What is the value of your business and how do you calculate it? Many businesses look only at their physical assets such as buildings, computers, cars and bank balance.

However, these are not the only assets that a business can possess.

One of the main assets that is often ignored is the customer base. Businesses are valued on the profits that can be achieved, but what about the hidden potential?

Intermediaries often overlook the value of cross-selling and fail to realise the potential of the customer database. It is relatively inexpensive to develop and implement an effective cross-selling strategy. If successful, cross-selling can improve customer loyalty. Research shows that customers with more than one policy organised through you are more likely to remain with you.

So why is there such reluctance in businesses to develop a co-ordinated approach to cross-selling? For many intermediaries it is because it can be too much effort. They are too busy with existing business. Their computer system makes information difficult to collate. Information is buried in filing cabinets and it would be too time consuming to sort it out.

Get organised

Intermediaries need to organise their systems and administration so that information can be found and used easily and cheaply. It is not difficult. A useful start is to draw up a template of the information it would be useful to have on customers if you are to make available all your product areas to them.

You will want to know your customers' contact details occupation, information on their home, vehicle details, renewal dates of policies and more personal information such as if they are married and have a family. Much of this information is likely to be in your records already, so search it out and organise it for future reference.

Softly, softly

Be careful though on two counts. First, customers do not like being asked for information they have already told you once. Do not draw up your template and then start phoning or writing to customers to ask them for the details, as it could be quicker, more convenient and customer-friendly for you to find out what you want to know from your existing records. You need to be subtle in your approach.

It is up to you to ensure that you make use of all the information you have been given. You can fill in the gaps as time goes on such as when the customer contacts you, moves or has a claim.

Second, you need to make sure that your registration with the Data Protection Commissioner is correct and up to date. Paper records will be included in due course so do get the up-to-date guidance from the commissioner.

You can telephone the commissioner's office for details (01625 545 745) but beware the phone lines can be very busy at certain times of the day. You may find it easier to email the office at: mail@dataprotection.gov.uk or write to Data Protection Commissioner, Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.

The commission has an increasingly comprehensive website that continues to improve. It is located at data-protection.gov.uk. It contains information on data protection principles, the Data Protection Act 1998 that came into force on March 1, 2000, guidance and notification.

To embark now on effective cross-selling you need a strategy and programme of activity. Plan this carefully. Set targets and success criteria. Work out viable products for cross-selling and decide whether to pursue inserts, direct mail, or telemarketing. It could be a combination of all three or samples of each to discover which is the most effective.

There should be three aims to such a programme. First, to improve or maintain existing customer links. Second, to capture information that improves your database and is helpful in any further marketing initiatives. Finally, to sell more policies and increase business.

There are many interesting ways of marketing for cross-selling. Some good guides are available. A future Viewpoint will distil some of the best ideas.

  • Tony Baker is former deputy director-general of the Association of British Insurers and now runs his own independent consultancy.

    He can be contacted on 01920 465000 or email: thetbaker@aol.com.

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