What is Cross-Selling - Types, Effectiveness And Methods Of Application

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 apply cross-selling;
• Who is cross-selling suitable for?

The concept of "cross-selling"

Every entrepreneur wants to sell a larger volume of goods at a lower cost. But all ways to increase sales require additional costs, which reduces profits and makes efforts ineffective.

But there is one tool that allows you to increase the volume of sales of products without additional costs. And the name of this tool is cross-selling.

Cross-selling or cross-selling is the one-time sale of products of different categories to the same customer.

In fact, cross-selling is a sale after the sale, that is, the process of cross-selling occurs after passing through all stages of the sale of the main product.

The main objective of cross-selling is to increase the company's revenue. As additional goods, as a rule, there are products that are not popular with consumers, but at the same time contain the lion's share of the profit in their price.

Types of cross-selling

At the moment, there are three main types of cross-selling:

• The sale of an additional product is the sale to a client of a product that is in no way connected with the main product, that is, the additional product is used separately from the main product 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 since this month, you have also started growing vegetables for sale. During the next transaction, offer your client your new product. There is a good chance that he will get it.
• Batch sales - the case when you offer an accompanying product 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. Batch sales often use scripts. A sales script is an approximate structure of a conversation between a seller and a buyer. In the case of bulk sales, the script should contain a call to action, for example: “We have a case specifically for this smartphone model. Get it and your phone will not break even after falling on a tiled floor.”
• Selling goods of the same category to the same consumer . For example, a mother brought a child to you so that you could improve him in mathematics, and you offered to help prepare the child for an exam in physics. However, this type of cross-selling often causes difficulties for managers. They arise due to the specialization of the seller in any type of product. For example, it will be difficult for a manager from the household appliances hall 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 lack of knowledge of the seller. 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 high-margin products. Some products are more profitable to sell. They are more expensive or a premium is set for their sale, there can be many different reasons. That is why sellers emphasize the sale of certain products in the range, making it difficult to cross-sell.

Cross selling performance

The effectiveness of cross-selling is quite high when implemented correctly.

The reasons for the high efficiency of cross-selling lie in the following:

• Complementary 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 goods to everyone. Within reason, of course. You don't have to offer hair ties to a bald man.
• To sell an additional product, we do not spend money on its promotion . Thus, the high efficiency of cross-selling is explained by the large scale of sales and the absence of additional costs.

Understanding if your cross-sells are effective is simple. To do this, calculate the profit received from the sale of the additional product, and subtract the costs of supporting the additional product (if any). What you get is your additional profit.

But be careful. If sales of the main product have fallen with the introduction of cross-selling, analyze the possible reasons. Cross-selling occurs after the purchase of the main product has been agreed between the seller and the buyer, but in rare cases can be the reason for the rejection of the 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, having bought 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 products of impulsive demand as additional goods . For example, if we sell smartphones, then you can place key chains or stickers for these gadgets in the checkout area.
• Set up your website for cross selling . For example, if a user has viewed pages with smartphones, show him the recommended accessories for him.
• Tips and tricks . When a customer purchases the main product from you, offer him an additional one under the pretext that someone else has already purchased these two products in a set before him. This method works well for clothing stores, furniture stores, and is also applicable in online commerce .
• Stimulation . Give a discount when buying two products or give gifts for purchases of a certain value.
• Expert opinion . Let the experts say that the main and additional product must be consumed together for the best result. An example is the common use of shampoo and hair conditioner.
• Second purchase with a discount or as a gift . Of course, in fact, the client pays for both goods, just the cost of the additional product is already included in the cost 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.
• Use a sales funnel . The main rule of cross-selling is to offer a related product to as many visitors as possible.
• Merchandising will also help you cross-sell . Place related products close to each other. Alternate the shelves of the main and additional goods or demonstrate combination options in the window.
• Flyers with joint advertising . 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 approach increases sales many times over. As you understand, there is no gift, the cost of the additional product is already included in the price of the main one.

Cross-selling products

At the moment, cross-selling is suitable for most types of products: from food 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. These sales will differ in toolkit.

Due to the specifics of sales, industrial goods do not allow the widespread use of sales promotion tools.

The table shows the instruments for each of the markets.

Consumer market

• Merchandising
• Sales promotion
• Gift with purchase
• Implementation of goods of impulsive demand
• Flyers

Industrial market

• Expert opinion
• Tips & Tricks
• Flyers with joint advertising (without the use of the “second product for free” promotion)