Cross-Selling
Cross-selling is an idea that became popular in the 1980s and 1990s. The Economist described it as “the synergistic notion that buyers of one of a firm’s services would become customers for another”. Cross-selling involves selling an additional product and service on top of the one that a customer has already agreed to buy or has bought.
Its close cousin is up-selling, the idea of upgrading the product that a customer is purchasing to something with extra features or extra services (and extra profit). A website created by Jim Domanski lays down ten rules for cross- selling and up-selling.
- Sell first; tell later. Do not attempt to up-sell or cross-sell until you have fulfilled the first order. Trying to sell additional items too early can endanger the original sale.
- The rule of 25. The value of any additional sale should not increase the overall order by more than 25%.
- Make a profit. The extra items sold must make enough profit at least to cover the cost of the additional time spent in selling them. But this should not be calculated over a short time frame. Frederick Reich- held, a marketing expert at management consultants Bain & Co, says that most cross-selling fails because companies think only of the next bottom line. They cannot resist trying to sell the highest-margin product rather than the most appropriate one.
- Don’t dump junk. Resist the urge to use cross-selling to move unwanted stocks.
- Limit and relate. Limit the add-on items to those that clearly relate to the original purchase. If a customer is buying a blazer from a catalogue, suggesting a shirt and tie makes sense; suggesting a garden hose does not. Much cross-selling of financial services fails because banks try to sell inappropriate products at inappropriate times.
- Familiarity breeds success. The more familiar customers are with the add-on item, the more likely are they to buy it. Cross-selling is not the occasion to introduce a brand new product. Misdirected marketing at such times can turn clients away in droves.
- Plan, plan, plan and plan again. Decide in advance, for instance, what products each additional item relates to.
- Train to avoid pain. Ensure that the salesman thoroughly understands the products or services being offered.
- Test with the best, then roll with the rest. Test cross-selling first with the best salespeople. They have the drive and initiative to smooth out any of the kinks.