What is 'Cross-Sell'

Cross-sell is the practice of selling or suggesting related or complementary products to a prospect or customer. Cross selling is one of the easiest and most effective methods of marketing. In the financial services arena, cross selling can mean selling different types of investments to investors, or even insurance to investors, or tax preparation to retirement planning clients.

BREAKING DOWN 'Cross-Sell'

If done effectively, cross selling can mean significant profits for stockbrokers, insurance agents and financial planners. Income tax preparers who are licensed can offer insurance and investment products to their tax clients, and this is among the easiest of all sales to make. Effective cross selling is not only a good business practice, but is for effective financial planning as well.

The Emergence of Cross Selling in Financial Services

Until the 1980s, the financial services industry was easy to navigate, with banks offering savings accounts, brokerage firms selling stocks and bonds, credit card companies pitching credit cards, and life insurance companies selling life insurance. That all changed when Prudential Insurance Company, at the time the largest insurance company in the world, acquired a medium-sized stock brokerage firm call Bache Group Inc. Prudential’s reason for the purchase was to create cross-selling opportunities for its life insurance agents and for Bache’s stockbrokers. It was the first big effort at creating a one-stop-shop for financial services. That was followed by other big mergers, such as Sears Roebuck (credit cards) and Dean Witter (stocks, bonds, and money market funds), American Express Company (credit cards) and Shearson Loeb Rhoades (stocks, bonds).

The mergers of Wells Fargo & Co. with Wachovia Securities, and Bank of America with Merrill Lynch Wealth Management, in the 2000s occurred at a time of declining profits for both banks. The acquisitions were done with the intent of achieving greater scale in the sale of their banking products. To a great extent, they were aiming to expand their own retail distribution arms by buying large and established distribution channels. Both banks placed a heavy emphasis on cross-selling as a strategy to regain profitability.

With few exceptions, cross-selling failed to catch on within many of the merged companies. Conflicting sales cultures and resentment among sales representatives for being forced to sell outside their comfort zone have been difficult obstacles to overcome. Bank of America has been losing Merrill Lynch brokers over its insistence they cross sell bank products to their investment clients. Wells Fargo has been more effective instituting cross selling because its merger brought together two similar cultures.

RELATED TERMS
  1. Relationship Banking

    A strategy used by banks to enhance their profitability. They ...
  2. Agency Plant

    The amount of presence that an insurance company has in a market.
  3. State Guaranty Fund

    A fund administered by a U.S. state to protect policy holders ...
  4. Key Person Insurance

    A life insurance policy that a company purchases on a key executive's ...
  5. Unauthorized Insurer

    A company that poses as an authorized provider of a financial ...
  6. Life Insurance

    A protection against the loss of income that would result if ...
Related Articles
  1. Financial Advisor

    What Advisors Need to Know About Cross Selling

    FINRA is undergoing a review of the cross-selling activities of broker-dealers. Here is what the regulator is zeroing in on.
  2. Personal Finance

    FINRA Examining Cross-Selling Among Broker-Dealers

    The recent scandal at Wells Fargo has triggered a widespread investigation by FINRA into the cross-selling practices of broker-dealers.
  3. Insurance

    Becoming An Insurance Agent

    Few careers match the opportunity for as quick and large a paycheck as does being a life insurance agent.
  4. Insurance

    Career Advice: Stockbroker Vs. Insurance Agent

    Compare and contrast careers as a stockbroker and insurance agent. Understand the skills and attributes required for success in each career.
  5. Insurance

    The 5 Biggest Canadian Insurance Companies

    Learn more about the insurance industry as a whole, how it functions in Canada, and the five largest Canada-based insurance companies.
  6. Insurance

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  7. Insurance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  8. Insurance

    Tips for Helping Clients with Life Insurance Needs

    Life insurance needs will likely change over the client’s lifetime and again financial advisers can provide an objective sounding board.
  9. Insurance

    Insurance Companies Vs. Banks: Separate And Not Equal

    Insurance companies and banks are both financial intermediaries. However, they don't always face the same risks and are regulated by different authorities.
RELATED FAQS
  1. What is the financial services sector?

    Go beyond banks and credit unions to learn about the diverse group of companies that make up the fast-growing financial services ... Read Answer >>
  2. What are examples of the largest companies in the insurance sector?

    Read about some of the largest and most influential companies in the insurance sector, a list that includes Berkshire Hathaway ... Read Answer >>
  3. Who are the best-rated life insurance companies in the US?

    Learn about what makes an insurance company the best. Read about the best life insurance companies in the U.S. in 2014, following ... Read Answer >>
  4. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  5. What is the usual profit margin for a company in the insurance sector?

    Learn what the average profit margin is within the insurance industry, and what factors can affect the profitability of an ... Read Answer >>
  6. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ... Read Answer >>
Hot Definitions
  1. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  2. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  3. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  4. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
Trading Center