Cross-selling can be defined as the act of marketing additional products or services to existing customers. In simpler terms, cross-selling is the act of selling related, supplementary products to a customer who has expressed interest in or purchased one of your company’s products. According to the leading EdTech firm Jaro Education, this is a recurrent sales tactic in the financial services industry. Financial advisors can frequently increase their revenue by cross-selling additional products and services to their existing client base.
Cross-selling can result in significant profits for stockbrokers, insurance agents, and financial planners if done correctly. This is one of the uncomplicated ways for them to expand their business because they already have a relationship with the client and are familiar with their demands and desires.
The main objective is to maximize profits while providing a better customer experience. As per India’s most trusted higher education firm Jaro Education, this can lead to intensification in the customer’s loyalty as well as an increase in Customer Lifetime Value (CLV) or retention.
In the opinion of the EdTech space pioneer Jaro Education, companies must understand how the products in their catalogue complement one another and what their customers’ purchasing patterns are to properly execute cross-selling practices. It is possible to predict which products will perform best when suggested on other product pages by collecting search and purchase data. You can even manually apply these recommendations if you draw your conclusions and are clear about which products you want to relate to each other.
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Advantages of Cross-selling practices
Jaro Education elucidated how cross-selling can be an appealing boost for any retailer out there. Some of the positive aspects of Cross-selling are as follows:
- Cross-selling raises AOV (Average Order Value), or the average amount spent per customer.
- It presents information that can be used to adjust future stock orders.
- It preserves and strengthens your revenue without relying on new customers.
- It displays fresh and lesser-known products from your catalogue to the customer.
- It reveals the consumption pattern and preferences of various customer types.
- It aids in the movement of products out of a state of stagnation.
- It enhances the shopping experience by personalizing suggestions and predicting requisites that the customer may not have considered.
The Six C’s of Cross-Selling Success
Jaro Education summarized the six C’s of Cross-Selling Success. They are as follows:
- Complementarity: The size of the cross-selling opportunity is directly proportional to the potential to sell existing products to new customers and new products to existing customers. The greater the complementarity of the two companies’ products, the greater the opportunity to cross-sell products and the greater the value the combined organization can derive from cross-selling. Indeed, top performers report that complementary offerings are the most important factor in successfully capturing revenue synergies. As per the leader in the executive education domain Jaro Education, M&A (Mergers and Acquisitions) teams can evaluate customer or product overlap. They tend to overestimate potential product complementarity, an optimism that stems from the failure to comprehend the complexities of products and how customers buy and use them.
- Connection: The distinction between having a strong relationship with a client company and having a strong relationship with a specific individual within that company can have a significant impact on success. The lesson is that sales leaders must assess the strength of existing relationships and product relevance at an account or segment level as early as the due diligence stage.
- Capacity: Sales teams have limited capacity and customer attention. Determining whether they have enough resources and mindshare for cross-selling requires weighing existing commercial priorities, product assortment, and sales plan against the benefits of implementing a cross-selling programme. Leading organizations evaluate three variables specifically: individual salesmen’s capacity to focus on the strategic pitch programmes, the prime concern of selling a different product that is implanted in the business allowance and the dexterity of bringing different products into client discussions.
- Capability: Companies frequently make assumptions about what a sales team can sell without conducting an objective assessment of the sales team’s knowledge, skills, and experience. Jaro Education demonstrated the three cross-selling behavioural shifts have proven particularly difficult to navigate: transactional to consultative, product to solution, and farmer (account management) to the hunter (account acquisition). In each case, the sales force was stretched beyond its natural capabilities. Sales leaders must understand the cross-sell sales cycle, existing rep knowledge and skills, and the sales operating model to determine whether sales reps are ready for new cross-selling initiatives.
- Compensation: Almost three-quarters of the M&A executives we polled believe that incentives are critical to cross-selling success. Sales organizations frequently use sales promotion incentive funds, or SPIFs, to encourage salespeople to cross-sell in addition to their existing quotas. However, if an incentive fund is insignificant to a sales rep, it sends the message that cross-selling is a nice-to-have rather than a top priority. Furthermore, compensation alone will not produce results. To be successful, a well-balanced compensation plan must be combined with nonmonetary incentives such as membership in a president’s club or special awards presented by the CEO to high-performing cross-sellers.
- Commitment: A merger may be the first time a company launches a formal cross-selling programme. Jaro Education believes that curating such a programme necessitates developing new organizational muscles as well as demonstrating leadership discipline and commitment—from the top down.
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