percent of its customers while other banks average an estimated 2.3 percent, according to Kemp.

“They have found out the best way to make more money is to do more business with the customers they have,” he said of the more than 150-year-old San Francisco-based bank.

It’s need-based selling, said Well Fargo’s Tommy Solomon, community banking district manager for Central Mississippi.

But you can’t find out the needs until you sit down with both new and longtime customers and discuss their financial picture, he said. “Wells Fargo has been doing it well for a long time.”

Millions of former Wachovia customers, Solomon said, are learning that Wells Fargo has nearly twice as many products and services as Wachovia.

“It goes back to our competitive advantage,” he said. “We had an emphasis on cross sales way before our competitors.”

The emphasis begins at each store. “Our store managers don’t have offices, per se,” Solomon said. “They can be in an office assisting a customer,” but otherwise “they are encouraged to be out on the floor interacting with the customers. That’s a key change.”

In addition, store remodels have included desks in the lobby “so our bankers can be closer to our customers,” even the ones in the teller line, Solomon added.

“The most important part of the process is making sure we are sitting down with not only our new customers but our existing customers” as well. “We’re asking about their financial pictures.”

The new sense of urgency on the cross-sales front comes right form the top, according to Bloomberg BusinessWeek, which reported Wells Fargo CEO John Stumpf proclaimed to investors in March: “If we stay squarely focused on our customers, cross-selling them, helping them, we’ll win.”

Even the terminology has changed at Wells Fargo to reflect the emphasis on cross-selling, especially on the business banking side, said Fred Osing, Wells Fargo’s business banking manager for Mississippi and the Alabama coast.

What were once “lenders” or “commercial lenders” are now simply “bankers,” Osing said.

On the business banking side, cross-selling “is a perfect match,” he said. “I would say it’s picked up a lot of steam in the last five to seven years. At one time the bankers on the commercial side just wanted to focus on lending. But as banks wanted to create more non-interest income, they found their clients were needing services.”

In a state such as Mississippi where community banks dominate in small towns and rural communities, cross-selling of business banking services extends far beyond the confines of the bank lobby.

“If it’s a pure prospect that doesn’t have a relationship with our bank, our bankers are calling to introduce themselves, to talk about banking in general,” Osing said.

Once a rapport is developed an opportunity is likely to present itself, he added.

But that step is never reached unless the banker gets out and makes the visits, Osing said.

Wells Fargo is a relative newcomer to Mississippi. Though it has had home mortgage offices in the state, its official retail banking arrival did not occur until last October.

On the other hand, Jackson-based regional bank Trustmark has its roots entirely in Mississippi. That makes it well positioned for cross-selling in the provinces, especially on the business banking side, said Art Stevens, president for the Mississippi region. “We have a very robust product offering. We do business in lots of Mississippi communities.

“There are several communities where we would represent the only option to access some of these products and services,” he said.

Not only can cross-selling boost non-interest revenue, it can help ensure your customers stick around, said Randy Burchfield, senior vice president and corporate marketing director at Tupelo’s BancorpSouth, a multi-state bank with branches from Florida to Texas.

Even the free basic “sticky” services such as online banking and bill pay “make the customer less likely to jump ship on you,” Burchfield said.

BancorpSouth relies heavily on direct mailings to promote its menu of auxiliary products and services. The mailings go to customers based on the customer profile stored in BancorpSouth’s data base. The branch bank does the mailing and invites the customer to come in and discuss the new products and services.

The result has been a multiplying of the cross-selling success rate, according to Michael Lindsey, BancorpSouth senior vice president for retail banking.

With the promotional mailings “we’re getting that information down to the frontline level,” Lindsey said.

BancorpSouth employs “market segmenting” to determine the sort of appeal to make to a customer. For instance, social media and online search tools are an inexpensive way to recruit students as account holders and customers for auxiliary services, Lindsey said.

Art Stevens

While mobile banking or other technology may have brought the student into the bank, the face-to-face encounter is the deal closer, he noted.

That’s true no matter the demographic, Lindsey noted. “We want to focus our effort on the BancorpSouth experience and identify what products will meet your need.

“One way we do this is to encourage all of our employees to use our products. If they, they are a lot more comfortable explaining that product to our customers when they come through that door.”


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