Cross selling is a natural extension of trying to get a larger share of the customer's wallet.
After acquiring a new customer, the sales and account management teams put their entire effort into:
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 business. The primary being that it increases the customer profitability over the life cycle and discourages attrition.
Take for example an insurance company. Let’s say you have a home insurance policy with 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 pet insurance policy, or traveller's insurance, or gadget insurance, or… you get the drift.
They will try to keep selling to you until 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 to get a larger share of the customer's 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 needs to be considered:
- Customer life stage mapping: Simply stated, this means to know and understand at what phase of their life a customer is in. Are they married or single? Do they have any children? How long have they been working, 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 customer's transactions and interactions from the time they first became your customer? Did you consider their product portfolio? What about the household? Are there any gaps that should be fulfilled there?
- Leverage Analytics: Analytics help in connecting the dots. By understanding a customer's historical buying behavior, 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:
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 just 1 or 2 products which have the greatest probability of success. This will save time and money.
Targeted cross selling improves the customer's overall experience. It delights the customer to know that the brand cares enough to understand their requirements or needs at each stage of their life.
Cross selling is essential for the growth of business. However, a poorly designed cross sell approach will most definitely alienate your customers and make them wary of sharing any information with you.