Five keys to cross-selling success
Cross-selling can be one of the keys to organic growth. It can generate sustainable, recurring income, strengthen customer relationships and add value to stakeholders.
But cross-selling can also do immeasurable damage to a business, its relationships and reputation. Here I examine five aspects of cross-selling that I have seen help make it work.
Five areas to focus on:
- Customer centricity it needs to be right for the customer
- Trust colleagues need to trust each other to do the right things in the right way
- Knowledge avoid the pitfalls of too little and too much knowledge
- Recognition & reward it needs to be attractive to everyone in the supply chain
- Process cross-selling is not random. There needs to be a robust process
Cross-selling will only work if it genuinely makes sense for the customer. If it is seen just as a tool to drive profit it won’t work. So why could it be in a customer’s interest to buy multiple products or services from a single source?
- Convenience. Perhaps I avoid having to re-enter account information or complete further documentation.
- Familiarity I know where to look on your website or how to complete an order form.
- Trust I have come to trust the brand, its values, its reputation.
- Relationship I know the people at the end of the phone, in technical support, in senior management.
- Risk I have been satisfied by service before. There is minimal risk in buying further services from you.
- Status I feel you value me. If something does go wrong it should be in your interests to put it right.
- Internal costs it costs me less to deal with fewer suppliers
- Price I benefit from discounts because of overall spend.
Take time to see things from the customer’s view point and identify how and why they could benefit from “cross-buying”. This customer-centric approach will help ensure the success of your cross-selling.
Trust between sellers
Cross-selling usually involves persuading the “owner” of a relationship to give a product specialist access to that relationship. But as the relationship manager I may see you the transactional product specialist as a threat to their carefully nurtured customer relationship. I want continuity, predictability, continuity and control.
Allowing a colleague into this environment is full of risk. I may see leasing as essentially transactional, fearing your focus is on the deal and the asset class not on the (in my opinion) less tangible but more valuable aspects of the customer’s business. I may fear you will do things differently with the customer. You may let me down by doing things worse than me or even show me up by doing things better than me.
At any rate you will do things differently to the way I do things, and that will be disruptive and confusing. This may not be fair, but it is the way many relationship managers feel. I need to know you care about me and “my” customer. I need to know what’s going on in “my” relationship. I want you to keep me informed. I want you ask my advice. I’d rather be involved in your sale than sitting nervously back in the office wondering what damage you’re doing. So humour me. Involve me. Don’t take me for granted.
Tell me what’s going on, even if it’s just to give me no news. In short show me I can trust you. As trust builds I will begin to realise (maybe frustratingly slowly) that we are on the same side and I will start to relax. But never forget how fragile trust is. Build it, maintain it, protect it, grow it.
Knowledge neither too little nor too much
Trust alone is not enough. You also need knowledge. But how much?
I see two problems. Some people try and cross-sell without any understanding of the offer they are introducing. They cause damage and confusion that needs to be cleared up by the product specialist. Others feel they can’t begin to cross-sell until they understand every wrinkle of the product.
I have seen absurdly detailed cross-selling manuals that try and explain the product down to the last detail. They cost undue time and money to produce. They often look great but all too often remain unread. Do what one shipping financier does create simple one-page documents that tell colleagues:
- This what we do and here’s how to position us;
- These are the kinds of clients we want;
- These are the situations to look out for;
- Here are a few questions to ask that will identify opportunities and avoid problems
It really is just a single sheet of paper. Enough knowledge, but not too much.
Recognition and reward
Many financial institutions have removed product targets from their performance management systems to reduce the risk of regulators accusing them of mis-selling. If “cross-buying” is genuinely in the customer’s interests, and if reward is not disruptive then I believe it is important to consider how to recognize good cross-selling.
Good cross-selling takes time and effort so it should be recognized. You’re asking me to invest my valuable time in selling your precious product. I can choose to sell my familiar product and be seen as successful or I can make a bigger effort to sell yours. Even if directly rewarding cross-selling is not appropriate it should be possible t recognize and honour good, professional customer-centric cross-selling.
It is also important to consider the impact not just on the individual but on the team, the department or the division. One bank-owned leasing finance provider was finding it impossible to persuade relationship managers to cross-sell leasing solutions. The trouble was that the risk and profit structure of the leasing products ran counter to the KPIs of the relationship managers. The sales management team went to the top of the bank and made the case that asset-backed lending was more attractive to the group and improved ROCE. They persuaded the Group to change the KPIs for the relationship management teams. The result?
With no extra investment in marketing or training, an increase of 25% of leasing products sold by relationship managers. Trying to foster cross-selling without addressing KPIs is (sadly) probably just so much wasted effort. Get the measurement right and the sales magically appear!
Trust, knowledge and reward: critical components for successful cross-selling. However, these are not enough to ensure success. The vital fourth component is process.
Good cross-selling needs a good cross-selling process. This means identifying at what point the relationship manager brings in the leasing specialist. Too early and the valuable specialist resource is wasted on poorly qualified and inappropriate opportunities. As one specialist told me: “I don’t mind getting up at 4am, and driving for hours, if there’s something worthwhile at the other end. But I do get fed up when I arrive only to find there’s just nothing there for me to do.”
On the other hand, if the relationship manager leaves it too late before bringing the specialist in the damage has often been done. Unrealistic hopes have been raised and misunderstandings have been created. The specialist spends expensive time undoing things that should never have been done in the first place. Having a good process avoids these problems. Checklists, positioning statements, case studies, selection criteria and pricing matrices are the tools that make for effective cross-selling processes and efficient and effective cross-selling.
Cross-selling is not easy but it is worth getting right. The payback is seen in strengthened and defended relationships, increased sales income and improved margins. The keys to success are ensuring customer-centricity, building trust, getting the levels of knowledge right, managing KPIs and developing a good cross-selling process.