Cross-Selling

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What is Cross-Selling? Meaning.

Cross-Selling is the practice of suggesting and selling additional, related or complementary items to a buyer than those that have been bought before to an established, existing client.

Selling more of the same items to existing clients is not considered cross-selling.

Selling extra options to customers who have already committed to making a purchase for some item is called: upselling.

Cross-Selling versus Upselling. Differences

Upselling and cross-selling are quite similar. They both aim to maximize the value of a purchase as well as to improve the customers buying experience by creating additional value.

However, while cross-selling focuses on promoting additional products from related product categories, upselling encourages customers to purchase higher-end versions of that same product or to pay for upgrades and extra features or extra options.

Examples

If a customer is buying a laptop and the company offers a printer to use alongside with the computer, that is cross-selling. The same is true for offering extra leg space to airline passengers for an extra fee.

If a customer is buying a basic laptop and the company offers a faster processor or extra memory, that is upselling.

Benefits of Cross-Selling. Advantages

• For the seller
  • It is a way to increase sales to the same customer by introducing other products in the product range.
  • Increase in revenue and profit.
  • Decreases the likelihood of the customer switching to a competitor.
• For the buyer
  • Having a single supplier for multiple products (one stop shopping). This could be more pleasant.
  • Increase in efficiency (less commercial meetings needed)
  • May result in an extra discount due to larger spending.
  • Reduces the risk of unclear responsibilities in case of problems (finger pointing from one supplier to another)

Limitations of Cross-Selling. Disadvantages

• For the seller
  • There is a risk that existing relationships with the client could be disrupted.
  • The need for the existing product/service might decrease by selling the new product/service.
  • Potential ethical issues, such as the mix of accounting services (requires objectivity) with selling advisory/consulting work (Arthur Anderson at Enron))
• For the buyer
  • Additional cost

Obstacles to Cross-Selling. Barriers

• Certain customer policies may require the use of multiple vendors (multi-vendor policy)
• Large organizations might have many purchasing departments and officers, making cross-selling very complex.
• The fear of one delivery unit that other delivery units might do a bad job at the client, influencing their own business negatively.

Forms of Cross-Selling. Types

• Normal cross-selling: while servicing an account, a service provider finds out about an additional need/problem area of the client and offers to solve it.
• Total Solution Selling: for example large IT vendors, selling hardware, maintenance, standard software, tailoring of the software, training, consultancy and even financing of the entire solution.
• Customer Loyalty Programs.
• Add-on Services: for example selling all-risk insurance when you buy a car.

Cross-selling must not be confused with Multi Channel Marketing , nor with the Validity Effect, nor with Horizontal Diversification.

Compare also: Foot in the Door  |  Analytical CRM  |  Bait and Switch  |  AIDA

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This ends our Cross-Selling summary and forum.