Debt Views

Of all the credit products that financial institutions can cross-sell to a new or existing customer, credit cards are the easiest. Why?

The most common analogy for credit cross-sell in the financial services industry is cross-sell in the fast food industry. Do you want fries with that? This question is perhaps the best example of cross-sell in its most fundamental and successful form. The decision on whether or not to add fries to my meal is one of the easiest decisions I’ll ever make. Why?

Well first off, fries are relatively small in size and cost compared to other items on the menu. Which means that the decision to add them or not will not produce very serious consequences either way. Additionally, most people find fries to be a delicious addition to their meal, which means that fries, as an economic product, have strong appeal to the average consumer. Finally, fries can be added to the meal automatically if the consumer wants to add them. This means that, in regard to the customer’s valuable time, there are no negative externalities to making the decision to add fries.

Now let’s apply the same logic that makes fries such an effective cross-sell product for fast food restaurants to credit cards and financial institutions.

Credit cards, when compared to other financial products such as mortgage loans, are a relatively small and financially insignificant decision for most consumers. Therefore, the decision to add another credit card to their wallet is a relatively easy decision for most consumers to make. Additionally, just like fries, credit cards can have tremendous appeal. This is especially true with credit cards that have benefits tailored to the individual’s specific passions and personality. A Boston Celtic’s credit card that enables the holder to get tickets to Celtic’s home games would be almost impossible for a Boston Celtics fan to resist. Lastly, the acceptance of a credit card offer and the subsequent booking and authorization processes can be instantaneous. This is important when cross-selling a product that the customer did not previously request, because any inconvenience in the process might cause the customer to just forget the whole thing.

Gaining credit card customers could be easy. With an enterprise decisioning system that can deliver instant credit card decisions, banks could enable their tellers to make realtime credit cross-sell offers to all of that bank’s new and existing customers. Why can’t every decision be as easy as, would you like fries with that?