How Does Cross-Selling Work?
Cross-selling is a sales technique used to sell additional products or services to an existing customer. The idea is based on the logic that if a customer already trusts you, they’re more likely to buy from you and stick around due to customer loyalty.
One of the most common cross-sell tactics you see today is upselling, which is where companies offer a more expensive product or service to customers and encourage them to upgrade their current package or service. When the customer’s subscription is about to run out, the company will send out an email reminder to ask if they want to renew for another year. Studies show that upselling increases revenue 10-30% on average.
The great thing about cross-selling for companies is that it doesn’t require as much effort as acquiring new customers does. It’s also cost-effective because it can result in increased revenue and a higher conversion rate without needing to increase marketing efforts or advertising costs.
It’s also a win-win situation for the customer and the business because both parties benefit from cross-selling. While the business sees an increase in sales revenue and profits, the customer improves their customer experience by getting access to better or more products/services with improved functionality at a cheaper price than what they would have paid with another business.
In this article, we’ll uncover how cross-selling works and cross-selling techniques you can use as part of your customer sales and marketing in your local business.
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What Is the Difference Between Cross-Selling and Upselling?
Upselling is the practice of encouraging customers to purchase a more expensive version of a product or service. It involves increasing the price of the item you are selling by giving the customer more “value” (i.e., a better product, more features, etc.). In other words, upselling is when you try to make a sale more profitable by making it more expensive.
Cross-selling, on the other hand, encourages customers to purchase additional products or services to improve customer satisfaction. Upselling differs from cross-selling because your goal with cross-selling is not to increase the price of what you are selling, but rather, to increase the quantities of other items that you sell.
An easy way to remember the difference between these two terms is: upselling is selling up, and cross-selling is selling across. Retailers and home service businesses alike partake in the practice of upselling and cross-selling.
Let’s use a plumbing business as an example.
If a plumber was in your home and found that your water heater was beyond repair and needed replacement, he might offer you an upgraded model that features smart technology. This would be considered upselling, because you are upgrading to a more expensive version of the same product.
If, however, they sold you a new water heater that came with installation included in the price, this would be considered cross-selling. You’re paying for an additional service that goes along with the primary service you originally purchased (the water heater).
Examples of Cross-Selling
You see examples of cross-selling across many industries, even the ones you buy from on a daily basis.
For example, fast-food restaurants like Chipotle and McDonald’s use cross-selling in their menu as well. They also push for add-ons to the menu items, like chips with cheese dip and a drink, or adding guacamole to a burrito.
In the travel industry, hotels often upsell customers on a more expensive room with amenities such as a concierge or a view of the city. Airlines often upsell customers on more leg room or priority boarding.
Another example is when someone is buying a car from a dealership, they might be offered an extended warranty.
Here are some more home service-specific examples.
Examples of Cross-Selling in General Contracting Businesses
A general contractor could also cross-sell by offering to add an additional bathroom or remodel a kitchen. Here are some examples of other home improvement projects that you could offer your customers after a job is completed:
New garage door installation or services (for example, garage door repair)
Window replacement or repair services (focusing on energy efficiency windows)
Home weatherization services (such as caulking and weather stripping)
Doors or locksmith services (such as installing a security system or upgrading locks)
Examples of Cross-Selling in Roofing Businesses
Most roofing businesses have a variety of shingle styles and colors that a homeowner can choose from. However, there are other cross-selling opportunities for your customers when it comes to their new roof. Here are just a few:
Roof ridge vents
Solar powered attic fans
Solar powered ventilators
Examples of Cross-Selling in Electrical Businesses
An electrician could offer:
A discount for a one-time service call
Free service call with a yearly contract
Free smoke detector with a yearly contract
Free surge protector with a rewire job
20% off surge protectors when you buy 2 or more at the same time
How to Create an Effective Cross-Selling Strategy
Did you know that cross-selling can increase sales by 20% and boost profits by 30%? Cross-selling can be a powerful tool in your sales arsenal, but only if you do it right. It’s an easy way to boost sales, but only if you have the right strategy and know how to execute it.
When done effectively, cross-selling can help you increase sales without investing much time or money. As a business owner or salesperson, you already have a relationship with your customers. You know what they need. You know the challenges they face and how the products or services you sell can improve their lives. All you’re doing is offering related products or services that may make their lives easier.
The best part? Most of your customers won’t mind at all because they’re looking for ways to make their lives easier, too.
If you don’t have a cross-selling strategy, it’s time to put one into place. The goal should be to offer your customers useful information and relevant products or services that will help them in some way.
Anticipate the customer journey
The customer journey is the path a customer takes before, during, and after their interaction with your business. This includes all of their interactions with your brand and products, including phone calls, walk-ins, website visits, and more.
Understanding the customer journey can help you identify additional opportunities to not only sell them your product or service, but also cross-sell to them another product or service.
For example, you may want to suggest related services or another product page on your website checkout page. Or if you’re on a call with a customer who’s inquiring about one of your services, you might offer them another one that they may be interested in based on what they’re already looking at.
When identifying where to place recommendations for additional products in the customer journey, it might be helpful to think about where the customer typically has questions about related offerings and make recommendations there.
For example, if you’re a home security company that offers both home security systems and cameras as part of your portfolio of products, then make sure customers are aware of your camera offering when they’re inquiring about buying a home security system—as many people who buy a home security system may also want added security with cameras.
Bundle complementary items together
Bundling complementary items together is all about anticipating your customer’s needs and desires, and giving them an experience that makes their lives easier. They may not even realize that they need something until you show it to them.
There are lots of different ways to bundle complementary items together. Amazon’s “frequently bought together” feature is a classic example of this at work: when you buy one item, it suggests adding other items that go with it to your shopping cart.
Other online stores have adopted similar techniques. For example, when you buy a razor on Gillette’s website, it automatically suggests blades for the razor and shaving cream too.
This technique can also be used in less obvious ways: bundling services into packages designed for specific types of customers in your base (such as businesses versus homeowners).
Bundling complementary items together isn’t just for physical goods either: you can do the same thing with services (like offering a maintenance package along with your product), or by using digital products to enhance physical ones (like putting a QR code on your physical product that links people to a paid online community for help and support).
The possibilities are endless!
Offer additional useful services and promotions
Cross-selling is one of the most effective strategies for increasing your profits. This can be done by offering incentives through additional services or promotions to existing customers based on their past purchases, their current needs, and what they might need in the future.
Let’s say you’re an HVAC contractor with a customer who is interested in upgrading her air conditioner during the summer. But your customer also mentions that she is considering replacing her furnace in the near future. You can offer her both an AC replacement and a furnace replacement at a special rate.
You have another customer who wants to replace his air conditioner before it breaks down. He mentions that they are unhappy with the quality of their indoor air, so you can offer him a new air filter along with the AC replacement.
You will need to develop different packages and promotions based on your market and customers’ needs. For example, you might want to offer an end-of-year promotion for clients who want to replace their old furnace before winter arrives.
Likewise, analyze your business model and the opportunities for cross-selling promotions during the year.
Boost Revenue Through Cross-Selling with Signpost
Signpost is a modern CRM service that enables businesses to build and manage relationships with their customers through email, text messaging, and online reviews.
In addition to enabling businesses to send regular messages to their current customer base, Signpost also provides cross-selling tools that let you upsell your existing customers on related products or services that they might not know you offer. We can help you grow your customer acquisition and retention through your cross-selling efforts.
Looking to get your customer ratings up and sales strategy growing together? Signpost is a cost-effective solution. Start a demo today.