Welcome aboard: everyone knows it's a good idea to greet new customers. But banks need to go a step further by creating a structured program to cross-sell these new people and lock them in--so that deposits don't go out the back door as fast as they come in the front.

• Author: Wachtel, Christopher
• Position: On-Boarding

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With interest-rate spreads compressed, the primary objective today for most financial institutions is to increase core deposits. Unfortunately, marketing departments are faced with limited (or reduced) marketing budgets to accomplish the task of bringing in--and retaining--larger amounts of core deposits.

"Our prime objectives in establishing our on-boarding program," according to Thomas D. Woodbery, senior vice president and marketing director, Security Bank Corp. (assets: $2.5 billion), Macon, Ga. "were to build a systematic and consistent program with our new household accounts, and to extend the life of the household using additional services of Security Bank."

Most banks with a formal on-boarding program understand the dual purpose of communicating with new customers, both to recognize the new relationship and to expand upon it by adding other services.

According to Heather Anderson, vice president, direct channel marketing manager, Provident Bank (assets: $6 billion), Baltimore, the bank's objectives for the on-boarding program were "to welcome customers, ensure the account opening went smoothly, and inquire about additional products and services they may need."

According to a sample survey of banks nationwide, 80 percent of respondents said they had a regular "new customer welcome" program in place, while 20 percent did not. Reflecting the dual objectives of on-boarding, 60 percent reported their goal was the retention of customers while 40 percent were aimed at cross-selling additional products.

Improving retention

New customer attrition within the first three to six months can be up to 200 percent higher than annualized rates. And the simple act of calling or sending a letter to new customers to thank them for their business and explain the features of the product they just purchased can go a long way in ensuring their satisfaction.

Since the biggest contributor to customer attrition within the first six months is a product or service that does not live up to expectations, clearing that hurdle should be the first priority to help ensure a lasting relationship.

Because customers with two or more services are 33 percent less likely to leave the bank, cross-selling should a major objective of an on-boarding program. Research shows new customers are six times' more likely to open new accounts" when compared to prospects. And 75 percent of cross-sales from retail checking customers occur within 90 days of account...