Successful Cross-Selling:
Bring Home the Bacon, Not the Fat

“Cross-selling” is a hot topic in today’s business environment: Senior executives of multi-divisional enterprises are championing cross-selling strategies to increase the number of products each customer buys.  And, if they’re not talking about cross-selling, they’re being asked about it by financial analysts during earnings conferences calls, particularly if they run companies that have pursued aggressive acquisition strategies.

For leaders with imagination and tenacity, the benefits of cross-selling are huge.  Long after the sizzle is gone, successful cross-selling strategies are delivering the bacon – growing revenue, building loyalty, lowering costs of customer acquisition and retention, and making it tougher for competitors to get a taste of your business.

While there’s no debating the value of cross-selling, not all companies have figured out how to do it, or if they have, they don’t always do it well. First, and almost inevitably, cross-selling meets human resistance to change. Most organizations promote and reward based on what you do or don’t do within your organizational “silo.” By definition, successful cross-selling requires that the people you hire to meet the needs of your customers develop a broader view of those needs – moving beyond the traditional limits.

Second, cross-selling initiatives in many companies tend to focus on sizzle and miss the obstacles embedded in their organizations.  If you’ve been in sales:

• You’ve been to meetings where a senior leader rallied the troops to offer all the products of the company to your customer, only to be told by your manager afterwards to “remember what you get paid to sell.” 
• You’ve been frustrated by the inadequate tools available to communicate another division’s value proposition or to convey a lead from one of your clients to a different sales team. 
• You’ve been reluctant to expose your valued customer relationships to the newest “flavor of the month,” potentially risking retention of your base business. 
• Your company’s more focused on what they want you to sell than how the customer benefits.
• You may have paid just enough attention to cross-selling initiatives to avoid attracting unwelcome attention from management.

These survival tactics may get a salesman by in the short term, but they cut off the valuable opportunity inherent in cross-selling for organization and its customers.  Without addressing the perceptions driving these tactics, a cross-selling initiative fails; it simply adds fat to the organization without generating benefits.

Recipe for Success

In our experience, successful cross-selling can be supported by common elements that every company can learn.  These elements include:

• aligning goals over a sustained period,
• promoting the right offer to the right customer,
• clarifying how sales and service organizations each play a part, and
• rewarding those organizations when they cross-sell successfully. 

Our clients have seen that implementing cross-selling in a large organization also requires finely tuned processes for:

• sharing information,
• communicating the offer,
• delivering training in qualification and referral management,
• establishing rewards and recognition, and
• developing effective reporting disciplines.

So successful cross-selling coordinates expertise from many management disciplines:

The Payoff

When cross-selling fundamentals are in place, sales soar. How does this work in the real world?  Listen to Dick Kovacevich, the CEO of Wells Fargo, talking about his organization’s cross-selling strategy on their web site:

Cross-selling — or what we call “needs-based” selling — is our most important strategy. Why? Because it is an “increasing returns” business model. It’s like the “network effect” of e-commerce. It multiplies opportunities geometrically. The more you sell customers the more you know about them. The more you know about them the easier it is to sell them more products. The more products customers have with you the better value they receive and the more loyal they are. The longer they stay with you the more opportunities you have to meet even more of their financial needs. The more you sell them the higher the profit because the added cost of selling another product to an existing customer is often only about ten percent of the cost of selling that same product to a new customer. This gives us—as an aggregator — a significant cost advantage over one product or one channel companies.
A sustained focus on cross-selling has boosted Wells Fargo’s financial performance since their merger with Norwest in 1998.  For example, they show 30% and 33% annual compound growth on incremental after tax profit from cross-sold products in mortgage servicing and financial customers.  Products per customer in business, wholesale, and consumer accounts are above five per account, with a corporate goal of eight per account.

Encouragetech can help

Our approach to helping our clients with cross-selling involves a multi-dimensional look at the business.  We ask you and your staff how your customers buy, whether they’re organized into identifiable segments, and how you sell and support them today.  Sometimes, a rigorous look at your company’s customer or sales data can yield valuable insights about customer, sales and distribution partner preferences.  As market forces ebb, flow and change, relationships are affected in different ways. 

We’ll interview and investigate across your organization to understand what product combinations are easiest to sell, which are most profitable, and which offer the greatest immunity or exposure to competitive threats.  We’ll visit with your account teams to identify how they work today, to understand what behaviors will help them succeed in cross-selling, and uncover how these behaviors are aided or hampered by the forces at work inside your business.  This investigation builds on Encouragetech’s deep experience in understanding how companies deliver value to their customers through their marketing channels.  We may create a chart that shows the forces arrayed for and against excellent cross-selling behaviors, like this example:

Once we have an understanding of your market space, we work with your management team to design recommendations and an implementation plan.  We craft workable solutions that support real change.  And we work with your organization to implement these solutions for self-sustaining performance improvements.

If you’re not exploring how to integrate cross selling into your overall strategy, we think you should be.  With cross-selling as a way of doing business, you’ll be well-positioned to “bring home the bacon” for your customers and your enterprise.