A comparative study of cross-selling practices in public and private sector banks in India

Received: 25th May, 2006

Richa Sharma Vyas*

is a third year research scholar of Fellow Program in Management at the Management Development Institute, Gurgaon, India. Her research interests include consumer behavior, marketing of nancial services and communication strategy. She has worked as a creative consultant for McCann Erickson advertising agency and as an academic associate at the Indian Institute of Management, Indore.

Nijaguna Rudrayya Bhusnur Math

is a Professor of Finance at the Management Development Institute, Gurgaon, India. He has more than twenty years of work experience in Indian Financial Services Industry. He has worked in the State Bank India group, the biggest commercial banking group in India, Reserve Bank of India , the central bank and monetary authority of India and in The Discount & Finance House of India, the rst and largest Primary Securities Dealer of India. His research interests include management of banks and nancial institutions, treasury operations, debt markets and nancial risk management.

Abstract This paper is a study of cross-selling practices in Indian public and private sector banks through the case study method. The study revealed that cross-selling practices in public sector and private sector banks are quite different. These differences emerge mainly from their different philosophy, background and distinct target customer segments. However, both sectors can learn from each other; public sector banks can introduce specialised training and incentives, whereas private sector banks need to introduce appropriate control mechanisms and avoid indiscriminate cross-selling. The paper also brings out the elements of successful cross-selling in India. Journal of Financial Services Marketing (2006) 10, 123134. doi:10.1057/palgrave.fsm.4760027 Keywords Cross-selling, customer retention, banking, customer relationship

INTRODUCTION The banking sector in India has witnessed a signicant transformation in the past few years.1 Extensive deregulation, dilution of government ownership in Public Sector Banks (PSBs) and opening up of the banking sector to new private sector banks, as well as foreign banks, has brought in keen competition. Unlike in the past, banks in India now face the same challenges as any other business enterprise; they have to compete and have to ensure maximisation of share*Correspondence: Management Development Institute, Gurgaon, Mehrauli Road, Gurgaon 122001, India Tel: + 91 124 5013050; Fax: + 91 124 2341189; e-mail: fpm03_richa_s@mdi.ac.in, richa_kashyap@yahoo.com

holders wealth. In such a scenario, it is but natural that marketing assumes critical importance. The focus of marketing within the nancial sector has shifted to managing relationships with customers.2 As cross-selling in banks is a relatively new phenomenon in India, it is felt that a study of how it is practiced in different banks in India, the problems faced in cross-selling and the various initiatives taken by banks would be useful. The paper is organised as follows. First, the concept of cross-selling is discussed. Secondly, a brief background on the present Indian banking sector is provided to place the readers in a proper perspective. This is followed by the research objectives and

2006 Palgrave Macmillan Ltd 1363-0539 $30.00

Vol. 10, 4 123134

Journal of Financial Services Marketing

123

www.palgrave-journals.com/fsm

Vyas and Math

methodology. In the next section, crossselling practices in Indian banks are discussed and some comparative evaluations and conclusions are presented; the implications of the study for practitioners in marketing of nancial services are described in next section. The last section includes some suggestions for future research directions. LITERATURE REVIEW: CROSS-SELLING AS A MARKETING TOOL Cross-selling is the practice of promoting additional products and services to existing customers in addition to the ones they have.3 Cross-selling has also been termed as encouraging a companys customers who have already bought its product A to also buy its product B.4 The new products marketed could also be products of group companies, or in the extreme case, those of other companies. While cross-selling helps banks increase their sales volumes, it also helps customers by providing them a one-stop solution. Customers prefer to have one-stop solutions due to increased time pressure and changed lifestyle. Thus, banks are able to provide customers greater convenience and added benets, such as preferential pricing. Studies have shown that customers prefer their existing banks for additional nancial services. In their study, McGoldrick and Greenland5 found that traditional suppliers of nancial services like banks are the most preferred channel for sales of loans and mortgages. Similarly, Lymberopoulos et al.,6 in their study conducted in Greece, found that customers willingness to buy insurance products from their banks is quite high. With increasing competition and reducing effectiveness of traditional marketing campaigns, cross-selling has emerged as a signicant alternative to traditional communication methods.7 The resulting multiple relationships create exit barriers and reduce the cost of acquiring new customers.8

As customers buy additional service/products, the number of contact points increase leading to higher switching costs for the customers.9 Selling additional services to existing customers also reduces banks cost of advertising for customer acquisition and leads to a pricing advantage over competitors.10 Thus, Indian banks have adopted cross-selling as the main plank of their marketing strategy. Banks have to develop individual relationships with customers; this helps in providing customised products and a marketing mix to suit individual needs.11 Successful cross-selling depends on optimum contact management as they may jeopardise the efforts by excessive and repetitive contacts with a customer.11 It also requires a capacity to capture and hold customers information in an accessible form.12 Demographic data, such as income, education, nancial status and age, may provide banks useful information about the probability of purchasing another product from the same bank.13

Table 1 Benets of cross-selling for banks and customers Benets to bank Cost reduction in customer acquisition Improvement in customer retention Reduction of advertising expenditure Increased protability Benets to customers One-stop solution Reduced cost of transactions Additional benets, for example, preferential pricing Reduced formalities and paper work, as customers do not need to prove credentials for every new product bought Reduction in transactional risks

Protecting market share Leveraging on existing brand equity Economies of scope as common infrastructure can be used for selling more products

124

Journal of Financial Services Marketing

Vol. 10, 4 123134

2006 Palgrave Macmillan Ltd 1363-0539 $30.00

A comparative study of cross-selling practices

Table 2 Elements of successful cross-selling Elements of successful cross-selling Brand name Customer focus Motivated employees Incentive for cross-selling Training for cross-selling Contact management Reference Cocheo14, Hughes15 Cocheo14 and Jarrar and Neely16 Belsey17 and Sonnenberg18 Jarrar and Neely16 and Sonnenberg18 Jarrar and Neely16, Jones and Farquhar19, White20 and Krebsbach21 Lau, Chow and Liu7 Hughes15 Sonnenberg18 Jarrar and Neely16

Database and CRM tools availability Internal and external communication Customer protability analysis

practices. As a result, public sector banks were given more independence and private sector entry was allowed. Nine new private sector banks along with many foreign banks were allowed to enter. Also, existing foreign banks were allowed to expand their branch network. The most signicant achievement in the banking sector has been the marked improvement in the nancial health of banks in terms of capital adequacy, protability and asset quality with an increasing focus on risk management.21 Presently, 27 public sector, 20 old private sector, 10 new private sector and 33 foreign banks are operating in India (Table 3).23 Thus, a tremendous competition has been introduced, which is only going to become more intense. Banking, in India is no longer just accepting deposits and making loans at specied rates. It is now a business in a highly competitive environment.24 OBJECTIVES OF THE STUDY

The benets of cross-selling to banks and customers are summarised in Table 1. Table 2 presents the elements of successful crossselling documented in the extant literature. THE INDIAN BANKING SECTOR Since the establishment of the rst bank The General Bank of India in 1786, the Indian banking sector has come a long way. The rst major development was nationalisation of major banks in 1969, which brought most of the banking business under public ownership. This helped the expansion of geographical coverage of banks and supported developmental work. However, it also brought the ills of government ownership, disregard of prot motive and insensitivity to customer needs, resulting in highly inefcient and loss making banks. Reforms based on the Narsimhan Committee Report (1992),22 changed the Indian banking sector completely. The Committee proposed a market forces driven banking system and the introduction of internationally accepted best

This paper aims to understand cross-selling techniques adopted by banks in India through a study of public and new private sector banks. The objective is to explore and understand the following: Existing cross-selling practices in different banks Hurdles faced by banks in cross-selling Initiatives taken by banks for improving effectiveness of cross-selling Elements of effective cross-selling in India. Finally, the aim of the study is to derive managerial implications and strategies concerning cross-selling, which are relevant for all banks in India. RESEARCH METHODOLOGY Six banks three from the public sector and three from the new private sector were selected. Background information on these banks was collected from published

2006 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 10, 4 123134

Journal of Financial Services Marketing

125

Vyas and Math

Table 3 Indian banking industry, 31st March, 2005 Sector Public sector Old private sector New private sector Foreign banks Number 27 20 10 33 Market share % 74.50 6.11 12.48 6.90 Protability (ROA) % 1.12 1.20 0.83 1.13 Characteristics Wide spread branches, old clientele, traditional business, low technology and old practices Traditional business, regional New clientele, younger customers, high-tech urban branches, young staff Metropolitan branches, focused clientele

reports of Reserve Bank of India (RBI), their respective websites and other sources. Thirtysix ofcials, six from each bank, were interviewed. These interviews were qualitative interviews and were carried out in multiple sittings. Ofcials were chosen from different levels of hierarchy, such as Vice President, General Manager, Regional Managers, Branch Managers and counter clerks, across three to four branches. Interviewing ofcials at different hierarchy level helped not only in understanding the perspectives of both planners and practitioners but also in validating the information generated from different sources. Banks from public sector and new private sector were selected for this study as they represent two ends of the spectrum of banking industry in India. Public sector banks are large and struggling to protect their market share, sheding age-old practices and introducing the latest technology. On the other hand, new private sector banks started with a clean slate, latest technology and best practices. Foreign banks could not be included in the study due to their reluctance to share information. However, since market shares of both the foreign banks and the old private sector banks are not signicant, generalising from the ndings of the study would not be materially compromised. Findings from the study, therefore, are based on qualitative interpretation and not statistical analysis. However, studies have shown that in the development of theory it is not necessary to nd statistical evidence on

single issues, but rather the aim should be to understand and conceptualise a phenomenon.25 Cases that differ from each other should be examined in order to nd out as much as possible about the phenomenon studied.26 Although there may be reservations about the generalisation of such results, because of the explorative nature of the study, it is felt that meaningful insights can be drawn. The banks selected for study are as follows (Table 4).

FINDINGS OF THE STUDY Cross-selling practices in public sector banks Bank A Bank A was established in 1908 and currently has subsidiaries in diversied areas, such as merchant banking, housing nance, credit cards and mutual funds. These group companies are market leaders in their respective elds. Employees of bank A cross-sell products in the traditional way. Branch managers generally scan through customers accounts to understand their needs, for cross-selling. Employees personal knowledge about customers helps them in timely recognition of a need of the customer depending on his life-cycle stage. No external agency like Direct Sales Associates (DSA), etc is used, as bank ofcials believe that aggressive cross-

126

Journal of Financial Services Marketing

Vol. 10, 4 123134

2006 Palgrave Macmillan Ltd 1363-0539 $30.00

A comparative study of cross-selling practices

Table 4

Branches, total assets and net prots, 31st March, 2004 Public sector banks Bank A Bank B Private sector banks Bank X Bank Y 470 $ 27.82 billion $ 268 million 215 $ 5.36 billion $ 42 million

Bank C 2,508 $22.2 billion $297.33 million

Bank Z 478 $9.4 billion $158.22 million

Total no. of branches Total assets Net prot

2,744 $18.9 billion $215 million

9,038 $90.62 billion $ 818 million

Table 5

Cross-selling practices at bank A Hurdles Lack of updated databases; crossselling depends on the individuals memory and initiative No access to CRM and data mining tools New initiatives Cross-selling has become one of the areas of focus Incorporating marketing philosophy and training sessions for managers are being arranged at middle and senior levels Leveraging the relations with old clients

Existing practices Only group companies products are cross-sold Cross-selling is done by employees

Mailers are rarely used

Lack of good network of ATMs, poses a big problem in targeting younger customers Absence of formal training programmes reduces effectiveness of cross-selling efforts Lack of incentives remains a major barrier in motivating employees

Services of external marketing agency are not used Employees have good personal knowledge about customers Aggressive cross-selling is avoided No personal incentives are given

selling would lead to problems, such as delinquencies and defaults (Table 5). Training for employees is an important element in increasing the effectiveness of cross-selling.16,18 In India where personal relations with banks are valued by customers, appropriate training may help bank A in leveraging the customeremployee relationship. As motivated employees are a must for successful cross-selling,14,16 incentives can be a catalyst in motivating employees. To improve cross-selling efforts, banks must include appropriate incentive programme. Bank As older clientele is relatively more relationship oriented, needs personal recognition and is willing to accept advice

from the ofcials. It is understood that now there is a conscious effort to leverage on this. Bank B Bank B was constituted on 1st July, 1955. It has diversied into all segments of nancial services. All its branches are currently fully computerised. This has contributed to signicant improvement in customer service (Table 6). Synergies among various subsidiaries are well exploited for cross-selling. However, at times it has been found that subsequent to offering a subsidiarys product to their client, the subsidiary company nds him ineligible for that service. In such a case, there is a chance that the banks relationship with its

2006 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 10, 4 123134

Journal of Financial Services Marketing

127

Vyas and Math

Table 6 Cross-selling practices at bank B Existing practices All subsidiaries of the bank work in close relationship Many a time, cross-selling results in awkward situations for the subsidiaries Hurdles Synergy may not work in cases of clash of interests Role conicts arise for cross selling subsidiarys products New initiatives Steps have been taken to improve synergies within the group A new position at the Corporate Centre with a rank of General Manager is being created. This would ensure adequate focus on cross selling Proposal for appointing relationship managers

No formal individual incentives are provided for cross-selling Specialised training for selling/ cross-selling is not available

Problem of data integration Non-availability of CRM packages Lack of training in cross-selling Lack of incentives remains a major hurdle

customer may suffer, and at the same time, the subsidiary or the group as a whole does not derive any benet. Synergy also does not work in case of clash of interest between subsidiaries, for example, funds moving from deposit accounts to mutual fund schemes. Such conicts need to be resolved. More clarity is needed about who should sell the product; employees of the bank or only those of the subsidiary who have good knowledge. Proposed appointment of relationship managers is a good step towards more effective of cross-selling. Relationship managers would interact with clients on a continuous basis, understand their needs, identify appropriate products and forward this information to the concerned subsidiary. Bank Bs old database contains limited information about customers compared to new database with a wider information spectrum. Updating the old database is a major problem, as data integration requires combining the two existing databases. Until data integration and software implementation is complete, CRM softwares cannot be implemented, which is considered an essential ingredient for successful cross-selling.7,15 Cross-selling at bank B will depend largely upon employee initiative and motivation. Therefore, incentives must be given to employees. Training being important for

cross-selling must be available at all levels.16,18 It is especially critical for ofcials manning the tellers, who interact most with clients. Bank C Bank C was started in 1906 and was nationalised in 1969. The bank was among the rst to provide IT-based services. With 100 per cent computerisation of the branches, the bank now provides a wide array of services, such as Networked ATMs, Anywhere Banking, Tele-banking, Remote Access Internet Terminals, Mobile Banking, Debit Card, etc (Table 7). For selling in-house products, branch managers and marketing ofcers identify customers needs on the basis of their existing accounts. In addition, bank C has a contract with an MNC insurance company to sell the latters products. For this, the bank has identied a separate bancassurance team. The ofcers in this team are not attached to any branch but cover about ten branches each. The bank has multiple contact points for customers. They are approached both when they visit the branch as well as over the phone. However, frontline ofcials are more concerned about the viability of accounts as they feel that aggressive selling may compromise banks interests.

128

Journal of Financial Services Marketing

Vol. 10, 4 123134

2006 Palgrave Macmillan Ltd 1363-0539 $30.00

A comparative study of cross-selling practices

Table 7 Cross-selling practices at bank C Existing practices Cross-selling of in-house banking products is done at the branches Cross-sell products of a MNC insurance company Not aggressive in selling these (bancassurance) products Multiple contact points for customers Problem of data integration Lack of CRM software package is a major hurdle Training remains an obstruction Hurdles Lack of incentives for bancassurance ofcers is a major hurdle Owing to policy of permanent tenure, performance in cross-selling is not valued by employees New initiatives Training for all employees to strengthen cross-selling efforts

High net worth individuals (HNIs) are generally contacted by calling on them at their convenience Only ofcers are given training No individual level incentives are given

Similar to all other public sector banks, bank C faces problems due to lack of training, employee motivation and incentives. The bank is taking initiatives in this direction. As counter clerks are the ones who are always in touch with customers, they are provided with special training to identify cross-selling opportunities. It was found that bank ofcers are unenthusiastic about cross-selling since it is seen as an unwanted job without any additional compensation.18,27 Owing to lack of CRM packages, cross-selling depends on the interest of the ofcials and their knowledge about customer characteristics. This creates a problem when ofcials are transferred out. CROSS-SELLING PRACTICES IN NEW PRIVATE SECTOR BANKS Bank X Bank X was established in 1994 as a subsidiary of a development nancial institution. Subsequently, in 2002, the parent was reverse-merged with the bank resulting

in a much larger institution. It is currently a diversied nancial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and afliates. The bank has a universal banking model. This banking model provides all group products under one roof in all branches. Separate help desks are manned by sales executives for all products. Availability of CRM and business intelligence software gives bank an edge in cross-selling.7 Training in cross-selling helps these executives to catch hold of every walk in customer, service his existing needs and try to cross-sell related products or direct him to an appropriate help desk. Apart from contacting customers in branch ATMs, mailers of latest offers are attached to all correspondence with the existing customers. Customer account managers keep in touch with HNI customers, put through their transactions, offer services for best utilisation of their wealth and keep an updated information base about them (Table 8). Keeping in mind the aggressive crossselling, the bank needs to work on optimum

2006 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 10, 4 123134

Journal of Financial Services Marketing

129

Vyas and Math

Table 8 Cross-selling practices at bank X Existing practices Bank follows the universal banking model Sales executives are specially trained for cross-selling ATMs are used as the contact points for cross-selling CRM packages are used to identify cross-selling opportunities Tele-marketing executives are also used for cross-selling products of the group Bank has a dedicated Customer Account Manager for each HNI customer Hurdles Bank does not face any major hurdle as its systems for cross selling are well in place There are some incidents of complaints from irritated customers due to aggressive crossselling New initiatives Not disclosed

contact management. In attempting to make more contacts, bank executives may irritate customers by contacting them again and again. According to Bob Grieb as quoted by Krebsbach,21 a client should be contacted six to 12 times annually. Bank Y Bank Y was promoted jointly by Indias largest mutual fund and a host of public sector insurance companies in 1994. Right from the beginning, it has been a technology focused bank, operating on a centralised database. Through strategic use of technology, it also provides services to its customers across various delivery channels, such as the Internet, ATMs, Tele-banking or Branches (Table 9). The bank has the latest technology and all customer data are integrated. This is the biggest strength of the bank in cross-selling. Whenever a customer walks-in for any service, she is appraised for all facilities and products. Executives register customers for various services, such as tele-banking, mobile banking, etc. This way, customers can be contacted in multiple ways for cross-selling. Acquiring multiple forms of customer information helps in developing customer relationships as communications at various

points can catch customers attention better.28 The bank has a pact with India Post Services, to provide loans against nancial products of the Department of Posts. Also, both parties sell each others nancial products. Such pacts with similar agencies are especially useful in expanding the target market. Bank Y has created a niche in crossselling mutual funds. Apart from group mutual fund schemes, it cross-sells 14 other mutual funds, on agency commission. Bank Ys initiative for a pact with India Post Services is a good step, but to be successful, customer lists of both organisations must be put together. Reciprocal selling may help them a lot in expanding their respective clientele. In such arrangements, promoting credibility between business lines is a must.21

Bank Z The bank was incorporated in August 1994 and commenced operations in January 1995. From inception, it has installed the latest technology. Customers in 90 locations are connected with phone-banking. Bank Z has implemented CRM packages, which play a crucial role in cross-selling. At the corporate level, experts use data mining to identify

130

Journal of Financial Services Marketing

Vol. 10, 4 123134

2006 Palgrave Macmillan Ltd 1363-0539 $30.00

A comparative study of cross-selling practices

Table 9 Cross-selling practices at bank Y Existing practices All branches sell all products Hurdles Training for cross-selling is not available at all levels of hierarchy New initiatives Bank has a pact with India Post Services, to cross-sell Provide nancial advisory services. This will be one step below portfolio management and private banking Plans of adopting a broking model and thereby, utilising its expertise in cross-selling; insurance being rst on its priority list

Inter-departmental synergy is actively encouraged Multiple contact points are used for cross-selling Highly aggressive in selling mutual fund products. Incentives are provided at sales executive level No specialised training for crossselling

good prospects for cross-selling. This information is used to prepare a list of customers, which are sent to branches. Database and business intelligence software helps in in-depth understanding of customers proles and facilitate effective cross-selling.7 In this regard, bank Z has a competitive advantage. Also, it is compulsory for every employee to make 45 pitches over the phone each day. Training not only is given at all levels of hierarchy but it is also mandatory. Further, both in-house and outside training experts train the employees. To monitor cross-selling activities, bank managers usually make random calls to customers to nd our whether they have been provided with right information or not. The bank provides the customers good incentives for cross-buying in terms of preferential pricing (Table 10). The managers feel that they have a perfect blend of all essential elements required for cross-selling. However, discussions revealed that regular customers feel irritated by repeated attempts made at cross-selling. The bank needs to work on optimum contact management to overcome this problem.21

COMPARISON OF FINDINGS In this sub-section, we attempt a comparison of cross-selling efforts undertaken by public sector and new private sector banks, respectively. We identify six parameters that relate to cross-selling activities and report the status of each bank in relation to each parameter. Table 11 presents the pertinent ndings. Table 11 shows that cross-selling practices in public sector banks and private sector banks are quite different. In general, the: new private banks are more likely to employ what the literature has recognised as effective elements of cross-selling. These include: employee training, incentives, utilisation of cross-selling professionals, customer focus and more coordinated usage of databases and CRM tools. In most cases, public sector banks are found to be weak in these areas. Although both the sectors have some problems, the nature of these problems is different. Public sector banks face more hurdles compared to their private sector counterparts, as it is difcult for them to shed old practices and change employees

2006 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 10, 4 123134

Journal of Financial Services Marketing

131

Vyas and Math

Table 10 Cross-selling practices at bank Z Existing practices CRM packages are used to decide cross-selling strategies Bank is very aggressive in cross-selling; it is a part of every employees job Mandatory training at all levels of hierarchy Good incentives at both individual and group levels Monitoring of cross-selling by random checking Hurdles No major hurdles in cross-selling practices Regular customers feel irritated by repeated attempts at cross-selling New initiatives Not disclosed

mind set. The study found that most public sector bank ofcials perceive the role of a sales person as derogatory. As public sector banks have a unique feature of guaranteed lifetime employment, lack of incentives is a major hindrance. Thus, motivation of employees in public sector banks is critical to the implementation of cross-selling. Further, there are no specic strategies; PSBs need to incorporate consistent front-line sales processes, to involve counter clerks and make cross-selling an integral part of their jobs.29 These banks are at a disadvantage as far as IT implementation is concerned, although most of them are now in the process of upgrading their IT systems. Lastly, the non-aggressive stance of public sector banks will result in loss of opportunities. New private sector banks, on the other hand, have different problems. They need to reconsider their existing aggressive crossselling efforts specially bank X and Z where aggressive cross-selling may give rise to negative consequences. During the interviews, some ofcials indicated that repeated efforts to cross-sell lead to increased customers complaints. Also, a suitable control mechanism over incentives is required in private sector banks to control indiscriminate cross-selling, which may result in non-performing assets (NPAs). Despite these differences, it was found that all banks converge on the issue of seriousness

towards cross-selling, on improving their cross-selling practices and on taking new initiatives in this direction. Therefore, the future of cross-selling in India depends on initiatives taken by banks. CONCLUSIONS Despite the differences in public sector banks and new private sector banks, it was found that both the sectors understand importance of cross-selling for protability and are incorporating initiatives for effective crossselling. As Indian customers demographic and lifestyle prole is changing, attention should be given to the following. In India, customer characteristics play a major role in determining which product to cross-sell and through which channel. Public sector banks have relatively older clienteles who prefer personalied services, are interested in long-term relations with their bank and are willing to seek expert opinion of bank ofcials. On the other hand, new private sector banks cater to a younger clientele, who want services as per their convenience and are averse to relationships. These differences need to be considered while designing cross-selling campaigns, systems and processes. Contact management is another crucial element for cross-selling. Banks have to understand customers preferences and

132

Journal of Financial Services Marketing

Vol. 10, 4 123134

2006 Palgrave Macmillan Ltd 1363-0539 $30.00

A comparative study of cross-selling practices

Table 11

A snapshot of comparative analysis of cross-selling practices New private sector banks Bank B Not given Only group incentives as an informal procedure Bank C Given at some levels Only group incentives as an informal procedure Bank X Highly encouraged Individual incentives Bank Y Not given Only for sales executives Bank Z Given at all levels Available at both individual as well as group level Marketing professionals are hired

Public sector banks Parameters Training for cross-selling Incentives Bank A Not given None

Professional sales skillsa

Available at managerial level only

Available at managerial level only

Available at junior and middle managerial level Low

Marketing professionals are hired

Marketing professionals are hired

Contacts made for cross-selling Customer focus Database availability

Low

Low

High

Moderate

High

Low Low

High Medium, in the process of integration In the process of implementation

Low Low

High Readily available at the point of sales Already in use

High Readily available

High Readily available at the point of sales Already in use

CRM tools

Not available

Not available

Already in use

While the new private sector banks hire marketing and sales professionals, PSBs do not.

design an optimum contact management system, as more does not necessarily mean better. Apart from these, it is very important that banks give employees specialised training and put in place suitable motivational schemes. MANAGERIAL IMPLICATIONS The ndings of this study provide a number of practical implications for those involved in cross-selling nancial products in India. Indian customer characteristics should be central in all cross-selling programmes. They must be used while deciding on optimal contact management. Sensitivity to different customer segments is critical for successful cross-selling and the marketing plan should be built around these segment differences.

Further, training employees for a customeroriented proactive marketing approach is vital, and this applies to all banks. Along with this, incentive programmes are also important. Lastly, there is a need to adopt controlled cross-selling to avoid negative consequences. In addition to these general implications, managers in public sector banks need to bring a change in the mind set of employees; they have to adopt the skills of sellers. These banks have to redesign the employees job prole to include cross-selling as an integral part of their regular work, develop customer databases and install CRM tools to facilitate cross-selling. Similarly, new private sector banks may also benet by reconsidering some of their existing aggressive practices as annoyed customers will not only increase attrition but

2006 Palgrave Macmillan Ltd 1363-0539 $30.00 Vol. 10, 4 123134

Journal of Financial Services Marketing

133

Vyas and Math

may also spread negative word of mouth. Although incentives are vital, employees should not overlook the viability of an account while cross-selling. To prevent defaults, incentive schemes in private sector banks should be accompanied with a suitable control mechanism. FUTURE RESEARCH DIRECTIONS This study of cross-selling practices in Indian banks has been contacted from the bankers point of view. There is a need to understand customers attitude towards cross-selling, in the Indian context. A banks marketing strategy will not be successful if this is not taken into consideration. Also, there is a gap in the understanding of the key driving forces behind cross-buying. Knowledge in this connection will help in formulating a banks strategy. Other specic issues such as role of internal marketing in effective crossselling can also be analysed by researchers in the area of nancial marketing. REFERENCES

8 9

10

11 12

13

14 15

16

17 18 19

3 4

Kamath, K. V., Kohli, S. S., Shenoy, P. S., Kumar, R., Nayak, R. M., Kuppuswami, P. T. and Ravichandran, N. (2003) Indian Banking Sector: Challenges and opportunities, Vikalpa, Vol. 28, No. 3, pp. 83104. Sureshchandar, G. S., Rajewndran, C. and Ananthraman, R. N. (2003) Customer perceptions of services quality in the banking sector of a developing economy: A critical analysis, International Journal of Bank Marketing, Vol. 21, No. 5, pp. 233242. Butera, A. (2000) Cross-selling: Capitalizing on the opportunities, Hoosier Bank, Vol. 87, No. 7, pp. 1416. Deighton, J., Peppers, D. and Rodgers, M. (1994) Consumer transactions databases: Present status and prospectsin Blatter, R.C., Glazer R. and Little J.D.C. (eds) The Marketing Information Revolution. Harvard Business School Press, Boston, MA. McGoldrick, P. J. and Greenland, S. J. (1992) Competition between bank and building societies the retailing of nancial services, British Journal of Bank Management, Vol. 3, No. (3), pp. 169179. Lymberopoulos, K., Chaniotakis, I. E. and Sourelli, M. (2004) Opportunities for banks to cross-sell insurance products in Greece, Journal of Financial Services Marketing, Vol. 9, No. 1, pp. 3448. Lau, K. N., Chow, H. and Liu, C. (2004) A Databse approach to cross selling practice, strategies and challenges, Journal of Database Marketing & Customer Strategy Management, Vol. 11, No. 2, pp. 216234.

20 21

22 23

24

25

26 27 28

29

Reichheld, F. F. (1996) The Loyalty Effect, Harvard Business School Press, Boston, MA. Kamakura, W. A., Wedel, M., De Rosa, F. and Mazzon, J. A. (2003) Cross selling through database marketing: A mixed data factor analysis for data augmentation and prediction, International Journal of Research in Marketing, Vol. 60, No. 3, pp. 121. Reichheld, F. F. and Sasser, W. E. (1990) Zero defections: quality comes to services, Harvard Business Review, Vol. 68, No. 5, pp. 105111. Peppers, D. and Rogers, M. The One-to-One Future, Piatkus, London. Dibb, S. (2001) Banks, customer relationship management and barriers to the segment of one, Journal of Financial Services Marketing, Vol. 6, No. 1, pp. 1023. Kamakura, W. A., Ramaswami, S. N. and Shrivastava, R. K. (1991) Applying latent traits analysis in the evaluation of prospects for cross-selling of nancial services, International Journal of Research in Marketing, Vol. 8, No. 4, pp. 329349. Cocheo, S. (2000) And they said it couldnt be done, ABA Banking Journal, Vol 92, No. 4, pp. 33-34. Hughes, T. J. (1992) The customer database: Cross selling retail nancial services, The International Journal of Bank Marketing, Vol. 10, No. 7, pp. 1117. Jarrar, Y. F. and Neely, A. (2002) Cross selling in the nancial sector: Customer protability is the key, Journal of Targeting, Measurement and Analysis for Marketing, Vol. 10, No. 3, pp. 282296. Belsey, P. (2004) Cross-selling: Avoiding the hard sell, Accountancy Age, July. Sonnenberg, F. K. (1988) The power of cross-selling, Journal of Business Strategy, Vol. 9, No. 1, pp. 5661. Jones, H. and Farquhar, J. D. (2003) Contact management and customer loyalty, Journal of Financial Service Marketing, Vol. 8, No. 1, pp. 7178. White, D. (1994) Familiarity breeds contempt, Banking World, Vol. 12, No. 5, pp. 18. Krebsbach, K. (2000) Banks new mantra: Cross sell like crazy, Bank Investment Consultant, Vol. 10, No. 8, pp. 2228. Datt, R. and Sundaram, K. P. M. (2003) Indian Economy, 47th edn, S Chand and company Ltd, New Delhi. Report on Trends and Progress of Banking in India 200304. supplement to RBI Bulletin, December2004. Padwal, S. M (1995) Need for an information strategy in the nancial sector, MDI Management Journal, Vol. 8, No. 2, pp. 1729. Yin, R. K. (1994) Case Study Research Design and Methods, Applied Social Research Methods Series, 2nd edn, Vol. 5, Sage, Newyork Park. Gummesson, E. (1991) Qualitative Methods in Management Research, Sage, Newbury Park. Belsey, P. (2004) Cross-selling: Avoiding the hard sell, Accountancy Age, July. Peltier, J. W., Schibrowsky, J. A., Schultz, D. E. and Davis, J. Interactive psychographics: Cross selling in the banking industry, Journal of Advertising Research, (00218499, Mar/ Apr 2002, Vol. 42, No. 2, pp. 722. Ken, M. (2005) Why most cross-selling efforts op, ABA Banking Journal, Vol. 95, No. 2, pp. 6466.

134

Journal of Financial Services Marketing

Vol. 10, 4 123134

2006 Palgrave Macmillan Ltd 1363-0539 $30.00