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Cross Selling Starts With The CRM System

Financial institutions seek CRM solutions that build enterprise-wide front-office sales systems.

Clamoring for ways to snare new customers and squeeze more revenues from the ones they have, financial institutions are seeking CRM solutions that build enterprise-wide front-office sales systems.

Customer relationship management (CRM) vendors have responded with an array of solutions aimed at converting the information stored in data warehouses into sales ammunition that can be used across all channels, including wireless and the Web. At the same time, these solutions capture and automate the myriad business rules and workflow processes that exist in organizations. Finally, they deliver decision support analytics for customer segmentation and profitability measurement.

These technology offerings run the gamut from those geared to an industry segment (banking, investment, insurance), to out-of-the-box (semi-customizable) products, on up to multichannel solutions aimed at the largest institutions.

At the high-end of the CRM market, vendors like Siebel Systems, Onyx, PeopleSoft, YOUcentric and others deliver the multichannel, multiproduct, customizable solutions. Such vendors are likely to prevail over more narrowly focused or industry-specific vendors, at least in larger organizations. "These vendors can provide highly tailored, global CRM solutions at high-end institutions," said Stephen Ross, an analyst at Meridien Research.

Some manufacturers have also found success offering niche items focused on improving a specific aspect of CRM. Vendors that specialize in cross-selling or campaign management technology aimed at the financial services industry include BroadVision, Clarify, E.piphany, FirePond, FrontRange, Informatica, Kana Communications, netDecide and NuEDGE, among others.

Whether geared toward the needs of large corporations or specific operational requirements, CRM systems remain a popular buy at financial institutions. Total spending by the 500 largest financial institutions on front-office sales technology will hit $485 million in 2004, up from $281 million this year, according to Meridien Research (see chart below).

One reason analysts predict CRM spending will remain strong despite the current economic slowdown is because consolidation has created a need to adopt customer-centric business models cutting across multiple products and channels.

Ultimately, the goal is to provide better information to call center and branch personnel, field sales agents and others who deal directly with customers, as well as those responsible for customer profitability. The foundation of such solutions is a customer data model that allows a unified view of the customer across all organizational units. That's been the vision behind most CRM spending since the early 1990s, when enterprise data warehouses first appeared on the scene.

But that vision is improving. A new trend, "marketing automation," is aimed at aligning the data model aspect of CRM with cross-selling or campaign management. Marketing automation, according to Meridien, is a combination of customer, message and product to improve a firm's revenue, cost and profits. In order to achieve this, the technology should focus on profitable customers and target them with personal offers through a channel that's likely to get a successful response.

For large financial firms brimming with customers, offices and products, integration is also crucial to any CRM effort. Such firms, said Paris Deletraz, president of Mathias Client Management Software, should use technology to create a "virtual client service team environment," in which the various channels are brought together, enabling the firm to "look at the opportunities, decide what products are going to help increase the share of wallet and which product they're going to cross-sell."


In the banking industry, Northern Trust has built just such a front-office CRM application around YOUcentric's JSales, which the Chicago-based institution installed in early 1999.

Northern Trust has consolidated customer data from 35-40 legacy systems into a centralized Sybase repository. JSales, which is accessible to 3,000 employees, is integrated with the repository to provide client cross-referencing (to improve customer relationships) and target marketing.

Northern Trust is enjoying other benefits from its CRM investment, according to Meridien. Concurrent usage in the range of 10% to 15% has resulted in improved operating efficiencies and productivity. Relationship managers have a complete view of clients and their associations (family, friends, etc.) that they can use to create cross-selling and up-selling opportunities.


Despite having to wrestle with a tightening economy and market volatility, cross-selling technology has become an integral component of CRM strategy on Wall Street.

"The evolution began with very little integration across multiple channels, stale customer data and rudimentary segmentation and modeling and has progressed to real-time enterprise customer interaction," said a recent Meridien report.

Especially in the retail brokerage area, the technology focus is shifting from simply understanding who the clients are to much more robust CRM, said Dennis Ceru, an analyst at TowerGroup. "We're starting to see a resurgence of interest in the retail brokerage space that is taking a look at CRM more the way that banking did and less as simple contact management software."

CRM tools help brokers understand customers' behaviors and goals, and provide automated triggers and alerts for investment opportunities, noted Tom Richards, research director for CRM at Meridien. "There are new sets of tools starting to be developed to help brokers become more productive and to help consumers become more self-directed."


While Wall Street tackles the intricacies of cross selling, perhaps the biggest challenge for insurance companies is adopting the right strategic mindset before investing in the technological tools. What happens all too often in the industry is that "people in the organization go out and they buy software without a corporate commitment to getting close to the customer," said John Harrison, president of Intermediary Marketing, a Vernon Hills, Ill.-based consulting firm.

In addition, insurance companies deal with their customers one-on-one, but because different product lines reside in separate databases, customer contact information is often fragmented.

"When a multi-lines insurance company talks to a life insurance customer, often they don't even know they have a relationship with that customer through accident and health, because they don't have integrated databases," said Harrison. A product or line-of-business approach prevails at far too many insurance companies, and shifting to a customer-orientation "will require significant cultural change."

In insurance, initial work has often gone toward analyzing data for retention programs, according to Donald McNees, global leader, strategic economics practice, at Tillinghast-Towers Perrin. "Citigroup through its Travelers subsidiary is experimenting with software that uses artificial intelligence to analyze customer history to develop propensity scores for recommending next product to buy, " he said.

In the case of MetLife, cultural transformation is credited with the company's transformation from "Mother Met" into what Intermediary Marketing's Harrison calls "one of the leaders."

Changes in the use of technology have enabled MetLife to capture and share information across corporate units, said Tony Candito, CIO of individual business at the New York-based insurer. "Historically, a Met rep would have systems that looked at and offered only Met products. Now the rep will want access to MetLife subsidiary General America's universal life product because it's the leading product in the marketplace."

At the heart of the cross-selling focus is a robust customer information file, Candito said, noting that MetLife is upgrading its technology in this area to achieve greater responsiveness to cross-corporate opportunities. "Database technologies have really matured to handle relational databases of the scale that we require."

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