Study: Inbound Cross-Selling Can Outdo Outbound Service For Banks

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Inbound call centers can be a productive cross-selling channel for banks and other financial institutions with the proper technology, infrastructure and incentive plans, according to a year-long study of teleservices operations.


David Howe, vice president with consultant Booz, Allen, Hamilton, New York, found that inbound cross-selling can lead to response rates three times higher than traditional outbound telemarketing, direct mail and in the case of banks, branch visits.


Retail banks, with a few exceptions, are lagging the leading practitioners of inbound call center technology -- credit card issuers, mutual fund and telecommunications companies and some retailers -- but have ample opportunity for growth.


"This channel is uniquely powerful to sell additional products in a targeted way,'' Howe said. "Not only is there an up side [to inbound selling], but a reasonably modern call center can be easily leveraged to take advantage of it. So the returns can be very near term.''


Inbound calling is unique in three ways. The customer is calling the bank so they feel in control of the transaction. The bank is all they are thinking about at the moment and they are ready to discuss banking issues. And the two-way communication allows the call center representative to learn something about the consumer and whether to offer a cross-sell.


The type of offer and its timing is critical and requires training the call center reps to think in terms of profitability rather than cost reduction. For the channel to be effective, reps must adopt a sales attitude and have the latitude to stay on the phone longer than they would when resolving customer service problems. Howe said incentive plans must be included in an employee's compensation package to encourage this sales attitude.


"The point is not to reduce costs but to maximize the relationship profitability of each call,'' Howe said. "If you keep measuring on cost and ask them to sell, they won't do it. People understand what they are paid to do.''


The proper technology is also essential. The better firms that Howe studied all practiced information-based marketing that gave reps a profile of the customer on the call. When a call comes in, the computer system knows who the customer is and can pop up a profile on screen before the rep answers the call, or in some cases calls can be routed to the right specialist to cross sell a specific product.


Companies assist their reps by developing sophisticated models that predict customer behavior and allow their offers to be much more targeted. Models can advise reps on selling strategies or even dictate actions during a call.


While call center infrastructure is applicable to any product, different models need to be built for specific financial products. Models look at profitability and predicted response rate of a product, the volume of the inbound channel and the cost of product deliverability, then come up with a ranked set of cross-sell offers.


To become adept on this channel requires experience, Howe warned.


"The ones who are really leading edge have typically been at it for at least three years,'' Howe said. "This is something you won't become world class in in a few months or even a year; it's an evolutionary process.''


While the leading players have a better set of in-house capabilities than outsourced call centers, he was impressed with some of the outsourced centers - Teletech, Denver, and Sitel, Omaha, NE, in particular -- and said they are a good option for some financial institutions.
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