What Is Cross-Selling and When to Cross-Sell?
According to the 2014 Infusionsoft Attitudinal Segmentation Research Report, most small businesses are looking for help in attracting customers, getting referrals, and implementing social media marketing.
Unfortunately, small businesses miss the opportunities that lie in their existing customer base when all of their marketing resources and efforts are focused on gaining new customers. They leave a ton of money on the table because they don’t have processes in place to cross-sell products and services.
What is cross-selling?
Cross-selling is the practice of persuading customers to buy additional products or services that are related to their purchase. It’s different than upselling, which involves attempting to convince your customer to upgrade their purchase to a larger size or more expensive version.
Both cross-selling and upselling techniques increase revenue, build awareness of your offerings and improve the customer experience when done tactfully.
Enhancing the customer experience with cross-selling
Customers have certain expectations when they purchase products or services that may not be met with the initial purchase. They know what they want to purchase, but probably haven’t researched or considered other offerings.
When you listen to the problem they are trying to solve, you can make additional purchase suggestions that enhance their experience. Perhaps they are having trouble keeping up with household chores and they sign up for your housecleaning services. If you don’t tell them that you also clean dishes and fold laundry, they may never get the additional help they need, but by sharing information on related products and services, you can drive in-depth awareness of your offerings and provide customers with additional options.
Creating a cross-selling strategy isn’t rocket science, but it does take some planning. Taking the time to sit down with a pen and paper might help you visualize how the process could work in your business. When you do so, you’ll want to focus on segmentation, relevancy and timeliness, according to Dan Paulson, an Infusionsoft sales manager and owner of MicaMove.
Segmenting your customers into demographic groups by characteristics like location, gender or age is one of the easiest ways to gain insight into your customers. Learning about their attitudes and beliefs helps you better understand why they purchase from you and further segments your customers into psychographic traits. This combination of demographic and psychographic traits helps you know who your customers are, where they are, what they need and what they’re looking to learn.
In the Attitudinal Segmentation Research Report, Infusionsoft discovered four audience segments unique to their business: Freedom Seekers, Passionate Creators, Legacy Builders and Struggling Survivors. The Freedom Seekers strive to keep things small and manageable in their business. They want to reduce the time they work and cite that improving their lifestyle was an important reason for starting their business.
When cross-selling to Freedom Seekers, it’s important to share products and services that help automate their business, save time or improve their lifestyle.
After you’ve segmented your customer base, you will need to create a cross-selling strategy so that the products and services you suggest are relevant to the purchase and to the customer type. Write down the products or services that customers frequently purchase together, as well as other related products. Cross-selling works best when you have a high priced offering and you offer a lower cost accessory or service.
Perhaps you own a landscaping business with a segment that includes career-oriented, time-strapped pet owners who need weekly lawn care. This customer segment would probably be thrilled to sign up for weekly pet waste removal service, which would save them time while maintaining the beauty of their yard. Cross-selling also works well when you have two low cost items. Imagine you own a coffee shop and want to cross-sell your latest donut creation.
You might have your staff suggest your customers try the new flavor, since donuts go well with coffee. Generally, offerings that are naturally bundled together work well in a cross-selling strategy. Regardless of the items that you’re pairing together, your messaging must come across as helpful and authentic.
Offering intelligent suggestions based on your conversation or observation is the key to successful cross-selling. If you’re simply trying to unload overstock inventory, your customers will catch you in the act sooner than you expect.
Most businesses attempt to cross-sell at the time of purchase by suggesting relevant items, sharing what other customers have purchased and displaying items that are frequently purchased together. However, this doesn’t necessarily work for all small businesses.
Inappropriate cross-selling can frustrate your customers and impact your reputation. Sometimes you’ll need to wait until the point of customer satisfaction before it makes sense to cross-sell a relevant item. If you’re a fitness trainer who works with clients to help them get in shape, you may not be able to cross-sell vitamin supplements until your client feels that the program is working.
You first need to understand the client’s goals, build a workout plan, assist with execution and then measure results. When your client’s body responds to the program, you can then upsell a diet plan to amplify the success.
Don’t cross-sell to everyone
Not all customers are profitable, and cross-selling to the wrong customer could end up costing you more over the long run. According to the Harvard Business Review, there are two types of customers that you want to remove from your cross-selling funnel: service demanders and revenue reversers. Service demanders often overuse customer service channels. They tend to call support for every issue that they encounter, will often ignore service announcements and sometimes reach out to other members of your company to get resolution.
When service demanders purchase additional products, your costs rise because they’ll utilize support at a significantly higher rate than other customers. Revenue reversers have the appearance of generating revenue, but only for a short time. They are more likely to return items that they’ve purchased, default on payments or terminate contracts early. Often times, the more they buy, the more they return, which can cost your company time and money.
When you identify a service demander or a revenue reverser remember to tag them appropriately in your customer relationship management system (CRM). Using the right tags helps you or your sales team remember not to follow the cross-sell process with these customers.
What is cross-selling success the result of? Its success requires segmentation, relevancy and timing considerations. Think of your customers and their buying process, walk through the buying process and consider how you might improve their experience by suggesting other items. Be sure to document the products that pair nicely together and train your staff to cross-sell. Once you’ve implemented your cross-selling strategy, you’ll need to constantly evaluate and improve; you can’t just set it and forget it.
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