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
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.
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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.
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NEW Upselling: Optional Feature Pricing
Many companies are offering optional, related products and/or additional features along with the main product. This is called: cross-selling and/or upselling. Optional Feature Pricing (OFP) is the pri...
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The Actual Relationship Between Cross-buying and Consumer Loyalty Customer Loyalty, Consumer Loyalty, Cross-Selling, Cross-Buying, Sales Management, Account Management There has been an ongoing discussion as to whether cross-buying (buying goods from various categories) is the consequenc...
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