Cross-selling and keeping customer needs firmly top of mind
Regardless of the business you’re in, one universal rule applies. In order for it to be successful, you need customers. Customers are, and will always be, the key to your bottom line. It’s no different for a finance broker. Once you have gone through the exercise of ensuring all expenses are necessary and your business is performing as efficiently as possible, there are only two key ways to increase your profit margins:
- Increase your client base
- Increase your average profit per client
Both options are equally lucrative, in that they both bring more money into your business. However, one of them has the potential to outstrip the other in terms of effort, resources and time put in to make it work. It is for this reason that anyone involved in business has learnt (usually first-hand) that the best option is the second one.
The most effective way to increase your average profit per client is through cross-selling. Simply put, this involves providing the client with different services, or even entirely different categories that you already have on offer.
Clients that have worked with you once are more likely to work with you again than someone who has never worked with you at all. For this reason, not only is it easier to service them with additional products, but the cost of the lead to sale is cut in half. Two transactions between two clients will typically always cost more than two transactions for one client.
Clients who have chosen to work with you on multiple products are also less likely to go elsewhere, which increases your client retention rates and can position you as their subject matter expert. With the benefits of cross-selling established, the following points will outline the best ways to incorporate it into your own business as a finance broker.
Determine which products or product-groups you will cross-sell
It is highly important that all your customers are aware of all the products or services you have available. You may find that some customers only buy specific products because they are simply unaware that you can meet their other needs at the same time.
Once you have educated your customers on your product offerings, sell them the benefit of working with you on additional products as well. If you have found your client a great home loan rate, can you offer them a business overdraft as well?
Determine who the provider of the products or services will be
If you do not have multiple products on offer or the capacity to cross-sell between them, you may need to form a professional alliance with a person or company that can does.
Many companies offer commissions for clients referred to them. If you are currently offering unsecured business loans, seek out local companies which offer vehicle finance, equipment finance, trade finance or any other similar products that you do not offer yourself. Approach those companies with the intention of forming an agreement on a monetary value or percentage commission for each client referred.
Use a solution-based (as opposed to product-based) approach with clients
The first place many businesses go wrong is in using a product-based approach. Although there can be some success with it, discussing lenders, rates and borrowing capacity does not put the client in the right frame of mind for cross-selling.
In that perspective, it is hugely limiting when taking the bigger picture into consideration. A solution-based approach is a discussion about the clients’ holistic needs and wants, and your ability to help them achieve their goals. Naturally, this will involve other products.
As long as you have put the right steps in place internally or partnered with the right people, you are right on track to cross-sell the meeting away. Assisting clients with various products and services can be seen as becoming “their broker”. You will find that you are the center of it all, which is exactly where you want to be.
You need to remain in control
As long as you have the upper hand in a conversation, you can move it in any direction you wish. As someone looking to increase profit margins through diversifying your income, while simultaneously meeting additional needs of your clients, this direction should always be cross-selling. Every client you encounter will have financial goals.
As an expert in your field, helping clients meet them will endear you to them while increasing your bottom line. It is not them that know the best and most effective ways to achieve their dreams, but you. For this reason, you should never wait for them to ask. Take initiative and sell them everything they need in order to get where they need to be.
With cross-selling forming win-win situations all round, it is curious that more companies don’t include it in their day-to-day strategies and profit planning. If you want your business to become the go-to provider in your field, cross-selling shouldn’t be an option, it should be a necessity.
GetCapital is a leading non-banking lender specialising in commercial finance and business loans for Australian SMEs. Since 2013, GetCapital has supported thousands of Australian SMEs with Working Capital facilities and commercial finance solutions, lending over $700 million to Australian small businesses.
To find out more about GetCapital and our commercial finance solutions, call us on 1300 249 649.