Firstly, let’s get the definition out of the way.
Cross Selling – selling additional products or services to an existing customer
Few organisations sell just one product or service; furthermore most of the products/services offered by one organisation will have high levels of commonality in terms of target markets.
For example in legal firms where the target prospect may be a company MD who can easily purchase from a number of separate departments – litigation, conveyancing, wills, employment etc.
Typically a company may pursue a Cross Selling Strategy to increase spend per customer, but the driver is not always financial.
Often Cross Selling is an ideal way to build loyalty and ‘stickiness’ between an organisation and the customer based. This can be a very powerful strategy to protect the customer base, retain and protect margin, minimise competition and secure stable market share.
When employed successfully, the switch factors and costs of moving for the customer can be too high and therefore may prohibit the customer from taking their trade elsewhere if the degree of cross sell is high.
Are there risks?
Of course there are risks.
The risks can vary depending on:
- The degree of cross sell
- The financial commitments
- Internal account management requirements
- Pricing policy
- Special accounting requirements
- Service level agreements (internally and externally)
- Degree of business integration
- The risks associated with having an over reliance on fewer, larger customers
- Do any of these risks mean an organisation shouldn’t look at cross selling?
Definitely not…depending on the industry you are in, it may cost up to 10 times as much to recruit a new customer as to service an existing customer, so strategic cross selling should always be investigated as a viable way to quickly and profitably grow the bottom line.
Clear strategy can be employed that will minimise the risks involved.
Strategic cross selling should always compliment any new business activity, and this may be reflected in any reward and commission structure for the sales team.
So, is your organisation capitalising on the financial, loyalty and branding opportunities that come from cross selling your company range of products and services?
If you would like any advice on how you can monetise your existing customer base – call us for an informal chat – Carol Griffiths – Lead Consultant – 0779 002 1885, email@example.com
Funding may be available to assist in your business growth.