Op4: The downturn is a chance to sell customers something new; redefine the relationship

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The ad from Morgan Stanley was all-inclusive. It offered "more than a quick plan highlighting stocks and mutual funds." The pitch throws in college and retirement planning, tax, insurance, "even directions on what to do in a financial crisis."

Welcome to the soft-landing strategy, where "asset aggregation" are the buzzwords for the year. While cross-selling services to existing clients has been the mantra of financial companies through the 1990s, it could be the lifeline that helps many of them through this downturn.

Cross-selling "can make a huge difference in profitability," said William C. Lyddan Jr., president-CEO of WPP Group's Brouillard Communications. "Your best prospect is an existing customer."

Research shows it is five to six times harder to gain a new customer than to retain an existing one, and client-acquisition costs drop with each successive relationship added, according to Mr. Lyddan. "You want to build into that third and fourth relationship," he said. "The challenge is to credibly offer something outside our expertise."

Therein lies the opportunity: Companies that diversified offerings while sales of their main product (stocks) were booming are in the position now to sell what customers want to buy when the market turns. In this case, the decline of the stock market does not need to mean the decline of the consumer financial market.

Mergers and acquisitions have been financial companies' shortcut of choice for acquiring expertise. With the relaxation of federal laws that kept insurers, banks and brokerages from each other's turf, financial companies went into a splurge of mergers that created giants such as Citigroup, the combination of Travelers Group, Citibank, Smith Barney and Salomon Brothers. Now, they are positioned for the economic downturn.

"The [financial] supermarket concept has been around for a while. But there have been some cycles in which it makes sense. ... I think this is one of them," said Jeff De Joseph, exec VP of Omnicom Group's Doremus Advertising, New York.

For example, E-Trade Group more than halved media spending behind its online brokerage in January and February to $11 million, from $25 million during the same period last year-the months before the tech-stock meltdown of 2000 took the air out of the brokerage market. But according to the same Taylor Nelson Sofres' CMR numbers, the spending behind its E-Trade Bank rose to $6 million from $1 million during those same time periods.

There is a backlash under way against the self-service ethos of the '90s, when consumers took pride in handling their own finances. Witness the changing tagline of Ameritrade Group. The online brokerage corporation made a big splash in 1999 with "Believe in yourself," and ads featuring slacker hero Stuart. The latest incarnation of Ameritrade ads claim, "It's how you get somewhere on Wall Street."

Finances have become so fragmented that consumers have tired of handling everything, said Mr. De Joseph. "We've moved from DIY-do-it-yourself-to DFM-do-it-for-me," he said.

Companies are happy to oblige-for a price. H&R Block, the most popular tax-preparation service in the U.S., leveraged its relationship with tax customers to launch a network of financial-services centers offering financial planning, brokerage, mutual funds and mortgages. The company is now extending its marketing activities year-round to promote the new business.

"That's the whole play, so that you get 100% share of wallet," said Mr. De Joseph. Even in a downturn, financial outfits still have plenty of opportunity-if they can get past their stock answers of the bull market.

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