What cross-selling gives the bank. Cross-selling banking products. What it is? Cross-selling for your business
"Entrepreneur without education legal entity. PBOYUL", 2007, N 3
What is cross selling?
The term “cross-selling” (as well as cross-selling, or integrated sales) is quite well known in modern business - cross-programs are mentioned both in business literature and at master classes of leading sales practitioners. However, most often things do not go beyond calls to implement comprehensive programs. But commercial practice has created a lot of working methods, technologies and cross-selling strategies. In this article we will make an attempt to systematize the available information on this issue.
So what is cross-selling? In its most general form, such sales involve offering several services to customers.
Example 1. Russian insurers make their profits mainly through cross-selling. Let's say a client comes to them to take out a compulsory motor liability insurance policy. This type of insurance is usually unprofitable for the company. Therefore, agents are likely to offer the client an additional number of voluntary types of insurance. Usually these are some products related to the car - a CASCO program, additional motor third-party liability insurance (increasing the maximum amount paid by the insurer under the MTPL policy), a special voluntary medical insurance program - emergency hospitalization, treatment of the driver and passengers. Inexpensive (comparable to the price of OSAGO or less) property insurance products without inspection, designed for impulse purchase, may also be offered.
Having successfully negotiated, the insurance agent sells the client not only the services of his department, but also services for which colleagues from other departments are responsible.
Why does a seller need to cross-sell?
The seller’s benefits from using the integrated sales method are quite obvious:
- Each product or service receives additional points of sale, which increases turnover. The number of so-called “selling points” is maximized;
- turnover increases, which entails an increase in profits;
- since sales are carried out to already attracted clients, the costs of finding new clients are significantly reduced;
- cross-selling is aimed at increasing the level of customer loyalty and his commitment to the entrepreneur-seller. And this provides the business with a certain “margin of safety”;
- loyal customers and additional profits are excellent prerequisites for the development and implementation of innovations;
- This method increases sales without the entrepreneur’s participation in “price wars.”
It seems that there is no point in analyzing these reasons in more detail. From a practical point of view, the answer to the question of why cross-programs might be of interest to the buyer is much more interesting.
Why cross-sell a client?
- A client who cooperates with a partner in several areas can receive discounts on one or more services.
Why is this happening? Economists can calculate the profitability of providing each service and selling each product. Or you can calculate the profitability of servicing each individual person. In the case of comprehensive services, the financial results for each product are summarized and accumulated. This means that the buyer, by purchasing the first or several first services, has already provided a total profit that satisfies the seller. From this point on, maintaining customer loyalty becomes the first priority. This is work for the future. And here the entrepreneur should provide a discount that is insignificant for him, but significant for the client.
- The client will not have to maintain relationships with several counterparties, which reduces internal costs.
Let's show what this looks like in practice.
Example 2. Let's assume that an individual entrepreneur received a loan from a commercial bank for the purpose of business development. To achieve this, he worked hard and prepared an impressive package of documents for submission to the bank. After some time, he needs to get a new loan (a different type of loan, a different banking product). All other things being equal, an entrepreneur will most likely choose a bank with which he already has experience of communicating. After all, he is already familiar with the rules of operation of this credit institution and its pitfalls. This means you can save time and effort. He may not have to submit an impressive portion of documents a second time. Moreover, the entrepreneur will try to contact the bank employee who served him previously, as this will also speed up the process.
Why is this happening? Modern methods conducting business involves maintaining information about counterparties, including for the purpose of subsequent sales. Therefore, any companies and individual entrepreneurs create databases of their partners in one form or another. This is the need of the hour, and it appears to be in favor of both sides.
- The client receives a real, and not just a declared, individual approach. In an era of global competition, customization<*>valued more than a low price.
Moreover, the assessment of not only the subjective indicator - consumer value - but also the objective criterion - the quality of the goods and services offered - increases.
Why is this happening? The answer is obvious - the seller already has experience communicating with the client and knows the specifics of his consumption.
It turns out that cross-selling is beneficial to both parties. Next, we will consider the types of cross-selling that occur in practice.
Types of Cross Selling
Complex sales can be classified according to several criteria.
By the number of entrepreneurs whose products are involved in sales
If the cross-program affects only one individual entrepreneur(products of individual divisions of his business are sold), then we can talk about internal cross-selling.
Example 3. A lawyer (individual entrepreneur) conducts an inspection personnel service joint stock company. At the same time, he offers the client an expanded service: advice on accounting and taxation issues in relation to “salary taxes”, protection of interests in court.
When several entrepreneurs and companies come together to sell together, external cross-selling occurs.
Example 4. Investment construction company cooperates with individual entrepreneurs engaged in renovation of premises, finishing, supply of building materials. At the time of commissioning of the building, such services are relevant for real estate buyers. Therefore, the construction company invites future residents to contact their partners.
Example 5. When purchasing a trip abroad from a travel agency, the client is offered several types of insurance - medical, accident, luggage insurance, etc. Insurance Company in this case, it increases its sales, and the travel agency receives a commission. The partners from the previous example interact in a similar way.
By the amount of financial benefit received by the client
If the entrepreneur's goal is only to sell additional products, then the client usually does not receive any additional monetary benefit. In our opinion, this is not an entirely interesting option for the buyer. For this reason, it is the least effective in practice. In our opinion, this type of sales is more applicable to increasing the level of awareness about products. However, it rarely leads directly to a deal.
A more beneficial turn of events for the client is to receive a discount when purchasing a second product.
Example 6. The buyer of an online store, immediately after adding any sports equipment to his virtual “cart,” receives an offer to buy a computer program for keeping a fitness training diary at a discount.
A cross-program may offer consumers not direct discounts, but other types of bonuses, in particular the accumulation of “reward points” when making purchases, which entitle them to gifts, discount cards, VIP client status, and others (see example 7).
Example 7. The Aeroflot Visa discount card program has combined the efforts of a commercial bank and an airline. In general, this is a standard plastic card. The difference from similar cards is that when paying with Visa Aeroflot for any purchases in any retail outlets the owner is credited with a certain number of miles to his personal account, directly proportional to the purchase price. Having accumulated a certain number of virtual miles, he can receive free plane tickets from Aeroflot within the “accumulated” distance, or partially pay for the flight with virtual miles. Partner companies within this program pursue the same goal - finding and retaining a certain segment of clients - people with a fairly high level of income.
You can take the cross-program to the absolute level, when the client receives the product for free. In this case, however, it is difficult to talk about actual sales. Obviously, this technique can only be used to promote a product, as one-time promotions (see example 8).
Example 8. Each buyer of the business literature department of a book supermarket who makes a purchase of more than 1000 rubles is given a free subscription to a new business magazine for 2 months. Cooperation can be “strengthened” by offering magazine subscribers a discount at a specified supermarket. The benefit of the store is primarily in increasing the size of the average check. The benefit of the magazine is to inform its target audience about the appearance of a new product.
If a customer does not receive direct monetary income from cross-selling, this does not mean that he does not receive any benefit. No less interesting (and maybe more) will be non-financial benefits for him, such as:
- a new level of service quality;
- technological amenities;
- individual approach;
- optimization of time costs;
- additional service;
- Information Security;
- innovative products.
By type of products (services) sold
Classic cross-selling involves selling several separate products.
"Cross-sold" can be:
- completely independent products and services. They are connected only in that they have a common target audience;
- a package of related services, in other words, basic products and accessories.
Another thing is integrated, interdisciplinary products. In this case, several business units of an individual entrepreneur or even several entrepreneurs and organizations unite to implement a joint project. As a rule, this is a complex product with a high degree of individualization, and in some cases it is unique.
Example 9. The computer salon of an individual entrepreneur not only sells equipment and software, but also provides various types of telecommunications services. To your client, an entrepreneur who owns a network retail stores, he proposes a special project - the organization of a single information space. The work includes laying a fiber-optic cable between the buyer's stores, providing Internet access, and creating unique information databases. Employees of several departments, as well as contracted specialists, are involved in the implementation of the project. As the product becomes more complex, its price also increases.
By technology used to work with clients
- Direct cross-selling.
Within the framework of this technology, a businessman on an agency basis can sell the services of partner companies. This is the basic level, the basis for the development and implementation of more complex cross-programs.
- Personal management or key account management. A personal manager or entrepreneur must personally be able not only to orient the client to the features of the products offered and offer the best set, but also, at the first request, select any information that may influence the purchase decision (see example 10).
Example 10. In a car dealer company, luxury car sales managers supervise the purchased car throughout its entire lifespan. They organize technical inspections, repairs and even sale of cars through the trade-in system for clients.
- Supermarket, or "one-stop-shop-services".
Realizing that for most customers it is more convenient to deal with one supplier of products or services on all issues, many merchants have switched to implementing a supermarket strategy. This means that a businessman offers his clients almost the entire possible list of goods or services in the relevant area: household chemical products of all brands, represented in Russia, or the provision of all standard accounting services - analysis, maintenance and restoration of reporting, reconciliation with the budget, etc. Services are standard and provided at average market prices. At the same time, at least average market quality is ensured.
If there are many manufacturers and sellers on the market and they are not too different from each other, this strategy works very well. Why? Nowadays, offering a client a fundamentally new, attractive product is a very difficult task. Exclusive - by definition piece goods. Therefore, sellers who do not have this competitive advantage compensate for it with the most complete product line, the ability to give the client “everything at once.”
Example 11. Many entrepreneurs-realtors are not limited to organizing the purchase and sale of real estate. They offer clients the services of a consultant who can not only explain the intricacies of housing and civil legislation, but also prepare a tax return and property tax deduction. Additionally, they engage a lawyer who checks the purity of the transaction and draws up an agreement, and also coordinates it, if necessary, with specialists from the registration authority, bank and insurance agents.
How to organize cross-selling?
The algorithm for building an internal sales system generally comes down to the following steps:
- Formulate consumer benefits and competitive advantages of all products offered.
- Identify all possible combinations of products that have the same target audience; identify newly emerged consumer benefits (synergy effect<**>).
In practice, it is not always effective to sell all possible products and their combinations with equal activity. One of the successful ones in this regard is the “center-periphery” strategy. What is its meaning? The seller determines the engine, the core of sales - the best or most relevant product of the entrepreneur at the moment. He is able to attract clients and set them up for long-term cooperation. This creates a favorable impression of the business as a whole, and additional sales will be made much easier.
Products located on the periphery are best sold “in addition” to the core (sales core) due to their lack of “sticky” consumer value. In our opinion, such goods must have the following characteristics in total:
- versatility;
- simplicity;
- cheapness.
In a cross-selling system, they are able to provide good revenue due to mass sales.
- If necessary, consider a system of discounts and bonuses for customers.
- Determine the persons responsible for complex sales.
This stage is extremely important. This is where the entire technology of work is determined. There are many options offered by business practices. Let's look at them using the example of a store:
- every sales consultant can and should sell all kinds of store products, regardless of the section (department) in which he works;
- sales consultants focus on certain types of goods or categories of buyers;
- persons responsible for the sale of specific products (development of specific business areas) are appointed; within the framework of the sales plan, they distribute responsibilities to all sales consultants;
- one or more salespeople in each department of the store are assigned responsibility for cross-selling products from other departments.
The sales system is formed purely individually for each business based on its structure, traditions, features of products and services, and other significant factors.
- Provide training for salespeople.
This stage is not inferior in importance to the previous one. One of the biggest problems in practice is the lack of product knowledge among salespeople.
In particular, the following must be taken into account:
- types of products and their combinations;
- transaction analytics: the number of transactions for individual products and the number of transactions concluded by non-core divisions;
- customer analytics;
- profitability by product, customer, business area;
- other necessary indicators.
- Provide advertising and information support for innovations.
When building a cross-selling system, it is not at all necessary to start immediately with complex programs. One of the most successful solutions is the so-called “second product” strategy. Attracting each new client is quite expensive for an entrepreneur. It turns out that the first product sold takes on the bulk of marketing and other similar expenses, reducing the profitability of a particular client. But selling the second product, according to various estimates, costs on average five to eight times less. The profitability (profitability) of any subsequent transactions with the same partner will be significantly higher. Therefore, the main task of the entrepreneur within the framework of the described strategy is to ensure that each (or most) client concludes a second contract.
In practice, building an effective cross-selling system is complicated by a number of obstacles and barriers.
Barriers to effective cross-selling
- A common practice is for different salespeople to work independently with clients.
This leads to:
- Each seller goes through his own path to understanding the client: who he is, what his characteristics are, how to work with him;
- independent information and analytical systems are built with their own unique structure and methods of work, which leads to difficulties in comparing information;
- There is no uniform approach to the client. When a buyer contacts different departments, each time he is new to the business as a whole.
If, under such circumstances, you begin to implement a cross-selling system, the situation can quickly approach disaster. For example, a buyer has to wander through sections of a store for a long time and receive service that varies in quality and completeness. There are often cases when sales consultants take different approaches to solving the same client problems. This is a classic example of how good intentions lead to the opposite effect - a feeling of general chaos, lack of business control, and therefore its unreliability.
How to overcome this barrier? It is necessary to organize a centralized exchange of information about customers within the same store. The most optimal way is to create a centralized information and analytical system - a database. All employees in contact with clients should have access to such a system. Many software products have been developed for these purposes. Whether to use them or create a database of your own design is largely a matter of taste. For security purposes, employees can be ranked by access level (the amount of information received).
As a result, it will be possible to find out what products and services customers have already purchased, how they responded to individual commercial offers, and what needs they have not yet been satisfied. This will help you predict with relative accuracy what they are most likely to be willing to purchase in the future.
- Incentive systems in most cases are aimed at the fact that the seller cares only about personal performance or the profit of his own department, and not the business as a whole.
As a result, he is not motivated to sell products from other departments.
How to overcome this barrier? The most banal answers are usually the most correct. They are also the most difficult to implement in practice. The obvious answer is that the incentive system should include rewards not only for “goals”, but also for “effective assists”.
- The main reason why complex selling is ineffective is that it does not provide any value to the buyer.
A simple rule works here: if it benefits only you and not the client, then all your efforts will lead to nothing. Buyers expect counterparties to pay attention to what is happening in their companies, in their markets, how it may affect their business, and to offer their assistance. The only thing they didn’t want and don’t want is attempts to simply sell them something.
How to overcome this barrier? In our opinion, the solution to the problem lies in two levels:
- it is important to prove to the client that he will receive additional benefits from your joint work;
- It is important to ensure that you truly put the customer at the center of your business.
We talked about the benefits above. But the customer-oriented approach in terms of sales is implemented as follows. Buyers must be provided with:
- personalized solutions for individual client situations;
- personal unique advantages;
- active recommendations to clients at critical moments of their financial condition;
- Availability through all interaction channels convenient for the client;
- the opportunity for the client to change his decision;
- demonstrating the benefits of using advice, products and services.
The key tool to solve the problem is employee training. All tools are suitable here - corporate trainings, drawing up a book of sales scenarios, planning meetings with discussions of specific clients, implementation of internal service standards, any other events, including employee certification.
The algorithm for building an external sales system is as follows:
- Follow steps 1 - 4 described for internal sales.
- Submit proposals to potential partners.
- Find companies and entrepreneurs operating in the relevant target audience. In this case, it is necessary to consider not only “colleagues” from related industries, but also any company that focuses on the desired target audience, even partially.
- Conclude cooperation agreements with each partner.
- Tell counterparty employees about the features of your products and provide them with information materials.
- Determine a system for monitoring the effectiveness of cross-selling.
- Launch a trial promotion - one-time or limited in time.
- Next come the stages of monitoring, evaluation and adjustment.
It is known that marketing is only as successful as it is diverse. We hope that cross-selling will become one of the effective tools promoting products to magazine readers. Good luck in business!
D.A. Khmelyuk
Cross-selling is useful for any company, because it can have a significant impact on increasing turnover and income. That's right, for example, Amazon receives 35% of its profits.
Cross-selling refers to the sale of related, additional products or services that are based on the client's interests and previous purchases of the company's products. Moreover, each industry has its own specifics of cross-selling.
To better understand how this works, here's an example from retail sales. In a sporting goods store, when purchasing a bicycle, the consultant will definitely suggest installing fenders on the bicycle, purchasing a protective helmet or bike lock. If these products are of interest to the buyer and he purchases them, then he will form a positive impression of the store and loyalty will be formed. This is important for business, because the chance of selling a product to a regular customer is 60-70%, while to a new one it is only 5-20%.
In the banking industry, cross-selling will be considered an additional option offered by the bank. So, when concluding a mortgage agreement, a specialist may offer, for example, debt insurance.
Or an example of cross selling in online sales. On the page of any product in an online store, algorithms suggest related accessories - for a smartphone this will be a case and a protective glass. This technique not only increases the average check, but also allows you to present to the buyer a product that is in little demand or that he had no idea about.
Cross selling also works in the b2b segment. In the case of large manufacturing companies, this will be a parallel sale to the customer of products from another division. So, when building a plant, a partner may need not only power tools, but also industrial boilers for heating and hot water supply to the production facility, fire alarms, fire warning systems and other security systems. And since the company produces all of the above, it seems quite logical to offer this and other products relevant to the client.
Advantages of cross selling for a company
- Increasing sales in the company as a whole, and not just in one department.
- Increasing customer and partner loyalty. By anticipating the buyer's needs and convincing them that they have entered into a good deal, the company has a great chance of laying the foundation for long-term and promising cooperation.
- The ability to more accurately find patterns in the behavior of end customers and identify focal verticals to multiply successful experience. The firm begins to better understand its partners and can implement effective business strategies in sales, marketing, product development and customer support.
- An incentive for employees to participate in the life of the company. By exchanging contacts, operational information, knowledge and experience, they become interested in the progress of the work of other departments and divisions, feeling like part of the team. And material motivation and a healthy spirit of competition lead to increased productivity and employee involvement in achieving the company’s success in the market.
Cross-selling practice
In many global companies, corporate culture occupies a central place. IN Bosch it is based on the idea of We Are Bosch, which means that management contributes as much as possible to the development of the company by increasing the loyalty of its employees. After all, an employee, feeling like part of a single multicultural team and realizing his personal contribution to overall success, strengthens the company’s image in all external communications. In this case, clients and partners will be loyal and interested in cooperation.
One of the areas of the concept is a cross-selling program. It was invented to enable each employee to convey information about customer needs to colleagues from other departments and contribute to the development of the company. Specialists are rewarded for providing information, thereby introducing an element of competition. Some employees have annual goals to identify customer needs for products from other divisions and cross-sell, but most do this voluntarily, using it as a sales tool or out of pure altruism and loyalty to the company.
The cross selling program has been developing in the company's offices around the world since 2009. Sales department employees of all divisions undergo training, attend seminars and receive brochures that tell about the features of each of the company’s areas of work. This is done so that specialists pay more attention to the client’s needs and can seek support from a special cross selling department, which, if necessary, will connect the customer with employees of the required department. In addition, the cross selling department carries out targeted work to develop business and find new customers in the interests of all divisions of the company.
Globally, the company has several key areas. Perhaps the most famous line of consumer goods, which includes household appliances, power tools for DIYers and garden equipment, equipment for heating and hot water supply in individual housing construction. Other, no less important, are:
- Mobility solutions: everything related to personal and commercial transport, as well as vehicle infrastructure.
- Rexroth: hydraulic and electric drives, control components and mechatronics.
- Packaging equipment: packaging equipment for pharmaceutical, confectionery and food enterprises.
- Building technologies and energy: integrated solutions for heating and steam generation for industry and commercial buildings, integrated security systems, and business process outsourcing.
A successful example of a large-scale cross-sell project is the innovative project to create the smart city of Tianjin in China, in which most of the company’s divisions are involved in equipping it. In the field of mobility, the company offered solutions in the form of monitoring environment, fleet management and multimodal transportation. The energy division presented energy-efficient water heating systems, air conditioning systems and energy storage systems. Security solutions included fire alarm systems, access control and video surveillance. For residential buildings, the company proposed smart home technology and household appliances connected to it. For development e-government the company will create mobile app for residents and a platform for effective management of public utilities.
Russian characteristics
In 2016, the Russian office launched a program for exchanging ideas for cross-selling “Cross selling lead sharing”. It works as follows: for each contact or information transferred to another department that served as the beginning of successful work, the employee is awarded one qualification point. Inside the company, they are called leads. Employees receive rewards for leads: for five contacts - a bronze badge, and for fifteen - a silver badge. And the employee whose information and active assistance will bring the maximum additional turnover to other departments during the year receives a gold badge and a cash bonus.
Over the course of three years, the scale of the project has grown significantly. If in the first year of the program’s existence, employees “shared” contacts only 57 times, then in the second year - already 150. In the first half of 2019, more than 80 leads were already made. The quality of information provided by employees is also improving - this year alone the manufacturer estimates the total potential for developing cooperation with three large Russian companies at 2.5 million euros.
Involvement in cross-selling among employees over three years increased from 27 to 70 people. The company's management expects that in 2019 their number will increase to hundreds. Thus, now up to 15% of sales department employees are involved in excellent sales.
When planning the program, it was expected that the most effective participants would be employees responsible for business development in departments, as they interact with end customers and communicate with a wide range of decision makers. However, based on the results of the first half of this year, the most interesting leads came from a sales representative, logistician and business development manager. Thus, the forecast was correct only in one case out of three.
All employees who excel in cross selling are awarded at an internal corporate event. In 2019, 13 people were recognized, of which two received a gold badge. The winners also divided the prize fund among themselves.
The first prize-winner was Sergey Tyurin, employee of the Rexroth division. In 2016, he met the management of a company producing thermal distribution points. They were interested in Rexroth controllers for controlling heating points. At the first meeting, Sergey spoke about the various areas of the company’s activities, and it turned out that the customer might also be interested in the products of the Thermotechnics division. When it became clear that the customer was planning to enter into a large-scale project to modernize municipal boiler houses in one of the large cities of Russia, Sergey reported this to the cross selling department, after which a second meeting was organized with the sales representative responsible for the sale of heating boilers. As a result, the division has been cooperating with this customer for the third year. In 2018, through the cross-sales program, this cooperation brought 6 million rubles of additional turnover.
And one more example. One of the security systems division's long-time partners won a contract for low-voltage systems for several stadiums in Russia. Despite the client’s weak interest in the equipment, Vladimir Bashkov determined that the customer might be interested in industrial controllers and frequency converters manufactured by Rexroth. He organized a meeting with representatives of the division and helped replace competitors’ products with Rexroth solutions, thereby increasing the company’s revenue by 11 million rubles.
Hello! In this article we will talk about cross-selling.
Today you will learn:
- What is cross-selling;
- What types of cross-selling exist;
- How to use cross-selling;
- Who is cross-selling suitable for?
The concept of “cross-selling”
Every entrepreneur wants to sell more goods at lower costs. But all require additional costs, which reduces profits and makes efforts ineffective.
But there is one tool that allows you to increase the volume of product sales without additional costs. And the name of this tool is cross-selling.
Cross selling or cross-selling – This is a one-time sale of products of different categories to the same client.
In essence, cross-selling is a sale after the sale, that is, the process of cross-selling occurs after all stages of sales of the main product have been completed.
The main goal of cross-selling is to increase the company's income. Additional products, as a rule, are products that are not popular with consumers, but at the same time contain the lion's share of profit in their price.
Types of cross-selling
There are currently three main types of cross-selling:
- Sales of additional goods– sale to a client of a product that is in no way related to the main one, that is, the additional product is used separately from the main one and is an independent unit of production. This type of cross-trading is especially common in the corporate sector. For example, you have been selling dairy products to a retail store for a long time. But from this month you also started growing vegetables for sale. During the next transaction, offer your client your new product. There is a high probability that he will acquire it.
- Package sales– this is the case when you offer an accompanying product in addition to the main product. For example, a client buys a smartphone from you, and at the checkout you offer him to buy a case for it. Scripts are often used in package sales. – an approximate structure of a conversation between a seller and a buyer. In the case of package sales, the script should contain a call to action, for example: “We have a case specifically for this smartphone model. Buy it and your phone will not break even if it falls on a tiled floor.”
- Selling goods of the same category to the same consumer. For example, a mother brought her child to you so that you could improve his math skills, and you also offered to help prepare the child for a physics exam.
However, this type of cross-selling often causes difficulties for managers. They arise due to the seller’s specialization in a particular type of product. For example, to the manager from the hall household appliances It will be difficult to sell a mobile phone.
In addition, the client ceases to trust the seller who sells all groups of goods at once. In the eyes of the consumer, such a manager is not a professional. He knows everything, but little by little, which means that the seller will not be able to provide qualified assistance.
The third reason for the difficulty of implementing this type of cross-selling is the seller’s insufficient knowledge. Indeed, one person cannot understand everything in the world. And this, of course, will affect sales.
The fourth reason for failure is the manager’s interest in selling products with high margins. Some products are more profitable to sell. They are more expensive or there is a premium for selling them, there could be many different reasons. That is why sellers focus on selling certain products in the range, making cross-selling difficult.
Cross-selling effectiveness
The effectiveness of cross-selling is quite high if implemented correctly.
The reasons for the high effectiveness of cross-selling are as follows:
- Additional product – a product with a high margin;
- The cost of an additional product is no more than 10-15% of the cost of the main product, although there are exceptions;
- We offer additional products to everyone. Within reason, of course. There is no need to offer hair ties to a bald man.
- To sell an additional product, we do not spend money on it.
Thus, the high efficiency of cross-selling is explained by the large scale of sales and the absence of additional costs.
Knowing if your cross-selling is effective is easy. To do this, calculate the profit received from sales of an additional product, and subtract the costs of supporting the additional product (if there were any). What you get is your additional profit.
But be careful. If sales of a core product have fallen since cross-selling has been introduced, analyze the possible reasons. Cross-selling occurs after an agreement on the purchase of the main product has been reached between the seller and the buyer, but in rare cases it can cause a refusal to purchase.
Cross-selling methods
- The range of products complement each other well. To implement a cross-selling strategy, it is enough to make several product categories dependent on each other. Thus, the consumer, by purchasing an additional product, will improve the characteristics of the main one. However, it is important to remember here that the additional product should be significantly cheaper than the main one. Otherwise, the value of the main purchase for the consumer will be lost.
- Use impulse products as additional products. For example, if we sell smartphones, then in the pre-checkout area you can place keychains or stickers for these gadgets.
- Set up for cross-selling. For example, if the user was browsing pages with smartphones, show him the recommended accessories for him.
- Tips and tricks. When a customer purchases a main product from you, offer him an additional one under the pretext that someone else has already purchased these two products in a set. This method works well for clothing stores, furniture stores, and is also applicable in.
- Stimulation. Give a discount when purchasing two products or give gifts for purchases of a certain value.
- Expert opinion. Let the experts tell you that the main and additional product must be consumed together for better results. An example is the common use of shampoo and hair conditioner.
- Second purchase with a discount or as a gift. Of course, in reality, the client pays for both products, it’s just that the cost of the additional product is already included in the price of the main one. However, remember that in this case the additional product should be no more than 10% of the cost of the main one. It is better to use the tool for products with inelastic demand.
- Apply. The main rule of cross-selling is to offer related products to as many visitors as possible.
- will also help you in cross-selling. Place related products close to each other. Alternate the shelves of the main and additional products or display combination options on the display.
- Joint advertising flyers. This method is often used by supermarkets. The offer sounds something like this: “Buy chips and you will receive Coca-Cola as a gift.” This technique increases sales significantly. As you understand, there is actually no gift; the cost of the additional product is already included in the price of the main one.
Cross selling products
Currently, cross-selling is suitable for most types of products: from the food industry to the automotive industry.
At the same time, cross-selling can be effective both in the consumer and industrial markets, where the client purchases goods in large quantities. What makes these sales different is their tools.
Industrial goods, due to the specific nature of sales, do not allow the widespread use of sales promotion tools.
The table shows the instruments for each market.
Cross-selling of banking products began to quickly gain momentum after the crisis times of 2008-2009. Then, without exception, all financial institutions tightened lending conditions in order to avoid significant delays. As a result, they themselves found themselves at a disadvantage, experiencing a shortage of clients. It was then that banks decided to compensate for the insufficient demand with such additional sales. What it is?
Cross-selling banking products. What it is?
Cross-selling (translated from English as “cross-selling” is cross-selling) is the bank’s offer to the client of additional products, including services when registering a banking product. In fact, this is the same “load” trade (for those who remember...) that was common in Soviet times, when something sensible could be bought along with a completely unnecessary thing - this way buyers received a long-awaited, scarce product, and stores got rid of unnecessary ballast, while receiving additional revenue. In another way, this process is also called cross-selling. You don’t have to look far for an example - this is at least “voluntary-compulsory” insurance in addition to a consumer loan.
Cross-products are mostly offered on preferential terms. If the client packages the same thing not as a load, but as an independent product, his costs will be higher.
Cross-selling of banking services is carried out in relation to new and existing clients.
Types of Cross Selling
All cross-selling can be divided into 2 types:
1. External. To sell such a product or service, the bank attracts partners. By purchasing something from one, the client automatically enjoys benefits from the other. An example would be “Thank you” bonuses from Sberbank or a loyalty (bonus) program from any other bank. By activating the service, you can enjoy privileges and discounts at partner stores. Or, for example, when you insure real estate when taking out a mortgage, this will also be a cross-sale on the part of the bank.
2. Internal. In this case, the bank sells only its own services and products. The most common example is issuing a credit card when issuing a salary, which is actively practiced in the same Sberbank.
Cross-selling can also be classified based on time. This gradation includes:
1. One-time offers. In this case, the client can take advantage of the special offer only at the time of registration of the main product. This is the same credit card as a complement to a debit card or consumer loan.
2. Promotions with an expiration date. Here, the consumer of banking services can take advantage of the opportunity to obtain a preferential cross-product for a certain time period. For example, by applying for a debit card, he can take out a loan on preferential terms within a month. Another example is Sberbank’s personal pre-approved offers for obtaining a credit card for existing clients.
Client benefit
On the one hand, cross-selling often involves hard sell. The bank definitely needs to sell an additional service, for which the plan is probably set. And such a situation cannot be called profitable.
On the other hand, there are still advantages in this situation. In any case, you will purchase services as part of the promotion, which means the conditions will be preferential. This time. If you take a good look at the product on offer, it may turn out that it is not so bad. That's two.
Or maybe it will come in handy someday? So why not apply now, when you can save?
For a bank, any client is a temporary phenomenon. Especially if he uses only one service. At any time, a person can change the servicing bank simply because another institution has offered more attractive conditions. Cross-selling is one of the ways to avoid such “transit passengers” and tie the client to you more tightly. But when purchasing additional services, we need to be on our guard, no matter how trivial it may sound. Otherwise, it will turn out later that you need this service as much as the Pope needs a GTO badge, or like an older grandmother needs a Sberbank credit card...
Cross-selling is a way to sell a customer additional products other than what he came for. Through cross-selling, a businessman increases the average cost of a check. The sales manager can offer the client an additional product that will be useful and which he would not know about on his own.
To do this, the manager must have the capabilities and desires of the client and have sufficient information about. Increasing sales volumes will attract additional customers and give the company the opportunity to grow and make more profits.
What is cross selling
We have already found out that cross-selling is the sale of several categories of goods or services to one client.
The main task of this marketing tool is to buy a product of one or more categories that complements its main purchase. For the client, this means savings on searching for additional products; for the seller, this means additional profit.
Example 1. Let's say you went to an electronics store and decided to buy a new tablet. You will immediately be offered to purchase headphones, a case, a protective film, a stylus, etc. These products belong to different categories, but the customer has the opportunity to buy everything. Moreover, at a discount (most often, additional products are sold on more favorable terms for the client). Often such offers bring in about half of the company's profits.
Here is a simple and simplified example for clarity.
Example 2. The bank carries out its activities through cross-selling in order to increase sales, profits and customer loyalty. Cross-selling can be divided into external and internal. If the bank works along the first route, then it offers an insurance service provided by a partner company. If according to the second, the bank offers the client additional goods or services of domestic origin. For example, in addition to a bank card, they will offer remote banking services.
There are three cross-selling options:
- Selling goods of the same category to one buyer. Example: Imagine you are buying socks at a sporting goods store. You have been convinced that socks are needed not only by you, but also by your grandparents, matchmaker, brother, sister and cat. As a result, you buy not one pair, but six, but with an additional discount.
- Selling an additional product or service. Selling an independent unit of product not related to the main purchase. Example: you have a regular customer who regularly buys milk and cottage cheese. You open a chocolate production. And when the client makes another purchase, the manager offers to buy a chocolate bar from the same production. The client will probably agree. And will come back again.
- Package sales. Example: you are buying a washing machine, the manager offers a cleaning product or rubber feet for it. Product categories are different, but are related to the first purchase.
Mistakes made by sales managers
Cross-selling is aimed at making a profit and attracting additional customers, but there are a number of mistakes when implementing the method.
| Error | Result |
| Insufficient development of the “value proposition”. The company failed to offer the customer reasons why he should purchase the product package. | It is more profitable for the client to buy each product from the package separately than the entire package. Example: fish, seasoning and oil separately will cost less than the Seafood package |
| Failure to identify a segment of clients who need to be offered additional services | The client is not ready to buy a package of goods or services. Example: in addition to shoes, shoe polish and insoles are offered, which the client does not need. In this case, he refuses and does not purchase the group of goods. |
| The manager is thinking about selling his products. | The client does not know about the possibility of purchasing products from the next room on favorable terms. Example: When purchasing an iron, a client can purchase a washing machine at a discount. But the manager does not provide this information and seeks to sell the product that he is aware of. |
| Additional product selection was unsuccessful. | The buyer is not motivated to purchase. Example: in addition to a summer dress, winter shoes are offered. |
| An overly intrusive offer of an additional service or product. | Psychological problem. The buyer may not be able to cope with the enthusiasm and emotional pressure of the seller and retreat without making a purchase. |
| The manager offers different services from different industries. | The buyer suspects the manager of superficial knowledge and refuses to purchase the product. Example: when applying for a bank card, a manager offers the client a discounted tour to France. |
Cross-selling analysis
There is a certain pastry shop in the city of N that bakes cakes for holidays.
Cake was chosen as the main product and a cross-selling analysis was carried out. Let's say that at the same time you produce soft toys and sell flowers.
| Product | Purchased | Together with the cake | Price 1 piece | Revenue | |
| Cake | 200 | 150 | 75 | 50 | 10 000 |
| Flowers | 150 | 125 | 83 | 200 | 30 000 |
| Soft toy | 35 | 20 | 57 | 300 | 10 500 |
| Total | 50 500 | ||||
Plus income from the sale of 400 cakes. The cost of one is 600 rubles. 240,000 income from the sale of the cake. Total – 290,500 rub. revenue.
The table shows that they most likely bought flowers with the cake. The store sold an average of 400 cakes during the reporting month. The cost of the cake has been reduced by 100 rubles. (from 600 to 500), which reduced income by 40,000 rubles. At the same time, the store began to advertise itself as a store with the cheapest cakes in the city. As a result of advertising, buyers flocked. In the new month there was an increase in prices by 2%.
| Product | Purchased | Together with the cake | % of purchases combined with cake | Price 1 piece | Revenue |
| Cake | 400 | 350 | 87 | 51 | 20400 |
| Flowers | 350 | 300 | 85 | 204 | 71400 |
| Soft toy | 90 | 60 | 67 | 306 | 27540 |
| Total | 119340 | ||||
Due to the reduction in the cost of the cake, 550 cakes were sold. Revenue from the sale of cakes amounted to 275,000 rubles. Total revenue this month is 394,340 rubles.
The reduction in cake prices led to increased purchases and attracted customers to the store.
The example is theoretical, but illustrative. It is worth remembering that a number of other indicators need to be calculated.
Why use cross-selling
In addition to increasing profits, cross-selling performs a number of additional functions:
- increasing customer confidence;
- increasing the client’s commitment to purchase from a specific company;
- promotion of additional products or services without financial costs;
- advertising of a branded product;
- sales of “not popular” goods.
Cross-selling is a way to sell more of your product to a customer. It is important that the client is sincerely convinced that the purchase is correct. Dynamism is important - regular updating of advertising, sales schemes and products in sets. The client must remain interested in cooperation with the company.
Cross-selling for your business
Cross-selling is effective if you have less in-demand products that can be sold along with a valuable item.
It is important to develop cross-selling scenarios and train the manager not to try to offer an expensive product in addition to the purchase. The client may not agree to buy an additional product, the transaction will not go through, or the company will suffer losses.
Forcing additional purchases without analyzing the customer base can bring losses to the company. It is important to distinguish the following types of clients:
- customers who choose products only on promotion and with the greatest discount;
- customers who spend a certain amount on your products and do not intend to buy more;
- claim special service, with an excessive number of calls to the support service, thereby leading to high costs;
- clients who reduce profitability. First, they buy the product and then arrange for its return.
If you see a problematic client in front of you, either do not offer additional products or offer products of a different (cheap, popular, etc.) category. If possible, it is better to refuse to provide services to a problematic client.
Cross-selling in online stores
There are no sales consultants, but cross-selling is used here too. For example, when you look at a product, you are immediately offered similar products in the same price category and/or accessories/add-ons for the product you need.
Once you've made a purchase, a window may appear asking you to buy something else to complement your purchase - usually something inexpensive or at a significant discount.
conclusions
Cross-selling can increase ticket value and profits, attract more customers to your side, and strengthen relationships with repeat customers. This will require not only the efforts of the manager, but also the work of a team of sales managers, on whom the success of the event depends.
It is important to first collect information about the client and needs. Then create a value proposition and convince the customer that purchasing additional services will bring them greater value than purchasing them individually.
It is worth conducting trainings and retraining among managers. An important point in their work is to let the buyer buy what he wants.
Aerobatics - mathematical modeling of customer behavior. But it is worth remembering that not everything is subject to calculations. If you approach your work carefully and wisely, success is guaranteed.
