Definition Cross-Selling. Description.
Cross-Selling is the practice of selling other products or services than those that have been bought before to an established, existing client.
Selling more of the same product to existing clients is NOT considered cross-selling.
Selling products to new prospects is also NOT considered cross-selling.
Benefits of Cross-Selling. Advantages
- For seller: It is a way to increase sales to the same customer by introducing other products in the product range.
- For seller: Increase in revenue and profit.
- For seller: Decreases the likelihood
of the customer switching to a competitor.
- For buyer: Having a single supplier for multiple products (one stop shopping). This could be more pleasant.
- For buyer: Increase in efficiency (less commercial meetings needed)
- For buyer: May result in an extra discount due to larger spending.
- For buyer: Reduces the risk of unclear responsibilities in case of problems (finger pointing from one supplier to another)
Limitations of Cross-Selling. Disadvantages
- For seller: There is a risk that existing relationships with the client could be disrupted.
- For seller: The need for the existing product/service might decrease by selling the new product/service.
- For seller, buyer and society: Potential ethical issues, such as the mix of accounting services (requires objectivity) with selling advisory/consulting work (Arthur Anderson at Enron))
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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The Actual Relationship Between Cross-buying and Consumer Loyalty
Customer Loyalty, Consumer Loyalty, Cross-Selling, Cross-Buying, Sales Management, Account Management...
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Compare also: Foot in the Door | Analytical
CRM | Bait and Switch | AIDA
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