Tag: Cross Selling

What is cross-selling and how does it increase sales?

A McKinsey study pointed out that companies implementing cross-selling strategies have seen an increase in revenue of up to 30%. So what is cross-selling?  Imagine you run a software company that provides CRM tools. One of your clients, a mid-sized business, uses your CRM software to manage their sales pipeline. During a routine check-in, your account manager learns that this client struggles with project management and team collaboration. Seeing an opportunity, the account manager suggests an add-on project management tool that your company offers. Since the client is already satisfied with the CRM software, they are likely to consider this additional product. This can lead to increased sales and enhance the client’s overall experience. This scenario illustrates cross-selling, a technique where a seller encourages a customer to purchase complementary or related products. Properly executed cross-selling can raise product portfolio sales by 10%.  In this blog, let’s explore what is cross-selling, the difference between upselling and cross-selling, and also common cross-selling strategies that are implemented.  What is cross-selling? Cross-selling is a sales technique implemented by key account managers, where a seller encourages a customer to purchase additional, complementary, or related products or services to the one they are already buying or considering.  The goal of cross-selling is to maximize the value of each customer transaction by fulfilling more of the customer’s needs with a broader range of offerings from the same seller. This strategy not only boosts sales but also enhances customer satisfaction by providing a more comprehensive solution to their needs. Difference between upselling and cross-selling It’s essential to distinguish between cross-selling and upselling, as they are often confused but serve different purposes.  Cross-selling involves offering complementary products to the one a customer is already purchasing. For example, suggesting a project management tool to a CRM software user, as in the scenario above. Upselling, on the other hand, is about encouraging the customer to purchase a more expensive version or an upgrade of the product they are considering or already own. For instance, if the same CRM software company offers a basic, professional, and enterprise version of their product, upselling would involve persuading a customer to move from the basic to the professional version. Cross-selling is also one of the easiest tactics to increase revenue. It can cost businesses 5 times more to get a new customer than to retain an existing one, making cross-selling important for customer retention. Both strategies aim to increase revenue, but cross-selling focuses on broadening the product portfolio a customer uses while upselling aims to enhance the value of a single product.  Guide: Cross-selling and Upselling Explained Advantages of cross-selling  1. Increased Revenue Cross-selling can significantly boost a company’s revenue by encouraging customers to purchase additional products or services.  2. Higher Customer Lifetime Value When customers buy more products or services from the same company, their lifetime value increases. Cross-selling keeps customers engaged with the brand and encourages repeated transactions over time. 3. Efficient Use of Customer Data Cross-selling strategies leverage customer data to make personalized recommendations. This efficient use of data not only boosts sales but also ensures that customers receive relevant and useful suggestions. 4. Market Penetration Cross-selling allows companies to introduce new products to existing customers, thereby increasing the market penetration of their product portfolio. This strategy can be particularly useful for new product launches. Disadvantages of Cross-selling A Harvard Business Review study discovered that some customer profiles aren’t suited for cross-selling as they tend to use loop-holes and result in net loss for the company.  “Cross-selling is profitable in the aggregate. But one in five cross-buying customers is unprofitable—and together this group accounts for 70% of a company’s “customer loss.” – The Dark Side of Cross-selling, HBR Before undertaking cross-selling decisions, firms need to look at their data set and formulate the customers they’ll be targeting in their marketing campaigns, that will make this favorable.  “If the cross-sell products/services bring additional value and enrich the customer outcomes, then it is less ‘selling’ and more ‘solving.’ The focus should be on what the customer benefits from, not what the salesperson needs to sell.”  – Natalie Hogg, Method Q  Some other common pitfalls include,  1. Over-communicating and Spamming  33% of consumers said they wouldn’t return to businesses that didn’t send relevant follow-ups. If not done correctly, cross-selling can annoy customers. Persistent or irrelevant cross-selling attempts can lead to customer dissatisfaction and might even result in losing customers. 2. Increased Sales Cycle Complexity Introducing additional products or services during the sales process can complicate and lengthen the sales cycle.  A Mckinsey study noted that accounts where the reps had to cross-sell to unfamiliar people/products took about 18 months longer to achieve results.  Sales representatives need to be well-trained to handle these complexities effectively. 3. Risk of Overextension There’s a risk that companies might overextend their product offerings, leading to inventory issues and operational inefficiencies. Offering too many products can also dilute the company’s brand focus. Common Cross-selling Strategies and Examples  1. Personalized Recommendations Personalized recommendations leverage customer data to suggest products that are relevant to the customer’s specific needs and past behavior. Personalized recommendations are one of the most effective cross-selling techniques, with a 35% increase in sales when recommendations are based on customer data.  This approach requires a good understanding of the customer’s business and challenges. Amazon is a prime example of personalized cross-selling. When a customer views a product, Amazon shows a “Frequently Bought Together” section, suggesting complementary items.  For B2B companies, this can translate into using CRM data to understand what additional tools or services might benefit a particular client. Use customer data to create personalized product recommendations. This can involve using CRM systems to track purchase history, customer feedback, and industry trends.  By understanding your customers’ needs and behaviors, you can offer relevant products that add value to their business. 2. Bundling Products Bundling involves offering a set of products together at a discounted rate, which can be more appealing than purchasing each item separately. Businesses implementing bundling strategies

How TaskUs Achieved 30% Growth in Upsell Revenue & 20% Growth in Cross-sell Revenue

In this case study, we observe the key role of DemandFarm’s digital key account management software in increasing the upselling & cross-selling revenue of TaskUs. The case study covers Taskus’ journey of identifying the top key account management challenges to streamlining key account planning processes and finally registering revenue growth in its key accounts. Read the Entire Case Study by clicking here   Watch More: Leaders of TaskUs sharing about their Digital Account Management journey with DemandFarm

Guide: Cross-selling and Upselling Explained

Successful strategies for satisfying the additional needs of customers beyond the primary product and increasing the quantity of the purchase decision. Learn more about how to cross-sell and up-sell in key accounts by understanding customer needs and goals, finding whitespace opportunities, making customized recommendations, and finding the right-person to reach out to deliver the right-message at the right-time. This cheat sheet contains quick tips and strategies on how to successfully cross-sell and up-sell in Key Accounts through focussed conversions, automation, incentives, retargeting, and demos. 

Cross-Selling vs Upselling – The Main Differences

Recall the last time that you were at McDonald’s (even though it feels like a decade at this point). What did you order? Maybe you only wanted some fries and coke, but the cashier convinced you to convert them into a happy meal. Or perhaps you noticed a new addition to the burger suite (at a point when you were hungry enough to devour a buffalo) and decided to try it out instead. If we start inspecting such encounters closely, an interesting pattern emerges. For instance, walking into a shoe store and subtly pitched to add a pair of socks or shorts to the cart. What is this? And more importantly, why does it work so well for almost all organizations, regardless of industry? Guide: Cross-selling and Up-selling Explained What is Cross-Selling? At its worst, Cross-selling is an advanced sales tactic. But at its best, it is a customer success story that corporate leaders yearn for. As we have seen in the examples above, Cross-selling is the process of satisfying the customers’ additional needs that the primary product cannot fulfil. In other words, it means encouraging customers to buy complementary products with their purchases, increasing the overall cart value. This places the strategy miles away from cold reach-outs and sales prospecting simply because it taps existing customers instead of new ones. What is Upselling? Up-selling is the first conceptual sibling of Cross-selling, where the end goal is to increase the cart value not by introducing new items but by increasing the size or quantity of the initial purchase decision. For marketers (or salespeople), this may translate into selling a higher-end subscription to the customer with more advanced features or integrations. In most cases, upselling works much better than Cross-selling since it is easier to improve the commitment of a purchase decision that the customer has already made! What is the difference between Cross-selling and Upselling? More often than not, Cross-selling and Up-selling are used interchangeably, marking a conceptual error. The best way forward is to consider Cross-selling a complementary product and Up-selling an upgrade. For instance, upgrading an economy aeroplane ticket to business class would be an Upsell. But shopping from the in-flight product catalogue, such as headphones, would be a Cross-sell (since you have already bought the plane ticket). Upselling is almost always associated with a higher-margin product. Cross-selling deals with similarly priced complementary products with no significant enhancement in the margin. Thus, margin expansion is a function of upselling. Cross-selling helps boost order value and volume. The following examples will make the difference vivid. Case Study: TaskUs registered a 30% increase in up-selling & 20% increase in cross-selling Why are Upselling and cross-selling Important? When Brian Halligan, CEO of HubSpot, went onstage to deliver a keynote at Inbound 18, no one expected what was coming next. He officially shattered the traditional concept of Sales Funnels – a cornerstone of marketing strategies since 1898. His argument? Funnels are inherently outcome-centric. They do not care about the customers once the sales process is over. The solution? Delighting customers with the new Flywheel model instead. As HubSpot explains, companies can drive more referrals and repeat sales by using the momentum of happy customers. This is a strong indication of the direction in which the digital world is headed. With increasing transparency and customer awareness, businesses today have no choice but to invest their energy into delighting existing customers. Why? This is because, in present hyper-competitive landscapes, acquiring a new customer is 5 to 25 times more expensive than retaining an existing customer, as reported by Harvard Business Review. In other words, upselling and Cross-selling are much better business strategies than Sales and Customer Acquisition. Here’s why you should be paying close attention: 1. Revenue Growth Both Upselling and Cross-selling have a direct positive impact on your average order value. This is a rather obvious outcome when customers are motivated to opt for higher-priced alternatives or add-ons. To put the numerous benefits in perspective, here’s what Neil Patel explains happened in 2006 when Amazon added Up-selling capabilities with the phrase – “customers who bought this item also bought”. They clocked a 35% boost in sales! Source 2. Strong Customer Relationships The fact that customers are willing to buy is itself a testimony to existing solid relationships. Successful cross-selling and up-selling can strengthen this relationship to the point of co-dependence, provided that you can deliver on your promise. But this also comes with a word of caution – never try to pitch additional products/services that buyers do not need. And even when you do get the pitch right, always be willing to take no for an answer. 3. Increased CLV For certain businesses, such as in the SaaS space, upselling and Cross-selling can amount to as much as 70-95% of the revenue. This means that in a modest scenario, initial sales can rake in only 5% of the revenue! This brings us to another critical revelation – the effect on Customer Lifetime Value (CLV). With most of the revenue being a direct result of the day-to-day experience of customers with the business’s products/services, Up-selling and Cross-selling also have a direct bearing on the overall CLV. How to Cross-sell and Up-sell in Key Accounts? Cross-selling v upselling is an art form where customer success teams need to target the sweet spot between under-delivering and under-pitching, and Account Planning plays a significant role in making this possible. Here are some of the best practices that will help you paint the canvas with more conversions: 1. Understand Customer Needs and Goals Even though it may look tempting, don’t just bombard your customers with product suggestions. The right Upsell/Cross-sell opportunities are hard to come by, leaving no room for squandering. The best way forward is to prospect customers first and answer questions like: What were they looking for in the first place? What are their short-term and long-term goals? Is there any budget or operational constraints? And more… Once you know everything about them, proceed to take the right call – Upsell or Cross-sell?

Cross-Selling – The 6 How-To-Do-It for Key Account Managers

The main strategies of cross-selling up-selling can be broken down into 6 strategies for successful Key Account Management as detailed below. If these are followed, they give good results, as has been proven in the past. ‍Check if your Key Account Managers have the skills required for cross-selling: Implementing a good cross-selling strategy is where things might go wrong. A piece of very good and sound product knowledge is a must-have for your Key Account Managers. At the same time, they cannot go overboard and push the prospect to say yes to you. Each Key Account Manager’s product portfolio should be kept to a size where they know each product in their portfolio well and get familiar quickly with new additions.‍ Cross-selling requires that customers get a good fit and benefit: Sales for the sake of selling does not work. You cannot push unrelated products to prospects. They will buy only if they see a good fit for the product for their needs. A good idea would be to create a solution for many products that would be of more value to the customer than individual products. An integral part of cross-selling is also counseling and advice to customers in helping them make the right choice. Moreover, in providing them good customer service long after the purchase is made.‍ KYC is a good technique to find out the woes and the wows of your customers regarding your products: Key Account Managers should always keep the customers engaged and happy without being intrusive, at the same time, gleaning insights from the customers about existing products through questions and surveys. This information should be used to fill current gaps and work on new products to fill a possible gaping need.‍ Be more than a salesperson to your clients: Clients always see salespersons as trusted partners and feel good when the salesperson behaves like one. To ensure that valuable information regarding each Key Account and client preferences and peeves stays with the salesperson, you should work on a database with all essential information and share it with the sales team. This can help salespersons to make customized recommendations to each client and explain how a certain product may benefit him by using specific examples assimilated through the database.‍ Sales and relationship analytics through Automation: Automating the sales process helps in keeping a close watch on client decisions and purchases and then identifying clients who are most likely to buy additional products from you. These automation tools use buyer profiles and personas through a scoring or weight-age method to identify hot prospects.‍ The right message and the right move at the right time are crucial to cracking a deal: Account Managers should know the buyers enough to understand what their next move should be when to make their next move, how to do it, what to say, and what will seal the deal. They should also have a finger on the pulse of which campaigns are working and which are not and which click with whom. Cross-selling needs establishing clear account planning processes, setting expectations, training the team adequately and continuously, and monitoring results, not to forget course correction whenever the need is felt. Technology is the one thing that ties together all cross-selling efforts. ‍