Walking the High WireFinancial services executives face a tough dilemma these days.

Most Americans are satisfied with their primary bank and eager to learn about additional products, according to a 2012 study conducted by the Banking Administration Institute. And it’s no secret that selling add-on products is a great way to increase loyalty, retention and ultimately, revenue. But offering add-on products in today’s regulatory environment can be like trying to keep your balance on a high-wire. How do you sell these products without jeopardizing your relationships with federal regulators?

The key is to sell products that benefit consumers such as credit monitoring, payment protection plans, car rental insurance and identity theft protection. In fact, credit score reporting services and identity theft alerts have the highest growth and revenue potential, according to the 2013 Growth and Revenue Potential of Emerging Financial Services study. The Market Rates Insight study found that credit score reporting has a 71.4 percent potential growth rate, while identity theft alerts have a 70.8 percent potential growth rate.

In addition, some add-on products—like credit monitoring—are not only good for your business, but they’re also good for the economy. Credit monitoring helps educate consumers about their credit reports and scores so they can work toward achieving—or keeping—high scores. This, in turn, makes them better candidates for loans and lines of credit, which not only helps your institution but also helps the economy when these individuals buy cars, homes or start a business.

Regulators, however, not only look at the add-on products, but they also look at how organizations market and service these products. Therefore, organizations need to be honest and forthright during the entire lifecycle of the product.

Below are six best practices for a safe and effective way to market and service add-on products.

  1. Transparency Tops the List
    This is of the utmost importance, as regulators continue to crack down on credit card companies and banks that employ deceptive and unfair marketing practices. To avoid punitive damage, companies need to make sure their marketing materials accurately and precisely describe their products. Marketing materials should be written clearly and designed in an easy-to-read format.
  2. Tread Lightly with Employee Incentive Programs
    It’s okay to offer employee incentive programs to sell add-on products but make sure these programs follow appropriate guidelines. Employees need to realize that honesty trumps incentives or commissions every time and they need to be monitored to make sure they abide by this ethical standard.
  3. Stir Customer Care into the Mix
    Customer care scripts and manuals need to be as transparent and easy-to-understand as your marketing materials. Be sure to conduct quality assurance reviews on a regular basis to assess scripts and training materials to make sure they are fair to your customers. Organizations should also conduct real time monitoring of calls to make sure your employees treat your customers with respect.
  4. Cancellations Must Be Honored
    This is where some companies have gone awry. Cancellation requests should be handled in a manner that’s consistent with your product’s terms and conditions. Don’t mislead your consumers by advertising one thing and doing another. Cancellations should be handled with the same courtesy as enrollments.
  5. Keep a Watchful Eye on Affiliates
    Affiliates and third-party providers aren’t always accountable. After all, they may come and go, but your business is here to stay. If you hire third parties to handle marketing or other functions related to your add-on products, make sure they are held to the same standards as your in-house staff.
  6. Keep a Tight Lid on It
    In order to keep a tight lid on the lifecycle of your add-on products, you need a systematic program of controls, monitoring, auditing and documentation. By implementing a company-wide program you can ensure that everyone is on the same page and that you have documentation and controls in place for auditors and regulators.

Is It Worth It?
At a glance, implementing these measures may seem like a lot of work. But in reality, these measures should probably be implemented for your core products and services anyway, so including the add-ons shouldn’t be too demanding. Plus, the add-ons can add value to your products and help the economy at the same time. Taking care of consumers helps the economy, the longevity of your business, and it pleases regulators, so there is no reason not to do so.

For more information, visit www.experian.com/affinity.


Allen Anderson