Statistics says that cross-selling to an existing customer is much easier than selling to a new customer. It’s like everybody knows this fact. But it is hard to implement it successfully.
The concept of selling more and selling other related product to the existing customer seems to be very simple. But the problem is that there is no proven and straightforward way to implement it.
What is Cross Selling.
Selling additional (related/complementary) products/Services to existing customers is referred to as Cross-Selling. This is a win-win situation for both parties. Cross-selling is possible in almost all types of business scenarios.
The buyer has already bought one product so they are comfortable with the seller. They don’t need to do vendor check again. The trust factor is already established.
For Seller the effort of finding is eliminated. That is very significant, because cost of customer acquisition is huge. Also, it is fact that doing an additional sale to existing customer is always much easier.
Difference Between Cross Selling and Up Selling.
Generally, people get confused between these types of techniques. Both the techniques involve doing additional Sale to an existing customer. However, there is a very distinct difference as listed below.
- Cross-Selling is marketing other additional product/offering. Selling a different product, which might be a related product. Example:
- When Clients buy Telephony, they buy it for their sales or helpdesk teams. Which means they could very well buy CRM as well.
- When we pitch CRM to our Telephony customer, it is called Cross-selling.
- Upselling, however, refers to selling more of the same product, or an upgrade version of the same product. Example:
- A CRM Client using an Alpha version of CRM is satisfied with it and now wants to use it more. So they upgrade to Omega Version with more features.
- Alternatively, they might also expand their team and need more users.
- Both these scenarios are of Upselling.
However cross selling and upselling techniques require to be implemented in sync to take maximum advantage.
Benefits of Cross-Selling
We can easily say that cross-selling is one of the most underrated Sales Techniques. It is very effective but seldom used effectively. In fact, smaller businesses have more to gain from this technique, but unfortunately, SME owners are not focusing on Cross-Selling.
Here are the benefits of Cross Selling.
- Everyone has Existing Customers
- Any Company who has been in existence for some time, have existing customers. Where cross-selling can happen.
- Easy Sale
- In any sale, 80% of the effort is required to win the trust of the Customer, and then 20% of the energy needed to sell the product.
- In Cross Sale, 80% of the effort is eliminated.
- Increased Profitability
- The biggest benefit of doing Cross-Sale is that although it adds to Revenue and profits, it does not correspondingly to the cost.
- Reduced Cost of Sales
- Reduced efforts will lower the cost of sales.
- Increased Customer Confidence
- When customers are using more than one solutions/products from you, their confidence in you is much higher.
- Increased confidence can be a significant advantage in getting more referrals from existing customers.
- Improved Customer Stickiness.
- With the increasing number of products a customer uses, more are the chances that they will stick to you. Because changing the vendor becomes difficult.
- Happier Sales Teams
- With a proper Cross-selling mechanism in place, the Sales becomes much more manageable.
- This makes the life of Sales team much more comfortable.
Can Cross Selling applied to every Business?
Yes, of course it can be applied to almost all the businesses. However there are some business scenarios where Cross-selling is not suitable
- There is one and only product/solution offered. Eg: Domestic LPG cylinder seller who has only one offering.
- Customers never return to the seller. E.g.: Book Stall on a Railway station.
- The seller has messed up with customers to such an extent that now they don’t want anything from this seller.
Most of the businesses use cross selling strategy, with or without being aware of the same. However here are the best examples of Cross-selling by the seller.
- Mobile cover, SD card, or Accessories with Mobile Device.
- Electronics reseller selling Laptop Bag, Accessories, or care-pack along with Laptop device.
- Fast food Industry. Eg: Fries, coke is sold along with the burger.
- Selling CRM system to the Customer who has bought Call Center Solutions. Also, recently the CRM vendors have started to offer Virtual Sales Manager Services.
- Car Dealerships sell Insurance to car buyers and owners.
- Insurance companies selling Health Insurance along with Life Insurance.
- Financial Services. Everybody has received calls from Banks and credit card for additional loans or cards.
- Also, having bundled offer is a good type of Cross-selling technique.
Step by Step Guide on How to Cross-Sell
This needs to be seen from a different perspective. Affective Cross Selling will require Preparing your offerings, your Customer Data and then approaching the Customer for Actual Sale. In fact, it is more towards Customer purchasing complementary Products.
All steps are explained in detail below.
Preparing your Offerings for Cross-selling
- List down all your products, solutions and offerings.
- Understand the benefit to customers, when they have a combination of your offerings.
- Figure out which offerings have maximum benefit for your Customers.
- Even though there might be 3,500 SKUs which are sold you the company. Types of offerings for identifying cross-selling opportunities should be limited to FIVE. Otherwise, it becomes unmanageable.
Preparing Customer Data for Cross-Selling
- Many times companies don’t have proper customer data. Create a list of your Customers.
- Identify which products they are currently using.
- Sometimes, in larger customers, you have to pitch the other product to some other team. In that case, prepare the customer for providing a reference.
Actually doing Cross-sale
- Before pitching another product, make sure that the customer is happy with the existing product. Otherwise, the whole efforts will boomerang.
- Approach the customer and pitch the product and explain how they will benefit from an extra purchase.
- The customer might expect some discount for additional purchase, be prepared for it.
Its a team work
- Generally, cross-selling opportunities are surfaced during the review meetings.
- There might be a scenario where two different product teams are required to collaborate for cross-selling purpose.
Using CRM for Cross Selling
CRM is used for Sales and Helpdesk. As such CRM already has information regarding the Customers. However, CRM provides the following features to facilitate cross-selling specifically. Watch the video on the page below, to understand the concept in a better way.
- CRM should be able to classify between Customer and non-customers.
- For Customers, there should be field to identify which product category they are currently using.
- All the offerings/products/solutions have to be identified for each and every customer according to the sales stages. In fact, it will form like a matrix of Customers-Products and sales stages as follows:
- Sold – Already sold. Not possible to sell more.
- Not Pitched – The seller has not even pitched this product to the customer. But there is a possibility.
- Not Required – The Customer has been approached and the pitch made. However, it turned out that Customer does not require that product.
- Up-Sell – The Customer is using some units of that product but they might buy more.
- In Progress – The customer has already been pitched and the deal/opportunity is in process.
- Advantage of using CRM for cross-selling is that CRM is always handy on the mobile of Sales Team. Also, no duplication of work required, since all the data is already available in the CRM.
Using Google Sheet [Free Tool] for Cross-Selling.
We have created a free Cross-selling tool for Google Sheets. Please visit the link and download the sheet to use it.
It is free for Business use and distribution. It can be modified according to requirements of the business.
Challenges in Cross-Selling
- Different product teams don’t talk to each other. This is the most common problem found.
- There is no CRM or any other tool for collecting customer data.
- Management and Sales team thinks that it is waste of time to collect and analyse Customer Data
- Lack of training and motivation for Sales Team for Cross-selling.
- Promise and performance don’t match, which means that customers don’t want to buy any other product.