when done efficiently cross selling can translate into significant profits for stockbrokers insurance agents and financial planners licensed income tax preparers 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 a good business practice and is a useful financial planning strategy as well 
not to be confused with cross selling upselling is the act of selling a more comprehensive or higher end version of the current product becoming proficient at cross sellingadvisors who cross sell financial products or services need to be thoroughly familiar with the products that they are selling a stockbroker who primarily sells mutual funds will need substantial additional training if they are assigned to start selling mortgages to clients a simple referral to another department that actually sells and processes the mortgage may lead to situations where referrals are made whether they are needed or not as the broker may not understand when the client really needs this service but is only motivated to earn a referral fee advisors need to know how and when the additional product or service fits into their client s financial picture so that they can make a more effective referral and stay compliant with suitability standards finra may use the information that it collects from its inquiry to develop and implement a new set of rules that govern how cross selling can be done in addition to understanding financial products advisors need to understand the assortment of products their company can provide imagine a new staff member joining a firm interacting with clients but not knowing the full extent of advisory services the company is capable of in this example the new hire needs to become familiarized with the company to become more proficient at recognizing opportunities to cross sell cross selling in financial servicesuntil 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 changed when prudential insurance company the most prominent insurance company in the world at that time acquired a medium sized stock brokerage firm call bache group inc in an effort to offer broader services 1the mergers of wells fargo co with wachovia securities and bank of america with merrill lynch co both in 2008 occurred at a time of declining profits for both banks and of financial crisis for the brokerages 23 to a large extent they were aiming to expand their retail distribution arms by buying large and established distribution channels of the brokerages hoping for synergy between banking and investment products and services with few exceptions cross selling failed to catch on within many of the merged companies as an example bank of america lost merrill lynch brokers through the insistence that the brokers cross sell bank products to their investment clients wells fargo has been more effective in instituting cross selling because its merger with wachovia brought a relatively similar culture into the fold it can be difficult for large firms to effectively integrate different types of products h r block inc failed in this proposition when it acquired olde discount broker in a push to offer investment services to its tax customers 4 the company ultimately decided to jettison the brokerage enterprises and focus solely on taxes 5 after acquiring olde for 850 million in 1999 h r block sold that division of its operations for 315 million less than 10 years later cross selling vs upsellingcross selling and upselling are sales tactics used to convince customers to purchase more however there are differences to consider upselling also known as suggestive selling is the practice of persuading customers to purchase an upgraded or more expensive version of a product or service the goal is to maximize profits and create a better experience for the customer that experience can translate into an increase in the customer s perceived value and an increased customer lifetime value clv the total contribution a customer makes to a company companies are 60 to 70 more likely to sell to an existing customer whereas the likelihood of selling to a new customer is 5 to 20 6for companies it is easier to upsell to their existing customer base than it is to upsell to a new customer existing customers trust the brand and find value in the products and or services this trust drives the success of upselling for instance if a customer trusts a brand they will generally trust the brand when it presents a seemingly better option alternatively cross selling is the sales tactic whereby customers are enticed to buy items related or complementary to what they plan to purchase cross selling techniques include recommending offering discounts on and bundling related products like upselling the company seeks to earn more money per customer and increase perceived value by addressing and satisfying consumer needs advantages and disadvantages of cross sellingcompanies employ different sales tactics to increase revenues and one of the most effective is cross selling cross selling is not just offering customers other products to purchase it requires skill the business must understand consumer behaviors and needs and how complementary products fulfill those needs and add value customers purchase from brands they trust and have had positive experiences with therefore it becomes easier to sell to an existing customer than to a new one existing customers are more likely to purchase products that relate to or complement what they already plan to purchase as consumers begin to use more of a company s products they become increasingly loyal to the brand on the other hand cross selling can have adverse effects on customer loyalty if done incorrectly it can appear as a pushy self seeking sales tactic this is evident when a salesperson aggressively tries to sell a related product or attempts to sell without understanding the customer s need for it not only does this affect the sale but it also negatively affects the brand s reputation additionally cross selling to the wrong type of customer could be counterproductive 7 some customers have high service demands and the more products they buy the more service they command as their service demands increase so do the costs associated with providing those services lastly some customers habitually return or exchange products when cross selling to this segment profits are not realized initially their purchases generate substantial revenues however they often return or default of payments costing the company more than what the customer generated in revenues may potential increase revenue by increase sales quantities especially in less popular goodsmay increase brand loyalty as customers are further exposed to an assortment of one company s productsmay fulfill all of a customer s needs stealing them from approaching a competitor for other requirementsmay result in increased service related costs as it may be more expensive to cross sell compared to other strategiesmay negatively impact relationships if the cross selling technique is found to be pushymay result in a negative public perception of requiring or demanding multiple products be paired togetherreal world example of cross sellingin 2013 a group of southern california wells fargo employees opened without consent new bank and credit card accounts for unsuspecting customers 8 the motivation to meet cross selling quotas after an internal investigation more than 30 employees were terminated 9to identify how widespread the issue was wells fargo hired an independent consulting firm to review new accounts opened since 2011 they also created new procedures for validating new accounts as well as implemented new training programs and security protocols the consulting firm found that over two million accounts were fraudulently opened within a five year period and 115 000 of those accounts incurred fees eventually over 3 5 million fraudulent accounts were discovered 10 wells fargo returned more than 2 8 million to affected customers and more than 5 300 people were terminated without notice and an explanation then ceo john stumpf resigned 11 in 2016 wells fargo was hit with a 185 million fine for this scandal 12