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What is Cross-Selling?
Cross-Selling is a selling technique where you convince customers to buy more by offering them other related products. For instance, if a customer has come to your shop to buy a comb, but you also offers him a hairdryer and other hairbrushes. If the seller offers customers relevant products at the right time, then he would maximize the chances of more sales.
Banks, insurance agencies, and other businesses also use the cross-selling technique. When a customer opens a saving account, the banker offers him to buy a credit card as well. An insurance agent would offer his client to buy car coverage plan additionally when he asks him for the life insurance.
Cross-Selling Vs. Up-Selling
In cross-selling, the seller increases the sales by offering relevant products. However, up-selling is the art of convincing customers to buy higher-end products by comparing it with the product that the customer is looking for. Both of these sale techniques; cross-selling and up-selling, have advantages if the seller applies them properly at the right time. The purpose is to increase sales.
The reason behind the success of both of these selling techniques is to understand the needs and wants of customers, and then replying to them accordingly to meet their requirements.
Cross-Selling Strategies
Cross-selling and up-selling is a marketing strategy of targeting already existing customers, instead of new customers. It’s because targeting new customers would cost the company 5 times more. Here are some of the following strategies of cross-selling are given below;
Target Past Purchases
Target Past Purchases is a very common strategy of recommending products to customers based on their past purchases. If the seller keeps a track record of customers’ past purchases and their buying pattering, then he would know the interest of customers. When he offers them the product of their interest, then it would increase the sale.
Offer Discount to Buy More
We all come across posters and billboards like a packet of 3 or 5 shirts at Rs.1500. It makes us buy a packet of 3 shirts when you need only one shirt. It is a very good marketing strategy for selling more products by giving away some discounts. The customer would be willing to buy more products than his requirements.
Sometimes, companies offer free shipment by setting up a certain amount of target price. Therefore, customers would tend to buy more products to reach the target price, so that they could get a free shipment. Customers end up buying more products than their needs.
Similar Interest
Marketers and sellers use certain phrases like ‘other users have also bought these…’ or ‘people are buying these.’ Telling customers about the trends would make them curious, and curiosity would make them check out the trending products and they’ll buy it.
For instance, you visit an online store to buy a dress. The store would show you the trending shoes, ties, waistcoat, and other trending similar products. Trending interest would make you buy more.
Related Purchases
Related Purchases is a very common type of marketing cross-selling strategy, and it uses the phrases like ‘have you tried these?’ or ‘this product goes with that product.’ Customers would end up buying more relevant products.
Loyalty Rewards
When a store awards some discounts to its loyal customers, then it would not only make them feel good and increase brand loyalty. But it would also make them buy more products. It would encourage loyalty among new customers as well.
Airlines offer loyalty rewards to their customers by setting up certain mileage. If the customer keeps flying the same airlines and achieves the mileage, then the airline would offer him the free flights. It would attract and encourage new customers to keep flying the same airline.
Advantages of Cross-Selling
Some of the advantages of cross-selling are as follows;
Increase Customers Loyalty
Besides selling more products through the strategy of cross-selling, it also allows you to solve problems for customers. When you’re able to solve problems for customers, then it increases brand loyalty.
For instance, a customer asks you for life insurance and you sell it to health insurance additionally. It solves problems for him later on. Then he would not only become your loyal customers but also refer his friends to you.
Higher Profit & Fewer Prices
Offering discounts to your customers is also one of the cross-selling strategies. Where you offer discounts either per sales or on a combination of products. It lowers the prices for customers either way. When customers buy more products, then you’ll earn more profit through more sales. It is a win-win situation both for the company and the customer as well.
Competitive Edge
When you apply cross-selling strategies at your store like offering discounts and products in combination and you would earn profit from it. Then it gives you a competitive edge over others in the market. When you’re able to earn profit from the lower prices and you have an asset of loyal customers. Such qualities differentiate you from your competitors.
Build Customer Relationship
Cross-selling doesn’t happen by remaining a quiet customer. When you are determined that you won’t take ‘no’ for an answer, then you communicate with the customer and convince him about the product. When you communicate with customers and explore more about his choices. There’s a possibility that you would find some common grounds. That’s how you build a relationship with customers.
Increase Lead
Lead means potential customers. When you have a pool of loyal customers and they’re willing to refer your product among their social circle. Then it gives you a potential pool of leads that are more likely to become your customers as well because of the good reference.
Disadvantages of Cross-Selling
Some of the drawbacks and disadvantages of cross-selling are as follows;
Irritating
If you apply a cross-selling strategy without any planning, then it would be annoying for the customers. For instance, offering discounts on winter clothes in the summer is useless to customers, because the discount on summer clothes would get their attention.
Stressful and Confusing
According to a study conducted by Harvard Business School, even successfully implementing the right cross-selling strategy is stress to the customers. It’s because when you make them buy more products than their needs. They would come back to return the product, and the whole process is very stressful and confusing for the customers.
Cross-Selling Examples
Retail Example
Amazon, Alibaba, Daraz, and other online retail stores often use the cross-selling strategy. Where you would come across phrases like these ‘have you tried this? Others are buying it’ and ‘this product goes with that product.’ It gives customers more options, and they’ll end up shopping more.
Banking Example
When you open a current or saving account in any bank, then the banker offers you the advantages of Debit and Credit Card. You’ll end up buying those cards, even if they aren’t of your use.
Cross-Selling FAQs
Here are some of the frequently asked questions;
How Does Cross-Selling Work?
Cross-selling works when the seller offers you relevant products added to your requirement and you’ll buy it.
Is Cross Selling Illegal?
Yes, it is perfectly legal. In fact, it offers customers products at lower prices.
When to Use Cross-Selling?
When offering an additional product to customers would add benefit and solve his problems, then you should offer it.
Conclusion
Applying the right cross-selling strategy at the right time is the key to success. Most importantly, it should add some value to customers’ life and solve problems for them. Rather than just selling your products.
