Posted by Anita Gardeva

Cross-SellingThe practice of selling a new product to established clients who are currently using other products, (e.g. when a financial institution markets a loan to savings account holders).

When done correctly, cross-selling can offer advantages to both clients and providers; new products increase revenue lines and customer loyalty while customers receive access to a wider product range from a provider they know.  Cross-selling can also decrease customer acquisition costs.  Unlike product bundling, cross-selling does not require clients to purchase services they might deem unnecessary. 

Spotlight Fact: Small savings services are arguably the most important financial service for the poor, yet they are costly to provide.  A new CGAP study by Glenn Westley and Xavier Martín Palomas shows that cross-selling increases the viability of small savers.  As the paper states, “If the MFI earns a profit on the [cross] sale of [other] products, this profit may partially, fully, or more than fully compensate for the high operating costs of small savings.” The study highlights ADOPEM, an MFI in the Dominican Republic, where cross-selling loans and insurance products to small savers earns the institution a total of US $1.34 million in profits.  Without its small savers ADOPEM would lose 30 percent of its profits.

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For more details about how cross-selling can improve the business case for small savers, see: Glenn D. Westley and Xavier Martín Palomas, “Is there a Business Case for Small Savers?,” CGAP, Occasional Paper No. 18.

For more financial inclusion terms, please visit the Financial Inclusion Glossary.

Flickr credit:  AndyRob