Many companies sell multiple products or offer various similar stored services. So it is important to offer customers as many products or services as possible. In this way you can retain customers and increase sales. Many customers are only interested in a single specific product or service. When it comes to cross-selling , it is important to sell other products or services to the customer. The simple logic: “Once I have won the customer, I try to sell them even more”.
What is cross-selling? The definition.
What does cross-selling mean? Cross-selling literally means “cross-selling” or cross-selling. With such an additional sale, existing customer relationships are used to make additional offers to the customer. These should match the product originally offered or ideally complement it. A high cross-selling rate ensures better sales efficiency. For each customer, it is less important to offer a large number of products than to conclude the largest possible number of contracts with suitable offers. After all, it is cheaper to convince an existing customer of additional products or services than to recruit a new customer. When cross-selling, companies often meet their customers with attractive pricing by offering discounts on additional products or services.
Goals: What are the benefits of cross-selling?
According to healthknowing.com, cross-selling is a sales strategy that aims to use existing customer relationships for new sales. You can try to win customers for additional services or the purchase of additional products. The products or services offered to customers in cross-selling were not originally asked directly by customers.
Cross-selling serves to compensate imputedly, with this marketing strategy part of the sales range is only sold for a small profit or even at cost. The aim is to promote the sale of parts of the range with high profit contributions. You can use the contribution margin calculation to determine the minimum price for such cross-selling offers. Companies pursue several main goals with cross-selling:
- Securing sales and increasing sales
- Increased and long-term customer loyalty
- Fixed cost contribution through the cross-selling products
- Increase in profit
- Promotion of the main range via a marginal range
- Promotion of the marginal range with the use of the main range.
Benefits of cross-selling
Cross-selling has several advantages for companies. You save acquisition costs because you already know the customers and only have to address them directly. This is legally permitted, because if a customer relationship already exists, you can contact your customers for acquisition purposes. Cross-selling can lead to a lasting customer relationship; customers can recommend the products or services that are additionally offered to them. The company’s product range is becoming better known, and companies are saving advertising costs.
Disadvantages of cross-selling
However, one should not overdo it with one’s advertising measures. Everyone knows the returning callers from their own mobile phone provider who want to sell you a DSL connection over and over again. This can annoy customers so much that they quit because of it.
You also have to be able to substantiate a different pricing policy in front of your customers. Because why does a customer A pay, for example, 20 euros for a service that he exclusively uses, while customer B only pays 5 euros because he is already using a different product. If customer A learns of the much lower cross-selling price that customer B pays, resentment can arise.
Companies collect data about customers and their purchasing behavior. This is completely serious and legitimate as long as the applicable data protection guidelines are complied with and customers are informed about it transparently. The customer data is processed and evaluated for cross-selling campaigns; data mining techniques are often used for this. The customers then receive letters, e-mails or calls with corresponding offers. In addition, new customers in particular are made aware of these additional cross-selling products and services when purchasing products or when commissioning services. Modern CRM software enables the early identification of sales opportunities and automatically reminds the clerk at regular intervals of calls to good customers.
Examples of cross-selling: banks and savings banks
Banks and savings banks are a typical example of successful cross-selling. They push the technology to the extreme when opening a new account. In connection with the management of current accounts, they offer various services or insurance policies that are well below cost. They hope to build long-term customer relationships with profitable additional business.
One such service, which is offered in addition to the current account, is a free credit card, especially with direct banks; the bank does not generate any income with the free credit card. With the current account and additional services, banks can often win over customers for other products, for example for a call money account or a savings contract. The range of services offered by banks and savings banks also includes the brokerage and sale of real estate. In connection with this, they offer their customers construction financing at favorable conditions or the necessary insurance for building construction or property ownership.
The accounting program supports you in recording sales tax and automatically creates the advance notification based on your incoming and outgoing invoices .
More examples of cross-selling
- Car dealerships often offer additional products to customers who have bought a car. The offer often includes winter tires, accessories for the new car or a larger navigation system. The customers are written to in autumn so that they can buy winter tires as early as possible before the start of winter, which are cheaper as part of such a sales campaign. Often there are vouchers for changing tires or storing summer tires.
- If a customer regularly orders books from an online bookstore, they can receive offers for magazines, audio books or an e-book reader by e-mail.
- If a customer has taken out liability insurance with an insurance company, the insurance company can offer him life insurance or private pension insurance. Insurance companies often offer their customers additional insurance in addition to an existing insurance.
- In addition to the product ordered by the customer, for example jeans, various online shops display various products that go with it. They often offer these products with the note “You might like this too”, such products can be a denim jacket, a denim shirt or matching shoes.