Cross selling is a natural extension of trying to get a larger share of the customers wallet.
After acquiring a new customer, the sales and account management teams put their entire effort in:
1. Ensuring that the customer spends more with them; and
2. The customer buys another product or a service from them.
Cross selling has a number of advantages for the business. The primary being that it increases the customer profitability over the lifecycle and discourages attrition.
Take for example an insurance company. Let’s say you have a home insurance policy from them. As a cross sell tactic, the insurer will try to sell you a car insurance policy. If that doesn’t work, they will try to sell you a pets insurance policy, or a travellers insurance, or a gadget insurance, or… you get the drift.
They will try to keep selling to you till either 1. You give in and buy something just to get them off your back; or 2. You start ignoring them. Either way, it’s not the best approach to try and get a larger share of the customers wallet, which was the original goal.
The ‘blanket’ selling approach to cross sell may have worked earlier, when there were a limited set of products to choose from, and customers were comparatively lesser aware about their insurance needs. However, this ‘sell everything to everyone’ approach to cross sell may not work as effectively now.
To make an effective cross sell strategy, the following need to be considered:
- Customer life stage mapping: What this simply means to know and understand at what phase of his life a customer is. Is she married or single? Does she have any children? How long has she been working for etc… If you don’t know where a customer is in their life, how would you sell them the product that best suits their needs?
- Use ALL data: Yes! Use all data at your disposal. Did you take into account the customers transactions and interactions from the time she first became your customer? Did you consider her product portfolio? What about her household? Are there any gaps that should be fulfilled there?
- Leverage Analytics: Analytics helps in connecting the dots. By understanding a customer historical buying behaviour, life stage etc…, analytics makes it possible to predict which other product the customer is most likely to buy. The advantage of this approach is multi fold:
a. It brings in operational efficiencies to the cross sell process. Instead of throwing the whole product catalog at the customer and hoping something will stick, you can now positions only 1 or 2 products which have the greatest probability of success. This will save time and money.
b. Targeted cross selling improves the customers overall experience. It delights the customer to know that the brand cares enough to understand her requirements or needs at each stage of her life.
Cross sell is essential to the growth of business, if done well. However, a poorly designed cross sell approach will most definitely alienate your customers and make them wary of sharing any information with you.