About the author Sanjay M. Nafde Chief Manager (Formerly) State Bank of India & Freelance Writer
This relationship is particularly important for services like Banking and insurance where the relation between the customer and the service provider is of trust. Adding to the magnetism of customer retention as a strategy is the finding that it can reportedly cost anywhere from five to ten times as much to acquire a new customer than to retain an existing. One of the more widespread strategies for customer retention is the practice of cross-selling.
Cross selling has been defined as "offering current customer additional products or services that can provide added value for them". Cross selling has also gone by other names such as companion selling, suggestive selling, and complementary selling (Polonsky et al. 2000). Early jargon for a related selling practice is "bundling." Bundling refers to "the practice of marketing two or more products and/or services in a single 'package' for a special price".
Many experts feel that by selling additional products and services to existing customers, the cross-selling operation creates more value for both customer and service provider. On one side by offering more products from their contemporary product portfolio, service providers create value for their customers, who now can procure services from a single vendor. On the other hand, cross-selling enables service providers to boost up their sales and exploit their broader product portfolio, thus contributing high turnover with only marginal costs. They experience no extra costs in acquisition or distribution, because their customer relations and sales channels already have been recognized. The marginal cost of selling additional products is relatively low when compared with total costs, and most services offered by firms are interdependent in nature.
This story is from the December 2023 edition of BANKING FINANCE.
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This story is from the December 2023 edition of BANKING FINANCE.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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