INTERNATIONAL JOURNAL OF SOCIAL SCIENCES Online Available at indianresearchjournals.

com
& INTERDISCIPLINARY RESEARCH
Vol.1 No. 6, June 2012, ISSN 2277 3630

CROSS SELLING
(With Special Reference to State Bank Of India)
MR.ANURAG KUMAR
Research Scholar, M.J.P.Rohilkhand University,Bareilly & Assistant Professor, Accurate Institute of Advanced Management,Greater Noida, U.P

ABSTRACT

This paper mainly emphasis on the concept of Cross Selling. Why cross selling is very necessary for any business
enterprise to accelerate the profit? How it operates in many large organisations? How Cross selling is applicable
in banks and how the banks are capable to increase their profit by using the concept of Cross selling This paper
also tells us about the meaning, existence, types, scope, , benefits, limitations of Cross selling and also include
suggestions to improve cross selling
Cross selling is a strategy of pushing new products to current customers based on their past purchases. Cross
selling is designed to widen the customer reliance on the company. In other words cross selling means to offer
additional but relevant products to the existing customers. Cross-selling is a marketing device used to increase
sales by displaying products to the customers that are closely related to the product he or she is interested in
purchasing. It allows the business to promote similar products that the customer may not be aware of, or offer a
complimentary product that the customer may be interested in as an impulse buy.

INTRODUCTION
With the beginning of era of globalization, liberalization and privatization, the domestic as well foreign market has
become more competitive .As a result of which the profit margin of business units engaged in different sectors of
economy started declining .So it become imperative for these units to search new ways of earning profit .It is in this
context the technique of cross selling came into existence and business units started using this technique as a means of
increasing their profitability.

CROSS-SELLING
The cross selling is a strategy of pushing new products to current customers based on their past purchases. Cross
selling is designed to widen the customer reliance on the company. In other words cross selling means to offer additional
but relevant products to the existing customers. Cross-selling is a marketing device used to increase sales by displaying
products to the customers that are closely related to the product he or she is interested in purchasing. It allows the
business to promote similar products that the customer may not be aware of, or offer a complimentary product that the
customer may be interested in as an impulse buy.
Cross selling is based on personal relationship, which is built slowly with the customer. For example, Banks not only
sell core banking products (saving a/c, current a/c) , but also sell additional products such as credit cards, insurance
products, mutual fund plans , govt securities. By selling these additional products they reduce per customer cost and
increase the per customer earning. Similarly Post office also sells insurance products, saving products, etc besides
providing postal services. .In case of electronic goods eg computer/laptop, sales executive offers various types of
software, cordless mouse / keyboard, ear phones, etc

UP SELLING AND CROSS SELLING

Up selling:- Up selling means selling same product at a higher price to a customer. In other words Up selling occurs
when the customer goes to buy something & the seller sells the similar product but the costlier one .Up Selling is the up
gradation to a higher product but of the similar item. For example:-

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(a) Customer goes to buy HCL laptop but seller offers Apple laptop (which is more costly), it will be termed as up
selling.
(b) Customer goes to buy 15 inch colour T.V of PHILIPS but seller offers 21 inch colour TV of the same company.
Cross selling

On the other hand cross-selling is a technique of offering related products to a customer besides the basic or core
product. Cross selling simply means that seller can increase the size of the customer's order by offering other related
items which may be used alongwith the product already purchased by customers.. For example, if the customer goes to
buy mobile phones, seller may also offer mobile cover, ear phones, memory card etc

SCOPE OF CROSS SELLING

More and more business units are adapting the technique of cross selling and up selling, with a view to increase their
profit margin.. This is the reason why the scope of these techniques is spreading day by day. Probably in every of type of
business activity these techniques are being used. .We can study the scope of Cross Selling under the following heads:

Banking Sector:
After Liberalization, many multinational banking companies stated opening their branches in different countries. This
caused cut throat competition among banking companies reducing their profit level substantially. Hence many banking
companies started searching new ways to increase their profit margin. Cross selling proved to be a significant tool in this
direction. Banks started offering various additional and relevant products to their existing customers such as credit
cards, insurance products, mutual fund plans, Govt. securities etc

Insurance sector:-
With the entry of multinational companies, this sector too became more competitive. For example, in our country, the
insurance sector in 1999 was open globally. As a result many private sector insurance companies, ((both domestic and
foreign) started joining the Indian insurance sector making the insurance business more competitive and lowering its
profitability. This necessitated the units engaged in insurance business to adopt the technique of cross selling to increase
their profit margin. Hence insurance companies in our country too started offering various customised plans along with
medical riders to the existing as well as to new customers.

Automobile Sector:-
In automobile sector, various automobile companies offer MP3 player, LCD display, central locking facility and
other car accessories which make the purchasing of car more attractive
Electronic Sector:-
In case of electronic sector, many computer /laptop dealers try to offer various types of software ( Anti virus
software, Kundli software, Games software, etc), cordless mouse, cordless keyboard, pen drive, earphone, laptop cover,
web camera, etc. to the customers along with their main product (computer or laptop). Similarly Refrigerator dealers
may cross-sell stabilizers and mobile pone dealers may offer Memory Card, Sim Card, Mobile Cover, lamination facility,
etc to their customers.

Footwear and Garment Sector :

Cross-selling is popular in these sectors also In case of footwear business; shoe dealers may offer socks, polish, laces, etc
to their target customers. Similarly, in garment business if any body purchases a Pant or Jeans, dealer may offer him T-

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Shirt, Half Pant, Trousers, Under-garments, etc.

Micro Insurance Sector:
IRDA has issued the micro insurance regulations under which a life insurance company makes a tie up with a non
life insurance company for distribution of insurance products to improve the penetration of insurance in the rural area.
"The regulation allows cross selling of insurance products (1). As per this regulation the Self Help Groups (SHGs),
Micro Finance Institutions and Govt. organisations are allowed to act as micro insurance agents and cross-sell insurance
products.

BENEFITS FROM CROSS SELLING

The major benefit is in terms of cost reduction for any business unit. The cost of contracting a new customer is
much higher than to serve an existing customer. It may be unto 3 or 4 times. Cross- selling considerably reduces
customer acquisition cost and also serving, marketing and communication costs and thereby substantially increases the
profit earning capacity of the concerned unit. Further, through cross-selling the benefits of economies are also available
which reduces the cost further and increases the profit margin. Another additional advantage is that cross selling helps in
building brand value, if the loyalty of the customer could be ensured for the brand. It is a well understood fact that
greater number of products held by customer decreases the probability of his shifting the business dealing to another
business concern.

CROSS- SELLING IN BANKS

Cross-selling with reference to banks stands for being able to offer to the existing bank customers some additional
banking products or services. (2) The basic purpose behind using the technique of cross-selling by banks is to expand
banking business, to reduce the per customer cot of operations and to provide more satisfaction and value to the
customer. For example, when a bank is in a position to sell to a deposit customer (say saving bank or term deposit), a
loan product such as housing loan, credit card, personal loan or vice-versa, this results into additional business for banks
also reducing the per customer cost and increasing the per customer earning. This is the reason why more and more
banks are using the cross-selling strategies as marketing approach to expand their footprints and to increase their
customer base. In our country many private sector banks (like ICICI bank) are offering to their customers a variety of
products and generating more business through cross selling. However for most of the public sector banks, in
particular, this concept is still in its evolutionary stage.

STRATEGIES FOR CROSS-SELLING

The existing client base of the bank can be used for the purpose of cross-selling after carefully examining the profile
of customers. For this purpose the bank can undertake studies for various products and various geographical areas to
understand the potential availability for cross- selling. The banks may take some of the following steps -
1. Preparation of data base:- The bank should collect the required data and prepare the data base of customers. The
required information can be collected from the concerned customer when he comes to the bank for opening an account
in the bank. It is the data base of customers on which the entire exercise of cross-selling is based. With the data-base
banks can assess the credit worthiness of the customer with more accuracy. Moreover, it is easier and cheaper to get
customers from one's own data- base than going out for getting new customers.
2. Identification of Customer:-On the basis of data-base and bank's relationship with customers, possible customer
for cross-selling should be identified. In the same way the product should be identified which can be offered to the
customer.

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3. Selecting target customers:- After identification of possible customers, the targeted customers should be selected
and efforts should be made to narrow down the product-range. If required, even new products may be developed to
meet the specific need of the group of customers.

4. Proper Training to Staff:- Proper training should be imparted to the staff entrusted with the task of cross-selling.
It not only creates team spirit but also enables the staff to meet the customer's needs in a better way. It also enables them
to understand the complexities of product and to identify the appropriate product to suit the specific requirement of the
customer.

5. Proper selection of tools - Based on the market size, tools selected for targeting the customer also matters. For
large banks with large number of customers tools may be CRM (Customer Relationship Management), Profitability
Analysis, Complete Activity Management, Information Support System, etc. Effective and economical tools should be
selected keeping in mind the market size, customers' preferences, etc.

6. Motivation and Incentives- Having proper tools and systems to cross-sell does not end the process of selling.
Getting the bank employees involved in this exercise and motivating them to sell is also an important aspect. It is
important for banks to provide reward for the cross sale that is commensurate with profitability of the product to the
bank. Efforts should also be made to involve the staff in coming out with innovative campaign and also ideas which will
stimulate them to sell newer products.

7. Cross-selling as a part of employees' appraisal - As an initiative for employees involvement for cross-selling,
cross-selling can be made a part of an employee's performance appraisal along with monetary and non-monetary
rewards for employees.

8. Periodical Analysis of Data-Base - Cross selling is a continuous process. In order to make cross-selling success, not
only to complete customer data should be maintained but it should also be analysed periodically so as to ascertain the
number of customers visited the bank during a particular period, how many of these customers did the sales
representative meet, in how many of these meetings was a cross-selling opportunity identified, how many of these were
referred and what was the outcome of these referrals. This process enables the bank management to set objectives,
monitor performance and take necessary action to make cross selling more effective and successful.

9. Effective Delivery of the Product - Every possible effort on the part of the bank should be made to ensure the
timely and proper delivery of the product purchased by the customer.The more relationships a bank has with a customer,
the more loyal the customer will be and the bank will be able to know more about the customer through these
relationships. The credit quality of the customer can be assessed in a better way. At the end it will be a win-win situation
for both the banks and customers. However, bank management should exploit this situation carefully keeping in mind
the overall profitability of the bank.

BENEFITS FROM CROSS-SELLING IN BANKS

Cross selling exists almost in every type of banks in general and in private banks in particular. Cross-selling is beneficial
not only for banks but also for its customers and insurance companies. We can study the benefits from cross selling
under the following headings:

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(A) BENEFITS TO BANKS

Cross-selling is beneficial for banks in many ways-

(1) Under cross-selling existing customers are approached and cost of approaching existing customer is much less than
acquiring new customers. It reduces per customer cost and increases the per customer earning.
(2) Benefits of economies are available which reduces the cost further and increases the profits.
(3) It helps in building the brand value, if the loyalty of customer can be ensured for the brand. In that case the likelihood
of shifting the business dealings by the customer to another bank is reduced substantially.

(B) BENEFITS TO CUSTOMERS

Bank customers too are benefited from cross selling in the following ways:
(1) The major benefit to the customers from cross selling is that they get all their financial needs fulfilled at one place.
For example a bank customer can fulfil his banking, insurance and mutual fund needs from the same bank.
(2) Customers get the opportunity to opt any other bank which proves to be more trustworthy for them.
(3) Cross selling helps in building a good relationship between customers and employees because both bank and bank
customers are well acquainted with each other.

(C) BENEFITS TO INSURANCE COMPANY

Following are the main benefits which an insurance company gets from the cross-selling:
(1) Insurance companies don't need to establish separate outlet for selling insurance products, only they have to
establish separate wing for selling insurance products.
(2) Insurance companies are not required to hire the large personnel for the purpose of selling insurance products.
After the completion of IRDA training, bank employees themselves can sell the insurance products.
(3) Bank database of existing customers is of great use. It can be used for designing customised products and
generating the leads for insurance products.

CROSS-SELLING IN STATE BANK OF INDIA

State Bank of India has been using the technique of cross-selling for the last several years. Through cross selling it has
been offering a banquet of the best financial and insurance solution in addition to its vast array of banking products. The
Bank as a corporate agent offers mainly life insurance products of SBI Life Insurance Company, general insurance
products of SBI General Insurance Company, mutual fund products of SBI Mutual Funds and Credit Cards of SBI
Cards. A brief description about these companies will not be out of place:

SBI LIFE INSURANCE COMPANY

SBI life insurance Private Company Ltd. Is a joint venture between State Bank of India (SBI) and Cardif S A, a leading
insurance company of France and a wholly owned subsidiary of BNP Paribas Assurance. SBI owns 74% of the total
equity capital of SBI Life Insurance and the remaining 26% has been contributed by BNP Paribas Assurance. SBI Life
Insurance has an authorised capital of Rs.2000 crores and has an unique multi-distribution model comprising of
bancassurance, retail agency, brokers, institutional alliance, group corporate channels for distribution of insurance
products. SBI Life Insurance provides a good platform to SBI for cross selling insurance products along with its
numerous banking products. SBI Life Insurance has designed and developed various insurance products. These
products can be classified under its three plans, namely, Individual Plans, Health Plans and Group Plans. A detailed

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discussion about these products has been made in the 6th Chapter.

SBI GENERAL INSURANCE COMPANY

Just to establish itself as a leading player in the financial services sector, the State Bank of India has set up SBI General
Insurance Company Ltd. (SBI General) as subsidiary company. It is a joint venture between the SBI and Insurance
Australia Group (IAG). The authorised and paid-up capital of SBI General is Rs. 150 crores of which 74% ( Rs. 111
crores) has been invested by the SBI and the remaining 26% has been contributed by the joint venture partner, IAG.SBI
General is a technology driven company. It is multi-product, multi-segment and multi-channel company. It has multi
distribution model consisting of bancassurance, agency, brokerage and retail, direct ( on line and tele-sales) channels.
Bancassurance will be the major channel during the initial years of its operations.
The SBI General started its business operations from the financial year 2009-10.(3) The total business ( Gross
Written Premium) booked during the financial year 2010-11 amounted to Rs. 43.02 crores(3) The company has so far
opened 17 branches across India, keeping in view the business potential at these centres. Motor Insurance, Home,
Insurance, Property Insurance , Fire Insurance, Theft Insurance, etc. are its significant insurance products. In years to
come SBI General is expected to introduce innovative and well-diversified portfolio of its products.

SBI MUTUAL FUNDS3

SBI Mutual fund is the largest Mutual fund Bank in India. It is a joint venture between SBI and Societe Generale Asset
Management (SGAM) of France. SGMA is one of the world's leading fund management companies with approximately
500 billion USD(4) of assets under management around the world. It was started over 20 years ago with the main
motto "Growth Through Innovation and Stable Investment Policies." Since then it has maintaining a good record of
judicious investment and wealth creation. It has built up a strong base of investor (over 5.5 million people)(4).
SBI Mutual funds has come up with 38 schemes to increase the wealth of its investors. It provides innovative and
need-based products. Some of its significant schemes enjoying the patronage of large number of investors are Magnum
Tax Gain, Magnum Balance Fund, Magnum Equity Fund, SBI Blue chip Fund, etc.
It is the most successful mutual fund in the world. II has educated the investors about the added benefits of making
investment in capital market via mutual funds. It has been actively managing its investors' assets through its investment
expertise. For institutional investors it also provides portfolio management advisory services. For offshore fund
management it has opened a branch called as Resurgent India Opportunities Fund. Many of its schemes have been
given good rating by agencies such as ICRA, (Internet Content Rating Agency), CRISL ( Credit Rating Information
Services of India Ltd.) etc. It has also won several awards recognising its role as investment banking. The awards include
the ICRA On Line Award (Eight times),The Lipper Award and The CNBC TV - 18 CRISIL Award ( Two Times), etc.

SBI CARDS
SBI Cards is a joint venture between State Bank of India (SBI) and GE Capital Services to offer Indian consumers
extensive access to a wide range of world class payment products and services. These partners have set up two joint
venture companies to develop the credit card business in India. These two companies are - SBI Cards & Payment
Services Pvt. Ltd and GE Capital Business Process Management Services Pvt. Ltd. Of these two companies, the first one
(i.e. SBI Cards & Payment Services Pvt. Ltd.) has been entrusted with the task of marketing and distributions of SBI
Cards and the second one handles the technology and processing needs of SBI Card.SBI Card is the India's fastest
growing credit card branch and it is the most preferred card across the country. SBI Card has been voted as India's most
trusted brand. SBI Card offers various types of credit card which are sourced through designated branches of State bank
of India located at important centres.

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STEPS TO IMPROVE CROSS-SELLING OPPORTUNITIES

The use of technique of cross-selling proves beneficial only when it is applied rationally. Customers may feel irritation
with too many sales pitches to buy more. Surveys have proved that most buyers appreciate if they are asked to buy
additional products or services which might meet their requirements in a better way or new items which were not
offered in the past. It will certainly will make customers realise that sellers are actually aware of their needs and are careful
about their satisfaction. Hence there are some suggestions to make cross-selling more successful:
(1) Let things happen in natural way - Many cross-selling opportunities arise naturally. A businessman selling tennis
racquets can also offer a bag, ball lessons and other accessories. To cross-sell these items he has to only mention that
these products are also available with him.
(2) Cross-selling of related items - If customers are over-loaded with too many unrelated products, they are more
likely to skip. Only items which are related to originally purchased goods should be cross-sold. Offering of socks
with shoes is certainly a good fit. But offering socks with TV or Computer will only irritate the customer. If
attempts to cross-sell are not closely related to the original purchase, they are not likely to succeed.
(3) Recommendations of experts to be quoted - To facilitate cross-selling and up-selling, the specific
recommendation from professionals, experts or satisfied old customers should be quoted. It adds value to the
customer. For example, if a person places an order for a book at amazon. com ( a website for purchasing and selling
books), the site automatically lists other related books purchased by people who bought the same book just
ordered. Naturally this helps in motivating the person concerned to purchase other related books too.
(4) Training of employees- Employees should be trained in cross-selling techniques. The approach should be not for
just selling more stuff but the emphasis should be to make the customer fully satisfied with the additional product.
The concerned employee should describe the customer how the additional products or services would complement
his original purchase and further solve the customer's problem. Only a trained employee can do it in a better way.
(5 Timing too is important- Cross-selling and up-selling can occur at different times depending on the products and
services being offered for sale. In some cases the best time is while the customers are showing his disinterest in
purchasing the product. For example, a customer is looking at a low priced digital camera but becomes
disappointed when he finds that its features or performance are not as per his requirements. Then he may be really
offered a higher priced model.
(6) Selling products in bundles- Selling of original product plus additional products in bundles is an effective device
to induce the customer to buy not just a single item, but the entire bundle of items. But the combination of original
product and the additional product should be at discounted price and price ( original) and discounted price should
be clearly disclosed to the customer so that he may know his savings if he purchases original plus additional
products in a bundled package.
(7) Deceptive or misleading practices not to be used- The technique of cross-selling or up-selling should not be
based on deceptive or misleading practices. Customers should not be misguided about the price, quality, durability,
etc. of the original as well as additional products. Deceptive and misleading practices often result in increase in
number of complaints, cause more sales return for refunds and bring disrepute to the business concern.

LIMITATIONS OF CROSS-SELLING
While applying the technique of cross-selling following limitation (or challenges or precautions) must be taken into
consideration -
(1) Cross-Selling not at the cost of profitability - The technique of cross-selling should not be adopted at the cost of
profitability. In an attempt to selling more and more additional products to the existing customers banks some time
ignore the profitability aspect. But they should keep in mind that the main purpose of bank is to earn more profit

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and not the cross-selling. If increased cross-selling activities do not result in additional profit the basic purpose of
cross-selling will be defeated. There are many unhealthy tactics which may increase the cross-selling but may not be
helpful in increasing the profit. Offering more discounts on additional products to the existing customers may
induce them to purchase more. This may result in higher cross-selling but may not increase the profit of the bank.
(2) Only required products should be sold -Bank should keep in touch with their customers by phone banking,
personal interaction, bank-websites, etc so that they may be able to know what their customers actually need. They
should be offered only that product which they actually need. Selling items such as credit cards, loans, which they
do not actually need, may only annoy them. If customers refuse for any product, it will be of no use to send them
phone calls for the same product again. Hence Banks should properly analyse the customers; data base and right
product for right customers should be selected so that their cross-selling efforts may not go waste

CONCLUSION
While developing cross-selling strategies, banks should always remember that cross-selling is not a transaction based
activity, it is primarily a relationship building exercise. The more relationships a bank has with a customer, the more
loyal the customer will be or in other words more helpful will be for banks in making the cross-selling a great success.
Cross selling also helps to improve their income which inturn improve their profits. Cross selling also reduces the per
customer cost of operation, cost of reaching per customer etc and improves satisfaction level among customers.

REFERENCES
BOOKS:-
• Srivastasva R.M. page 536
• Gupta.P.K Insurance & Risk Management HPH, Mumbai.Ed 2010
• Financial services -L.M.Bhole
• Motihar M. Insurance-
• Pandayan.P - Financial Service & Markets

WEBSITES:-
• www.impactlearning.com
• www.statebankofindia.com
• onlinelibrary.wiley.com/doi/10.1002/bir.3820160307
• www.sbilife.com
• www.salestrainingandresults.com
• www.eHow.com
• www.bankingeventsupdate.com
• www.Ask.com

ANNUAL REPORTS:-
• Annual Report of SBI for 2010-11, Page 57
• Annual report if Sbi Life 2010-2011

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