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(Last Updated On: April 16, 2021)

Banking 2.0

There are two ways marketers go about marketing to their existing customers.

The first type of marketers (a large percentage) craft campaigns based on products that they plan to focus on, for that particular quarter and run cross-sell campaigns to all customers who currently don’t own them.

A few of them may go a step further and demographically segment those customers who don’t own the product and target them.

Campaigns run by these kind of marketers would largely be cross-sell campaigns.

The second type of marketers, a rare breed, understands their customer behaviours, design playbooks with a comprehensive list of actions for each type of behaviour exhibited and run campaigns in line with the playbooks.

The campaigns run by these kind of marketers cover the entire marketing lifecycle.

Even though the idea of such campaigns is to meet the unstated needs of customers, most times, genuine opportunities for cross-sell are identified and campaigns planned as a response to those opportunities, which contribute greatly towards meeting business targets.

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In this article, we will discuss three reasons why you should run campaigns based on customer behaviour and not mindlessly run cross-sell campaigns as a response to business pressure.

Disclaimer: This article is not against cross-sell altogether. The goal is to emphasize why any campaign should be based on customer behaviour and not be just blind cross-sell.

Reason 1: Your customers don’t need new products every month

Imagine you are a financial services marketer.

I’m sure you would agree that financial product decisions (such as applying for a credit card or a housing / auto / personal loan / health insurance / term insurance etc.) are carefully made. You also know your customers don’t need new financial products every month.

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In fact, this is true to most industries except a very few.

For instance, telco subscribers don’t need a new broadband connection or a new sim card or a new DTH connection every day; and not every automotive customer needs a new car every month, unless he/she is ultra-rich and crazy about cars.

Simply put, unless you sell groceries / essential items / products that people buy impulsively, your customers aren’t in need of new products every month.

Retail and e-Commerce marketers are fortunate in this regard as they have hundreds of SKUs which they can keep pushing to their customers.

But even they can’t randomly run cross-sell campaigns. They need to establish correlations between SKUs and smartly recommend products to their customers.

When the reality looks like this, what is the point in running cross-sell campaigns to your customers and asking them to buy more and more products of yours every month?

Reason 2: You could still generate revenue from your customers without selling additional products

Puzzled? You don’t need to be. Here’s why.

Marketers have tons of opportunities to make money from existing customer without cross-selling new products to them.

While your customers don’t need new products every month, they certainly need a lot of other things that have the potential to give you revenue.

For the purpose of illustration, here’s how marketers from banks, insurance companies and telcos can make money from existing customers by running campaigns that don’t hard sell new products.

6 ways bank marketers can generate revenue from campaigns without cross-selling additional products.

  • Set up direct deposits – Interest revenue.
  • Set up bill pay – Transaction-based revenue.
  • Sign-up for next tier account – Higher fee-based revenue.
  • Upgrade credit card – Higher fee-based revenue.
  • Increase credit card usage – Interchange-based revenue.
  • Extend loan tenure – Higher interest revenue.

6 ways insurance marketers can generate / protect revenue from campaigns without cross-selling additional products.

  • Influence auto-debit to increase persistency and premium revenues, and to reduce conventional payment overheads.
  • Include family members on health insurance plans to increase premium revenues.
  • Include riders for each policy to increase premium revenues.
  • Communicate lifestyle best practices to prevent / delay claims for revenue protection.
  • Communicate driving / maintenance best practices to prevent / delay claims for revenue protection.
  • Upgrade coverage amount to increase premium revenues.

6 ways how telco marketers can generate revenue from campaigns without cross-selling additional products.

  • Get customer to migrate to other plans with higher subscription revenue.
  • Reactivate inactive pre-paid subscribers to increase reload revenue.
  • Bundle packs with existing plans to increase service-based revenue.
  • Bundle household accounts under single account to sustain continuous revenue.
  • Set up auto-debit to sustain continuous revenue.
  • Drive referral campaign to acquire more customers and higher subscription revenue.

Reason 3: The cost of blind cross-selling is too high

If you blindly cross-sell products and services to your customers, without considering their past and current behavior, you may well be shooting your foot. Here’s why.

If your criteria for cross-sell is just to look for ownership of the “product in focus” and a few demographic variables, you will end up.

  • Selling more products to unprofitable customers i.e. customers who incur a higher cost of serving than the revenue that they generate.
  • Selling products to customers with high risk and bad history (such as frequent late payments, bounced payments, fraudulent / frequent claims, broken promise to pay, etc.).
  • Contacting dissatisfied customers with issues pending resolution with the contact center. When they see a cross-sell message, instead of resolution, they get even more disappointed and this will result in a negative word of mouth.
  • Fatiguing your customers by presenting them products that they are not interested in and making them develop resistance to your communication.
  • Recommending incorrect product (the product that is in focus as per business pressure), when the customer might be looking for some other product and you end up losing the opportunity to sell that particular product. With a lucrative acquisition offer, your competitor may snatch such customers for products that you did not target.

Summing up

There is no doubt cross-sell is a lucrative way to meet targets set for products.

However, you need to be cognizant of the fact that your customers are not always looking for new products from you and have other expectations / requirements as well.

Despite this, just to meet targets set for the products, if you blindly send your customers cross-sell campaigns - where you push your products to all customers that don’t own the product in focus, without analyzing whether they may want the product or not - you will run the risk of customers finding your campaigns irrelevant. They might even unsubscribe themselves from your campaigns.

Whereas, if you start to understand your customers’ behavior, map their potential needs to demonstrated behavior and run campaigns that are in line with them, customers will find your campaigns relevant and will adopt the recommendations you make through your campaigns.

When this happens over a period of time, you would be able to establish a connect between your customers and campaigns.

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