Definition: Cross-Selling can be understood as the selling method intended to increase the sales by encouraging a customer to buy more items which are related, connected or complementary to the main product, which is just bought by the customer.
It is probably, one of the best marketing strategies of time, which has helped in adding revenue to the business, by pushing additional products to the current customers, on the basis of their recent purchase.
It is a practice of improving the shopping experience of the customers, and at the same time deriving the maximum profits out of them. Further, with the help of cross-selling the company can promote multiple products, be it complimentary or used together, which the customer might want to buy.
Examples of Cross-Selling
Following examples will help you understand the concept of cross-selling in the easiest manner:
- Suggesting heat protection spray, when a customer purchases dryer, is cross-selling.
- You might have noticed that when you visit any shopping mall and buy a pair of shoes, the representative at the billing counter often asks you to take the socks with it, that nothing but cross-selling.
- When you buy a mobile phone from a store, the sales representative suggests you, to take the screen guard or back cover, it is cross-selling.
- When you buy a motorcycle, you are recommended to buy a helmet or additional accessories to protect it from an accident or purchase accidental insurance, this is all cross-selling.
Strategies for Cross-Selling
Basically, there are two ways to increase the sales of the company, the first one is to bring more and more customers, while the second one is to sell maximum items to the existing customers.
In cross-selling, the salesman tries to sell additional products to the customers, by brilliantly making the best pair of products, which are bought and used together. It is based on the ‘just in case’ mindset of the customers.
However, there are some points which the sales representative should keep in mind before the cross-selling. These are:
- Additional product is to be suggested for sale only when the customer has already bought the product, for which he has come to the store.
For instance: If the customer has not yet bought the product for which he/she has come to your store and you start recommending the additional product, then there are possibilities he/she won’t buy anything.
- Price of the product offered for cross-selling must be lower than of the main product.
For instance: Suppose a customer comes to your shop to buy socks, and you start suggesting the pair of shoes, that will suit the socks, then also the strategy won’t work. The price of the second item, should not be more than 40% of the actual item.
- Product pushed on to the customer must be closely related and relevant, which are a part of their product mix.
For instance: If a customer purchases a shampoo, and instead of suggesting a conditioner, you suggest a moisturizing cream, then also the cross-selling technique would come out as a failure, as you need to identify suitable items to pair with.
- Ensure that the customers are ready for cross-selling, or else they would find it annoying.
For instance: If a customer is not paying attention to any other product, than the one for which he/she has come, then they might not be interested in making an extra purchase, or overspend on anything else.
Benefits of Cross-Selling
The benefits of cross-selling are discussed hereunder:
- Substantially increases the average spending per customer.
- Rise in the business revenue, without relying on new customers.
- Introduction of new items from the company’s product mix, which the customers are not aware of.
- Increases understanding of the purchase behaviour and patterns of different groups of customers.
- Informs you about the future stock orders.
- Enhances the overall shopping experience of the buyer by making recommendations and preparing for the needs, which they did not encounter.
- One order with multiple items, is more manageable and cheaper, in comparison to many orders with just one item, which facilitates cost optimization.
Cross-selling aims at acquiring the maximum share of the consumer market, by providing all such products which a customer needs and wants. Not just common retail stores, but online e-commerce websites also use this strategy, to boost their sales.
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