Why should banks cross sell? The prime point for cross selling is the cost factor.

. It zeroes in on the cost of new customer acquisition for asset expansion and the cost of cross selling to an existing customer. According to Money magazine, it costs a bank five times less to cross sell an existing client than to acquire a new one. Another finding says that it costs four times as much to get a new customer as it does to keep an existing one. The underlying is the cost advantage of selling to an existing client. The second important reason is the profit. Cross selling an asset/additional asset product to an existing customer improves the profits, in general, and profits per customer, in particular. Cross selling fosters brand loyalty. A customer who has availed himself of more than one product from the bank is drawn closer to the bank than a customer who has taken only one product. If a customer having a savings account has taken a consumer/personal loan, the chances of switching to another bank is less than when he has only savings account. If, in addition, he takes a housing loan or any mortgage product, the chances of bank hopping reduces further. Research studies have established that the percentage of loyalty increases with the number of products the customer takes. The reasons may be for convenience, service, price and value offerings by the bank for the total product solutions to the customer. Cross selling helps banks to plan, implement and maintain better customer relationship management programmes as it gives clarity to developing plans based on the customers' relationship profile.

 Strategies for effective cross selling A robust customer database is foremost for effective cross selling. The database is the core on which the entire cross selling strategy is built. Based on the customer relationship history and the cross selling model, a broad mapping of the customer profile and retail products to be cross sold has to be done. The mapped data has to be sliced and diced to develop specific asset related cross selling information. The cross selling information has to be put in place for staff (internal customers) to view and communicate to the target customer group. The internal customers should be trained to effectively cross sell and convert the initiatives into business Cross selling is a team effort and success depends on the attitude and involvement of all the staff concerned. The success of cross selling depends on offering at the right time, the relevant product to the customer. It will be a futile exercise to cross sell a product which is not needed or relevant for the customer. The strategy has to percolate from the corporate to the branch level based on customer database across geographies. Dynamic feedback from the line level should be taken cognisance of for fine-tuning /retuning the strategies. Selecting the target customer group is essential for cross selling success. Selling the right product to the right customer improves the relationship. Cross selling is more relationship- than transaction-based. At any point of time, the cross selling initiative by the line staff should not be an irritant for the customer. The above are only some illustrative strategies and success depends on the bank management's belief and commitment in retail asset expansion through cross selling as a viable tool and also customer acceptance of the initiatives by the bank. In the present day networked scenario and availability of customer database, banks can adopt a pilot run in some potential regions and based on the success rate, extend it in a phased manner to other regions. The indicative asset expansion figures for different strike rates surely point to a serious attempt. Cross sell and see the difference.

Assets and types of assets

A balance sheet is nothing but a representation of assets and liabilities of a company at a particular point of time. In India liabilities are shown on left side of the balance sheet and assets are shown on right side. Assets are anything owned by the company whether it is tangible or intangible. Assets can be classified into below 3 categories 1. 2. 3. Quick Assets Current Assets Long term Assets

Quick assets are those which are in the form of cash or which can be quickly converted to Cash. They show the liquidity of a company which means the companys capability to meet its immediate obligations. Usually quick assets are treated as the current assets excluding inventory. Current Assets These are the assets which can be converted into cash within one year. Accounts Receivable, Cash in bank, Inventory, Prepaid expenses and insurance, marketable securities etc are the examples of current assets. The percentage of current assets to total assets should not be very low. A low value represents the companys inability to meet its day-to-day obligations. It should not be very high. A high value means the company is not focusing on long-term project implementation and not utilizing the assets in a proper way. A Current Ratio is defined as the ratio of current assets to current liabilities. Its an important ratio in analyzing a companys liquidity. Long Term Assets These are the assets which company doesnt want to convert into cash in the foreseeable future. Also these assets cant be converted to cash quickly in the market. Land value, building, furniture, machinery and equipment come under this category. Long Term Assets value after deducting the depreciation is reported in Balance Sheet. In most of the Accounting rules the purchase price of long term assets is shown in balance sheets which may differ from market price at the time of reporting.

The Six Different Asset Types

The Hierarchy of Capital Allocation We Use at Our Companies

All assets, whether a gold nugget or a bottle of cologne, can and should be compared to others when making purchasing or investing decisions. In the past, I've used some of my own private company investments such as Mount Olympus Awards and Kennon Green Enterprises to illustrate basic concepts such as profit margins, financial ratios, investment returns, and more. Today, I'm going to share part of the theoretical basis a proprietary capital allocation hierarchy we use in-house to determine every potential capital expenditure and expense. My hope is that it will help you put together you own portfolio and structure your financial life to achieve what you want out of your portfolio.

Asset Type #1: Those that generate high returns on capital, throwing off substantial cash on very little capital investment but that can be grown by reinvesting profits into the core business for expansion.
Think of a business like Microsoft or Coca-Cola where the underlying company can earn 20% to 30% on shareholders' equity so that each dollar of retained profits is generating an enormous return the following year. During their growth phase, these are companies such as Wal-Mart, Hewlett-Packard, Best Buy, etc. The best course of action is to pour as much money as prudently possible, whether contributed capital through equity or debt through borrowing, into the main business so it can expand and earn huge rates of return.

Asset Type #2: Those that generate high returns on capital, throwing off substantial cash on very little investment but that cannot be expanded by reinvesting in the underlying asset.
These are the second best investment because you can earn large returns on very little money. The downfall is that you have to pay out all of the profits as dividends or reinvest in lower returning assets because the core business can't be expanded through capital infusions alone. Think of a patent to a device that generates hundreds of thousands of dollars per year. There are little to no investment requirements once the cash starts coming in but you can't invest it in more patents at the same rate of return. Unlike the first asset type, you can't put that money to work at the same level (you get your patent royalty check and have to find something else attractive whereas Ray Kroc at McDonald's simply built another location, generating roughly the same return.) At some point all #1 type businesses will become #2 type businesses. This normally happens at saturation. At that point, management will likely repurchase huge amounts of stock to increase the remaining shareholders' equity in the business or pay out cash dividends.

Asset Type #3: Those that appreciate far above the rate of inflation but generate no cash flow.

Think of a coin collection or fine art. If your great grandparents owned a Rembrandt or a Monet, it's going to be worth millions of dollars today versus a relatively small investment on their part. Over the years, however, you wouldn't have been able to use the appreciation in the asset to pay the rent or buy food. That is why these types of assets are often best left to those who can either A.) Afford to hold because they have substantial wealth and liquid assets elsewhere so that tying the money up in the investment is not a burden or hardship on the family and / or B.) Those who have an intense passion for the underlying subject and derive considerable pleasure from the art of collecting whatever it is about which they are interested (oil paintings, wine, coins, baseball cards, vintage Barbie dolls the list doesnt end). The huge investment returns are merely gravy for them.

Asset Type #4: Those that are "stores of value" and will keep pace with inflation
This asset type can include certain brands of furniture such as Baker, Henkel Harris, Bernhardt and more. These are companies that charge $18,000 for an armoire but for centuries, many of them have kept pace with inflation (and if they are extremely well cared for, actually exceeded it). These are brands bought by the average American millionaire because they will hold value, always be able to be sold for at least what they paid for on an inflation-adjusted basis (provided its not an emergency liquidation), and they have businesses and other income sources so they aren't worried about tying up capital in fixed assets. Most Americans buy furniture that has little or no economic value when they pass it on or it falls apart. That's not the case here. A good dining set by one of these companies is often worth more than a used Mercedes and, unlike the car, can keep going up in value.

Asset Type #5: Those that are "stores of value" and will keep pace with inflation but have frictional costs such as storage requirements, maintenance, et cetera thus turning them into liabilities in that they require cash out of your pocket from time to time.
This is where gold, real estate, and Steinway grand pianos fall. Looking back at charts for thousands of years, on a long-term basis, the best these assets can ever accomplish is to keep a person or family's purchasing power at parity, less the cost of storing and worrying about the assets for all those years. In other words, these assets classes will *keep* you rich, but they won't *make* you rich unless you deploy large amounts of leverage to amplify the underlying return on equity. In practical terms, that means if we were going to experience extreme inflation, it would be best to utilize leverage by either borrowing to purchase real estate or acquiring gold futures (which has its own drawbacks - it's almost always better to take delivery of the underlying gold despite the transportation and storage costs if you really think the world is falling apart so you don't need to worry about counter-party risk). This is why you see a lot of wealthy families engage in something known as "equity stripping" (there are some asset protection reasons for doing it but the economic returns are

far more important, in my opinion). Let's say you owned a house for $1,000,000 in Southern California. If you had no mortgage and the property appreciated at 5%, in 30 years, it would have a value of $4,320,000. Now, obviously, you've been out the frictional costs homeowners insurance, heating, water, etc., for all of that time but you also had the utility of living in the property. Your returns with no mortgage would be unspectacular. You would have actually lost purchasing power after adjusting for the related costs on an inflationadjusted basis despite having a "profit" of $3,320,000. Remember this - ALL THAT MATTERS IS THE NUMBER OF HAMBURGERS, OR PIANOS, OR PENS, OR CUPS OF COFFEE, OR WHATEVER IT IS YOU CARE ABOUT THAT YOU CAN BUY. WEALTH MUST BE MEASURED IN RELATIVE PURCHASING POWER - NOT MERELY DOLLARS OR ASSET LEVELS. IT'S ALL ABOUT PURCHASING POWER. NEVER FORGET THIS. Yes, I put that in all caps. If you learn nothing else from the millions of words that I've written over the years, I'll have done my job. If, on the other hand, the family had put down $250,000 and borrowed $750,000 to buy the property that gain of $3,320,000 would be against an initial $250,000 equity investment. Their return on original equity before mortgage costs would be 14.47%, beating stocks. They would obviously have enormous mortgage interest expenses, which should be offset in the calculation by the lower taxes they paid during that time period, so it's actually unlikely that the real estate would have beat the stock market. For most families it doesn't matter because the leveraged real estate lets them generate real wealth, built up in the form of home equity, while having the utility of living in the property. Even if stocks or private businesses would have generated higher returns, you can't live in them. There are often "special situations" in real estate that are not included here and can be highly attractive to an investor looking to build wealth at exponential rates of return over several years. Those that have the understanding and experience to purchase real estate options, for instance, and can turn around and sell the property are effectively managing a "business" with qualities more akin to Asset Type #1 or #2, depending upon their methods and circumstances. The fact that the underlying asset consists of tangible land or buildings is inconsequential (as a corollary - cattle is a low return business as is real estate but McDonald's combined the two into a system based on a franchising model that generated unbelievably high returns on equity for the shareholders over the course of decades). The same is often true in regards to gold, only there is much higher risk utilizing leverage because the commodity markets are far more speculative than the equity and bond markets. A relatively small drop that wouldn't have hurt you in stocks could wipe you out due to the margin maintenance calls at most commodity brokers. This would be acceptable if gold had utility to the average person like a house does. It simply doesn't, unless you are an industrial manufacturer who happens to need the reserves for your core business and are willing to make bets on the direction of prices. Thus, the man who wants to invest without worrying about losing everything is left to buy bullion outright for cash. The implication is that unless he experiences one of the few, relatively rare booms in the gold prices (a la the 1980's), he can never going to grow your wealth higher than inflation on a long-term basis. (There is also another rare situation in which gold can be a highly attractive investment and that occurs when the price of aboveground inventories falls below the production costs of extracting it from the ground. At some point, the supply / demand relationship must reach equilibrium. For those who have the resources to take advantage of the situation, and the intelligence to know that it can be a few

years before that happens so they avoid getting wiped out in subsequent price fluctuations, it can be - if you'll pardon the expression - a gold mine. For long-term holding, however, gold doesn't budge in real terms (the last time I checked the inflation-adjusted rate was $1.00 versus $1.01 - a 1% return in real terms for two hundred years). Again, real terms - that is, inflation adjusted - is all that matters. Purchasing power. No matter how you measure it - dollars, clam shells, shark teeth - all that counts is how much purchasing power you gained relative to your investment Another concern for long-term holders of precious metals (as opposed to the short-term trading which can, as I've pointed out, be very lucrative for those who know what they are doing despite the extreme wipeout risk) is that there is often a mistake belief that they provide doomsday protection. For those with any knowledge of financial history, it seems a bit absurd because the Government would simply do what it did in the 1930's - order that safe deposit boxes could not be opened outside the presence of a bank regulator or officer to ensure that no precious metals were inside. Those that violated these rules were subject to harsh criminal penalties. To put it bluntly, if the world really did go to hell, the only way to enjoy gold use would be to store it in a vault in Switzerland where no one knew it resided or be willing to risk dealing in a domestic black market that would inevitably develop if the dollar went to German reconstruction hyper-inflation levels. This can only be accomplished by refusing to report bullion holdings to the United States Government, committing a crime in the present for a potential future contingency. That always seemed idiotic to me in light of the better returns available in other asset classes. I should point out that this section only applies to the bullion. Rare gold coins normally fall into asset category type #3. They have value for their own scarcity making them trade independent of the value of spot prices. It's an entirely different thing.

Asset Type #6: Consumer goods or other assets that depreciate rapidly with little or no resale value
Without a doubt, this is how most people spend their paycheck. From video game consoles to cheap pressboard furniture, this is what you find in the homes of most Americans. Perhaps the quickest way to guarantee poverty (or at least a paycheck-to-paycheck lifestyle) is to purchase Type #6 assets with debt that has: 1. An incredibly high interest cost on an after-tax basis (e.g., a business loan at 10% for a company with a 35% income bracket costs less than a personal credit card balance at 7%). 2. A longer maturity / amortization time table than the salvage value of the underlying asset (e.g., borrowing $3,000 for 5 years to buy a high definition television that will be, for all intents and purposes, worthless by the time the debt is repaid).