56 JULY / AUGUST 2019 SALES / MARKETING It is not uncommon to hear bankers talk about new customer acquisition and their desire to expand market share. It is clearly one element of a growth strategy. However, too many financial institutions overlook the wealth of business that can be nurtured from within their existing client bases. In some institutions, single-service household ratios exceed 40%. If nearly half of your clients have selected you for only one of 12 to 15 measurable financial solutions, there is definitely room to improve performance. Data indicate that the average number of households with only one service typically represents 30% to 45% of a community bank’s households. With industry research showing it costs five to seven times more to acquire a new client than to retain and expand relationships with existing clients, every institution has a compelling reason to stop and examine internal relationship opportunities. Once a client has made its first purchase decision, it is logical to leverage that acceptance and initial trust by suggesting appropriate financial solutions. If you already know the client, why not deepen that relationship before you spend resources to introduce yourself to a prospect who hasn’t chosen you for any solutions at all? Client purchase behavior indicates that the likelihood of new clients to purchase additional products is higher during the first six months of their relationships with financial institutions. If clients have a natural tendency to reinforce their first purchase decision with additional products, we should not overlook the power of that opportunity. Three Stages of Relationship Development Client service and relationship development occurs in three steps: 1. Retention. You can fill a bucket faster if it is not Relationship Cultures and Customer Care leaking. Continually ask yourself: “What can I do to make each client experience pleasant and fulfilling?” Differentiating service is the best foundation for retention. Understanding existing customers and anticipating their service needs is important. In an industry where customers have myriad choices, actively offering the “next best” solutions helps eliminate the competition. 2. Expand relationships with clients who have chosen you for at least one solution. You’ve worked hard to establish initial product usage. Now you need to optimize the economics of expanding relationships with additional, benefit-based solutions for each client – not broad groups of customers, but individual clients with unique and focused objectives. After the purchase decision has been made, it is important to connect with the customer to understand their desires, goals and expectations. 3. Attraction of new clients. This step is last, because it is the costliest sales process you can implement. That doesn’t mean acquisition is not necessary; it is very important. But in the world of relationship development, acquisition of new relationships must be balanced effectively with other dimensions of the process. Deliver Service That Differentiates You Great service is the launching pad for all relationship growth. Clients need to feel comfortable with your institution before they will trust you for their financial solutions. As you migrate from a simple product purchase to a trusted relationship with a client, different dimensions of service will influence client behaviors. Proactively managing the service delivery is critical if you intend to differentiate your institution from the long list of competitors. Tom Hershberger President/CEO Cross Financial Faculty Member Graduate School of Banking at the University of Wisconsin tom@crossfinancial.com
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