Cross-Selling is the process of selling additional products or services to a customer to increase the value of a sale. It encourages the customer to buy more: for example, when buying a cellular phone, the retailer may also suggest you get the phone case. In e-commerce cross-selling is common practice: complementary items are suggested on the product pages, in the shopping cart or during the checkout process. You may also get emails after the sale with suggestions of additional products that would complement your order.
Knowing when to cross-sell is just as important, if not more so, than the initial sale itself. If you try to sell to a client at the wrong time, it can damage your relationship moving forward or negate the original sale entirely. No single approach or rule dictates the best time to cross-sell. However, by remembering the central goal of cross-selling — to persuade a customer to purchase a service that complements their original purchase — you can time the sale just right. Simply put, the best time to cross-sell is when the sale makes sense. For Example:
- If you were a video game store, a great opportunity to cross-sell video games would be when somebody purchases a new console.
- As an agency, if you have a client who has just launched their social media accounts, you may offer social media management to help attract new followers. If a client just launched Google and Facebook Ads, you might offer post-click landing page design services to generate more traffic and leads.
Ultimately, there is no exact time to cross-sell, but there are plenty of wrong times, and it’s up to you to determine when to make the call. Some sales may go well immediately after a client signs with you, whereas others are best saved for later in the relationship.
Once you have identified the customers you would like to approach and the products you would like to cross-sell, here are some techniques and cross-selling tips to keep in mind:
- Offer the customer additional products and services that will genuinely provide them with added value: Think about cross-sales from your a customer’s point of view, not just in terms of how much revenue you think you can generate. If you are utilizing a CRM, fewer well-placed offers are far more valuable than a greater range of offers that don’t benefit your customer relationships.
- Find your customers at effective touch points on their customer journey: If they’ve used your website to place orders, email or targeted ads might be the best method for cross-selling. If they’re more likely to visit a store in person, a salesperson is more likely to cross-sell additional products and services to them in person or on the phone.
- Use your existing inbound marketing campaigns to promote supplementary products and services: If you have content targeting an audience that buys luxury cars, for instance, you can include ads for car accessories on your blog posts and product descriptions to encourage cross-sales.
- Make effective use of the data your customers provide: The new generation of consumers expects personalized service, even when it comes to upselling and cross-selling, and the tools for providing that through solid data are out there.
- Encourage cross-sales by creating spaces for interaction between customers: An online community for skateboard buyers may be as effective at encouraging sales of additional wheels and other parts as your direct marketing efforts.
- Make use of social selling techniques: For example, social media influencers are a valuable tool for reaching the widest possible audience in the current, predominantly digital sales environment. Offer incentives for influencers who already promote your products to mention supplementary products on their social media channels.
Cross-Selling Vs. Upselling
The goal of both cross-selling and upselling is to maximize the value of a purchase as well as to improve the customer’s buying experience by creating additional value. While cross-selling focuses on promoting additional products from related product categories, upselling is a sales practice that encourages customers to purchase higher-end versions of that same product or to pay for upgrades and extra features. The difference between cross-selling and upselling tactics in an eCommerce setting would be:
- If your customer is buying a laptop and you’re using visual prompts on the product page or during checkout to encourage her to also purchase a mouse, that’s cross-selling.
- If your customer is buying a laptop and you’re using visual prompts on the product page or during checkout to entice her to also purchase a 5-year warranty, that’s upselling.
Cross-Selling Best Practices
Best practices for cross-selling success include:
- Recommend the accessory required for proper operation or use of the product purchased, such as a power cord for a computer printer that doesn’t include one in the box.
- Bundle related products so the customer doesn’t need to look for necessary components or accessories.
Offer a discounted price on a bundled product offer to encourage immediate purchase with a temporary price savings.
- Demonstrate how the additional products work with the product being purchased.
- Make it easy for the customer to say “yes” by addressing potential customer objections in the cross-sell conversation. For example, a waiter showing diners the dessert tray can overcome, “I shouldn’t” by suggesting that diners share a dessert.
Cross-selling in the ecommerce environment involves identifying related products and creating appropriate offers while in-person cross-selling could require training in effective approaches. In both cases, though, the goal is to make more money for the company while creating a satisfied customer.
Advantages and Disadvantages of Cross-Selling
Companies employ different sales tactics to increase revenues, and one of the most effective is cross-selling. Cross-selling is not just offering customers other products to purchase; it requires skill. The business must understand consumer behaviors and needs and how complementary products fulfill those needs and add value. Customers purchase from brands they trust and have had positive experiences with. Therefore, it becomes easier to sell to an existing customer than to a new one.
Existing customers are more likely to purchase products that relate to or complement what they already plan to purchase. As consumers begin to use more of a brand's products, they become increasingly loyal.
On the other hand, cross-selling can have adverse effects on customer loyalty. If done incorrectly, it can appear as a pushy, self-seeking sales tactic. This is evident when a salesperson aggressively tries to sell a related product or attempts to sell without understanding the customer's need for it. Not only does this affect the sale, but it also negatively affects the brand's reputation.
Additionally, cross-selling to the wrong type of customer could be counterproductive. Some customers have high service demands, and the more products they buy, the more service they command. As their service demands increase, so do the costs associated with providing those services.
Lastly, some customers habitually return or exchange products. When cross-selling to this segment, profits are not realized. Initially, their purchases generate substantial revenues; however, they often return or default on payments, costing the company more than what the customer generated in revenues.
- Increased service-related costs
- Pushy and aggressive perception
- Diminished reputation
While there may be some ethical issues with cross-selling, in some cases they can be huge. Arthur Andersen's dealings with Enron provide a highly visible example. It is commonly felt that the firm's objectivity, being an auditor, was compromised by selling internal audit services and massive amounts of consulting work to the account. Though most companies want more cross-selling, there can be substantial barriers:
- A customer policy requiring the use of multiple vendors.
- Different purchasing points within an account, which reduce the ability to treat the customer like a single account.
- The fear of the incumbent business unit that its colleagues would botch their work at the client, resulting with the loss of the account for all units of the firm.