Credit cards and cross selling

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

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

Well first of all the fries are relatively small in size and cost compared to other menu items. Which means that the decision to add them or not will not produce very serious consequences either way. Additionally, most people find French fries to be a delicious addition to their meals, which means that French fries, as an inexpensive product, have great appeal to the average consumer. Finally, French fries can be added to the food automatically if the consumer wishes to add them. This means that, with respect to valuable customer time, there are no negative externalities to making the decision to add fries.

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

Credit cards, compared to other financial products like home loans, are a relatively small and financially insignificant decision for most consumers. Therefore, the decision to add another credit card to your wallet is a relatively easy decision for most consumers to make. Plus, just like potato chips, credit cards can have enormous appeal. This is especially true with credit cards that have benefits tailored to an individual’s specific passions and personality. A Boston Celtic credit card that allows the holder to obtain tickets to Celtic home games would be almost impossible for a Boston Celtics fan to resist. Finally, the acceptance of a credit card offer and the subsequent reservation and authorization processes can be instantaneous. This is important when cross-selling a product that the customer did not previously request, because any hiccups in the process can make the customer forget everything.

Winning credit card customers could be easy. With an enterprise decision-making system that can provide instant credit card decisions, banks could allow their tellers to cross-sell credit offers in real time to all new and existing customers of that bank. Why can’t every decision be as easy as, would you like fries with that?