Financial Services Sector – Sales Differentiation and The Cross-sell Predicament Part-1

New customer acquisition and Cross-selling to existing clients are the most important goals for Sales teams in the Financial Services Sector (FSS). While rational would point at direct linkages with distribution strength, salesforce, product and service capability and customer base, etc., in reality top-performing sales organizations display significantly different results compared to others.

It is common and oft-repeated understanding in the FSS that cross-selling not only improves ticket size and revenue, but also has significant effect on customer satisfaction, ringfencing and ultimately delivering higher values during the customer lifetime. And even the rookie Sales manager will harp on the importance of acquiring new customers to sustain growth and replenish the book. Research however reveals that fewer than 20 percent of sales teams actually achieve these basic goals.

The most common challenge faced by Business Managers is realizing the full potential of a customer. Typically, this would require ensuring higher ticket sizes, activating new product sales, optimize resource productivity and leveraging perceived value by customers.

Over a few articles, I will discuss the challenges, common blunders, psychological influencers and finally the key success factors for budding sales managers and the sales leadership.

1.     Customer Acquisition and Portfolio Growth – Failure to create differentiated strategy

• Experience shows that as much as 70–80 percent revenue of the mature FSS company comes from existing customers. Yet sales leaders create largely similar propositions, expectations and platforms for customer acquisition and existing customer growth. Human brain is hard-wired to resist change and factors like dissatisfaction, perceived value and benefits, etc. are critical for overcoming this resistance. Acquisition and Relationship Salespersons usually work on converse functions to achieve their sales objectives. Customer retention and expansion conversations require entirely different messages and skills. In fact, using a provocative, challenging message when you’re trying to renew or expand business with your customers will increase the possibility that they will shop around. However, productivity and profitability pressures often force the sales leadership to thrust drifting objectives on an equally clueless salesforce.

2.     Imposing Sales before the Relationship

Buyers are guarded to trust salespeople whose credibility hasn't been established. Sellers need to bridge through the arduous path of establishing their credibility, showcasing reliability of their proposition, find common orientation and finally develop adequate intimacy to ensure the all-critical TRUST. Customers evolve through stages of awareness, belief in the proposition, benefit and value understanding before making a sales decisioning the same being actualized by TRUST on the seller.

Organizations frequently pursue instant-results and fail to enable salesforce towards developing TRUST, resulting in sales failures. Overzealous Team-Managers in charge of customer acquisition, frequently drive a sales pressure based cross-sell thereby placing the cart before the horse.

 3.     Ignoring Skilling

Both upselling and cross-selling require a behavioral shift from product to solution and transactional to consultative. Evaluation of individual salesperson’s knowledge level, orientation and experience is key to setting up a sustainable relationship model. More frequently than not, FSS organizations have failed to make this transformation. Diminished reputation and a pushy and aggressive perception are a cross-industry blight.

4.     Lack of Focus and Persistence

One of the most common expressions from the Salesperson and junior leadership in the industry is- “We have too many things to do”. It is true that Sales teams have limited bandwidth and even lesser customer mindshare. Ability to prioritize the sale objective and cross-sell program, inbuilt synergies and bundled offerings alleviate these challenges. Program designers often misjudge product synergies due to scarce understanding of product complexities and customer buying and usage patterns.

Overdoing cross-selling strategy can alienate customers – one such indecorous tactic employed by industry players is the concept of “Big-days” or “Focused Product Drive”. These tactics fail in the long-run as they go against the tried-and-tested practices of focusing on customers’ needs, rather than pushing a product, solving the customer problem before pitching additional products and explaining how the additional product will benefit the customer. Further, pushing the customer with cross-selling offers triggers the customer to ignore these efforts, thereby de-sensitizing the customer to future cross-selling efforts.

5.     Faulty Incentive Plans – Uninspiring Rewards & Recognitions

It is widely recognized that incentives are critical to both upselling and cross-selling and extremely popular across the industry. However, these programs need to be commensurate, relatable, easy to comprehend, result-oriented and driving the right values. A proper mix of monetary and non-monetary plans which can be flexible and scalable to motivate the salesforce is key.

Conclusion: It can be difficult for FSS firms to effectively integrate the sale of different types of financial products to the same client while effectively acquiring sizable number of new customers.  Effective Program design with deep understanding of customer and salesperson psychology and planning can create all the difference between Success and disappointment.

 Preview to Part-2 of the series:

• Psychology of effective cross-sell
• The Farmer versus Hunter mindset
• The mis-selling trap