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Brandon Mills
Manager,
ZS Associates
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Jason Bell
Associate Principal,
ZS Associates
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John DeSarbo
Principal,
ZS Associates
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Kyle Heller
Associate Principal,
ZS Associates

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Five Ways Tech Companies Go Wrong in Cross-Selling

Posted by Ashish Vazirani on Wed, Aug 24, 2016


shutterstock_143044834.jpgFor most, March Madness is a distant memory. However, as an avid college basketball fan, I’m already looking forward to next season. Of course, that also could be influenced by my wanting another shot at bracket predictions after enduring total disappointment with my predictions this year. Maybe I’ll fare better during fantasy football this fall. 

Those who partake in the bracket fun know full well that teams with the best shot of making it to the Final Four will succeed not just because they’re stocked with great athletes, but because those athletes regularly and intentionally work to make each other better. 

By comparison, the track record of many tech companies in fostering teamwork, particularly in cross-selling, falls short. Rather than going for the assist, too many tech sales reps are intent on driving the lane.  


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Sports analogies aside, fostering the kind of teamwork that it takes to succeed at cross-selling is a worthwhile pursuit. Acquiring new customers is costly in both time and money, and once they’ve bought into your value proposition, it only makes sense to sell them other products, services or integrated solutions. 

Given that the case for cross-selling is so intuitive, where do companies go wrong? There’s more than enough blame to go around. Here are some of the most common factors: 

  1. The sales force: Even reps who are pretty good (or excellent) at covering their primary product lines may find it tough to extend beyond that. In some cases, they may not understand the value proposition of a combined offer, or the technical considerations. Or they fear that taking the time to ramp up on other offerings might diminish their ability to sell their core products and services purely based on a lack of bandwidth. Their overriding fear may be that they won’t make more (or at least the same) money by going beyond their primary products or services. 
  1. The company: Many tech companies don’t have the right organization in place to support cross-selling. Business units often focus on their own priorities rather than the broader offering, and knocking over those walls to collaborate is a challenge. Other companies assume that training and incentives are enough to make it happen. Or they throw incentives at sales reps without understanding how that could potentially cannibalize the base business. 
  1. The data: Successful cross-selling requires accurately capturing transaction histories and overlaying that with other customer insights to identify the right targets. Companies are investing in data and analytics packages, but they may still stumble in terms of data quality and consistency (particularly if they’ve gone through a couple of mergers and are operating with different legacy systems). Companies may have some insight on potential at a macro level but lack insight on opportunity at a more granular level, such as at the account level by product or service-level line. 
  1. The customer: Just as the sales element requires coordination, so does purchasing, and some customers have their own organizational challenges that get in the way. For example, they may have different buyers for different product lines, or for transactions of different sizes. 
  1. The reality: Last—and perhaps most counter-intuitive—cross-selling to some customers might not be worth the effort. An analysis in Harvard Business Review found that while cross-selling typically leads to higher profits (on a per-customer basis), roughly one in five customers across a range of industries are money-losers. Cross-selling to these customers won’t rectify the problem. In fact, it will only accelerate your losses. 

 

That’s a lot of blame to throw around, I realize. How can you address it all? In subsequent posts, my colleagues and I will explain how to improve cross-selling within your organization and will offer specific action plans, including effective change management and sales force buy-in. In the words of Mike Krzyzewski, the wizard behind Duke’s rolling success: “You develop a team to achieve what one person cannot accomplish alone. All of us alone are weaker, by far, than if all of us are together.”

 

Topics: Ashish Vazirani, march madness, High Tech, cross-selling

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AUTHORS
Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
Jason_Bell_11099_headshot.jpg
Jason Bell
Associate Principal,
ZS Associates
John_DeSarbo_thumbnail
John DeSarbo
Principal,
ZS Associates
Kyle_Heller_thumbnail-1
Kyle Heller
Associate Principal,
ZS Associates
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