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Jun 7, 2024

The Power of a Golden Record for Cross-Selling and Upselling Banking Products

In the first quarter of this year, total household debt increased by $184 billion (1.1 percent) to an all-time high of $17.69 trillion, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data. In the same timeframe, mortgage balances rose by $190 billion to $12.44 trillion, and auto loan balances rose $9 billion to $1.62 trillion.

For banks and financial services institutions intent on maximizing cross-sell and upsell opportunities, rising consumer debt increases pressure to mitigate risk by knowing more about an existing customer. For a client with a mortgage, for example, would it be more advantageous to offer homeowner’s insurance or a savings product like a CD? If a customer is making a change to a life insurance policy, is it a good time to offer a retirement plan? As for upsell opportunities, perhaps a customer with a basic credit card might be interested in a premium card with more benefits.

There are several reasons why banks and financial services institutions continually pursue cross-sell and upsell offers. One is to drive revenue. Another is to save acquisition costs. According to the ABA Banking Journal, 80 percent of future profits come from 20 percent existing customers. Another reason is to build customer loyalty. Converting a cross-sell or upsell offer is advantageous to the company, but it is also advantageous to the customer, saving time, money and resources.

The challenge for banks is to identify profitable opportunities, successfully mitigating risk by making the right offer to the right customer. For many institutions, a complicating factor is that data and processes tend to be siloed. Various lines of business – mortgage, insurance, auto, retirement – typically have no insight into a customer beyond the initial product offering. If the goal is to bundle homeowner’s insurance with a mortgage, as one example, it benefits the company to know everything there is to know about a customer beyond what’s on the mortgage documents. Is the credit score updated? What is the customer’s life stage? Previous policy history?

The Power of a Golden Record

Maximizing cross-sell and upsell opportunities in financial services is one use case of a customer data platform (CDP). An enterprise CDP aggregates and unifies customer data from all potential sources, builds a Golden Record and segments and activates audiences to various end channels for the purpose of delivering personalized experiences. Banks and financial institutions use CDPs to analyze customer data and interactions, increasing conversion rates and customer lifetime value (CLV) by making the right offer to the right customer at the right time and on the right channel.

A Golden Record is a real time, unified customer profile that combines a complete identity graph with a customer’s contact graph as well as transactional history, data aggregates and data attributes. When a Golden Record is made available to users across an organization, everyone has the same updated view of a customer. With the use of persistent key, a Golden Record also provides a contextual view of a customer over time. What that means is that everyone who has access to the Golden Record knows everything there is to know about a customer, including all interactions across the organization. And because a Golden Record is built using advanced identity resolution capabilities, including both deterministic and probabilistic matching, the contextual customer understanding extends to household relationships, a vital consideration for a lender.

Using a Golden Record, a financial institution can make knowledgeable, informed cross-sell and upsell offers because it knows the customer’s complete history with the company – the product portfolio, usage, and interactions across every line of business. It also knows how to package the offer, i.e., what channel or sequence of channels to use to make the offer, the cadence of the outreach, etc. A CDP that uses GenAI capabilities might even leverage the Golden Record to alter the tone of the outreach, such as changing the text or speech in a chatbot to align with a customer’s dialect.

Dynamic Segmentation for the Win

A CDP that employs dynamic segmentation capabilities is able to divide audiences in real time in the cadence of an ongoing customer journey. That means that if a customer is eligible for a certain upsell offer based on a recent behavior, but then becomes ineligible based on the next behavior, the customer is automatically moved out of the audience segment for that particular offer. Conversely, what is more common is for financial institutions to build segments off lists of customers, with a list beginning to decay the moment it’s created. Lists become less and less effective as customers have more options for engaging with a financial institution, such as 24/7 online banking. Even a routine browsing session provides a wealth of new data – the products a customer researches, the page visits, etc. Just a single browsing session might materially impact what cross-sell or upsell offer a bank makes. When segments are built using rules and based off a real time Golden Record, a segment will always reflect the precise context and cadence of a customer’s banking journey. And when a segment is activated at the last possible moment, an organization can trust that the ensuing interaction is relevant for the customer.

A hyper-relevant, personalized banking experience increases cross-sell and upsell conversions because the offers are made with confidence. The brand knows the customer is interested in the product. It knows the customer is low risk. It knows the customer wants to retire at 65. It has, in short, every data point it needs to make an educated, informed decision about what type of offer will maximize revenue, increase lifetime value, or achieve whatever metric the institution is after. The institution also builds customer loyalty because it treats the customer as a unique individual, interested not only in a transaction but in helping to guide the customer through a personalized journey. According to a recent study from Dynamic Yield, 72 percent of banking consumers said that products that are tailored to their individual needs are more valuable. In the same study, more than 85 percent of financial institutions say that having a personalization strategy is a priority, and 92 percent plan to invest further resources in executing a personalization strategy.

For information on how the Redpoint CDP helps financial institutions unlock the power of their customer data, click here.

Steve Zisk 2022 Scaled

John Nash

Chief Marketing & Strategy Officer at Redpoint Global

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