Whose customers are they?

It is accepted across most industries that cross-selling generates a number of opportunities for maximising income streams. While it is acknowledged as a significant source of income, there are issues relating to the way cross-selling is conducted.

As a result of FSA regulation, introducers and new entrants to the introducer facility could be of the mind, based on past experience, that lenders and product providers have the ability and systems in place to carry out aggressive cross-selling activity.

Lenders and providers could easily respond to this by saying they are addressing a customer's financial needs where an introducer isn't fully able to do so.

The debate may have been with us for some time, but should introducers be able to claim 'ownership' of the customer or are they fair game?

In truth, the debate starts by looking at a marketing issue. Irrespective of the size of an organisation, every forward-thinking business will have a marketing strategy in place.

For many, this will include a strategy that creates opportunities to maximise profit potential by cross-selling and up-selling appropriate products. And this is where the potential conflict of ownership problem starts and brings the customer into the mix.

Customers may be personally known to the introducer. They may well have met at an introducer's office, they may frequent the same social scene, shop at the same supermarkets and have children who attend the same school. In many cases it is the 'local' connection that has prompted the customer to deal with the introducer.

So does the introducer win or lose in the world of cross-selling? Lenders and providers, in particular those that are multi-nationals, will have a customer database running into millions and by cross-selling to them, the chances of gaining new business are high.

If a lender or provider bypasses the introducer and targets a customer direct, the introducer could take umbrage to these actions and decide not to promote the products of the lender or provider to any of their other customers. Ultimately, the introducer's position is not as strong as the lender's.

Every customer has a finite spending power and is rarely concerned (notwithstanding the growing numbers that exercise their mailing and cold calling preference rights) from which distribution the latest product offering originated. The offering is either appealing or filed in the waste bin.

In the case of general insurance, intermediaries whose prime function is to offer advice and sell mortgages have a perfect opportunity to cross-sell their customer's insurance-related products as part of their sales process.

If a customer doesn't sign up for the likes of home contents insurance at the time their mortgage is processed, there is a strong chance that the lender could contact the customer direct at a later stage.

If the lender gets the business, will they acknowledge the original source of the customer and pay the introducer a commission? Unlikely in most cases, unless guidelines for this type of business acquisition are already established.

More probable is that the introducer will experience poor take-up on ancillary sales opportunities. If the lender continues unabated with cross-selling to an introducer's customers, the introducer's opportunities are constantly eroded and they will consequently be concerned about the prospect of future income.

The impact that this has on the new business volumes of an introducer can be enormous. Introducing customers at one end of the process only to see them disappear at the other end is a recipe for minimising revenue streams.

Lenders have to be aware that the introducer is the key player in this matter. Customers are acquired via this source and the lender or provider has only sold a product because of the primary relationship between them and the introducer and the inherent relationship an introducer holds with the customer.

Knowledge of a local market, placing local advertising, attending local events, networking with other local contacts and benefiting from personal recommendations are all activities that cannot be over-stated.

General insurance introducers should seek an assurance about cross-selling before they enter into a relationship with any lender, product provider, intermediary or network offering this status as part of their proposition.

If the introducer status is to introduce potential customers to an intermediary or network, introducers should satisfy themselves that client details are retained and managed in the way which best dovetails with their modus operandi, therefore protecting the potential cross-sell scenario.

If the lender or provider has a policy of independent customer contact, the introducer is at least aware of what lies ahead. If the lender has a policy of working in partnership with the introducer, what lies ahead may be a good deal more profitable for both parties, not least the introducer. IT

' Bruce Reid is managing director of Select & Protect