What is Cross-Selling?

Cross-selling is a distinct practice that involves selling related or complementary products or services to a customer based on their interest in or purchase of your organization's products or services.

This is a great way to engage with customers to increase their loyalty towards your brand, to develop better relationships and improve retention with them. Cross-selling also promotes better customer lifetime value and is an excellent process to include in your growth strategy.

An example of cross-selling is when a retailer offers a deal on laptop case and wireless mouse to a customer who purchases a laptop. These items add value to the current purchase without asking the customer to buy a more expensive laptop.

Cross-Selling vs. Upselling

Cross-selling and upselling are two different practices that get your existing customers to purchase additional products or services that are beneficial to them in the long run. The distinct difference between cross-selling and upselling, is that your goal with upselling is to sell a more expensive, more advanced product to the customer than they had originally planned. Upselling does not mean you get customers to buy expensive items without conveying its added benefits to them.

One example of upselling would be an insurance provider selling a premium plan with a more extensive coverage to a current policyholder of a basic plan.

However, in both upselling and cross-selling, companies need to rely on their existing and potential customer base to increase their sales. They can do so by ensuring the right additional products are being offered to the right customers.

A point to note here is that cross-selling never involves replacing the current choices of a customer with a more expensive one.

What are the Benefits of Cross-Selling?

The main benefits of cross-selling include -

  • increased sales revenue

  • improved customer satisfaction

  • increased Customer Lifetime Value (CLV)

Cross-selling is a practice when work provides tremendous value to both you and your customer. When an existing customer is not aware of a product or service that would allow for a better customer experience is an ideal scenario. Reaching out to such a customer at the right time in their customer journey will get them to react positively to your cross-selling suggestion. This will allow for better sales, improve customer satisfaction since their add on product or service is a better fit to their needs.

What are the Drawbacks of Cross-Selling?

Like anything, when cross-selling doesn’t work, it can be annoying to your customers and can be less effective at sales. This is always due to lack of planning and not analyzing the right data. For example: A customer planning for a vacation in the tropics buys swimwear, sunscreen, sunglasses etc. You then decide to send this customer promotions on winter clothing like jackets, gloves etc. This is a classic example of cross-selling gone wrong.

Such type of cross-selling techniques will drive the customer away. Another example is when you decide to contact a customer via the phone when past history of business indicates that they prefer to place their orders using their email will drive them away as well.

In the above mentioned examples, simple fixes in data and how they are looked at will enable you to avoid creating these pitfalls and losing customers. A good place to start is by analyzing past customer data and other metrics on all your cross-selling campaigns to understand which of these campaigns are improving cross-sells without reducing overall profitability.

Another thing to keep in mind is, when you do not have a well thought out plan on how to cross-sell to a particular customer, it is always better to avoid it.