Cross Selling Not New But Ripe For Use

By

Toronto

Cross selling is not a new idea but it is a practice that is ready to be more fully used, Charles R. Wright, executive vice president and chief agency and marketing officer of State Farm Insurance Companies said during a session on cross selling at LIMRA’s 2001 International Annual meeting.

Wright said that many companies attempted and failed to cross sell in the 1980s, mainly for two reasons: Companies did not focus on matching services and products to clients’ needs, and perhaps the time was not yet ripe, Wright said.

The present is a more auspicious moment for cross selling, Wright said, because of advanced technology and consumers being busier and more affluent than in the recent past.

The fact that they’re busy suggests that one-stop shopping might be just what they’re looking for in terms of satisfying their financial needs, Wright said.

“Other companies are very interested in your customers,” he said. “If you’re not (cross selling), other companies will.”

A company interested in cross selling needs to be able to offer the right products to consumers, and have the right training and compensation and reward system in place for its agents, Wright said.

Agents should focus on selling the products that their clients need, rather than the products that will generate the most commission dollars, Wright said. “That’s a philosophical thing you’ve got to engender with your agents,” he said. “The return is on the total package of products, not just an individual sale.”

He emphasized that the relationship the agent builds with the client will decide whether the client buys more products from him and how long the client will keep her money in the agent’s organization.

“Who’s going to win the war for the customer? It all comes down to who’s got the strongest relationship with the client,” Wright said. Creating a strong relationship is “the single most important thing to do to insulate your business.”

State Farm, based in Bloomington, Ill., measures its success in the cross-selling market by how many products it has in a household, he said.

Sometimes the best product for a client is something the agent’s company doesn’t offer. To manage such a situation, State Farm has created partnerships with other companies that do offer products missing from their own rosters. Wright gave as an example State Farm’s health insurance product. Created in the 1960s, it was outdated in today’s marketplace. So, the company formed an alliance with Fortis in Milwaukee to offer health insurance. State Farm agents market Fortis products in their agencies, Wright said.

Companies that want to motivate agents to cross sell should use incentives and bonuses that can as much as double the compensation that is already there, Wright said.

An organization interested in cross selling should ensure its agents have the appropriate knowledge by mandating they receive either the Chartered Financial Consultant or Certified Financial Planner designations.

A company should also back up an agent with office staff that has been adequately trained, Wright said. State Farm agents have an average of three staff people, about 90% of which have become an effective tool for marketing, he said. “This is an absolute must extension of what’s going on out there.”

State Farm also uses financial services product advisors and specialists as a backup source for agents, Wright said, because “there’s no end to what we can sell as a company but there is a limit to how many products the agent can be expert on.”

State Farm specialists and FSPAs work with agency field offices, which include about 30-35 agents, Wright said. They do not participate directly in sales.

An organization that wants to be successful at cross selling must have an “enormous amount of commitment at the top,” Wright said. “We’ve made cross selling part of our vision and mission.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 5, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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