Samuel Yeung co-wrote this post with Ashish Vazirani.
Companies often resort to extreme measures to acquire new customers, and the outcome isn’t always a revenue-generating addition to the portfolio. Just look at the elephant graveyard of Silicon Valley startups that have died as soon as investor funding dried up. In many cases, over-investment in customer acquisition happens at the expense of cross-selling opportunities in existing accounts, which are oftentimes viewed as tedious maintenance work with little upside.
There are more than a few ways that tech companies go wrong in cross-selling. A combination of these factors results in salespeople becoming the wild card. They resist cross-selling for three simple reasons:
- They don’t know how. Succeeding at cross-selling often means altering existing behaviors, but sales reps don’t know where to focus—and what to focus on—for the right changes and best outcomes from their efforts.
- They can’t. Sales reps sometimes lack technical understanding, adequate sales enablement and other resources to target and sell effectively.
- They won’t. Frequently, reps lack the incentive to cross-sell, believing that they may make more money by continuing to sell their current portfolio of products.
Salespeople often don’t know how to attack cross-selling and frequently overlook the potential for growth through mining an existing customer base—a huge, missed opportunity. Just ask Amazon: An estimated 11% of the e-retailer’s revenue comes from Amazon’s product recommendation engine, the clever little suggestion at the bottom of your checkout page that showcases products “you might also like.” This is an example of cross-selling done well. It’s the outcome of the in-depth profiling of your viewing and buying patterns that clusters you with similar customers in order to make educated guesses about complementary goods and services that you and similar shoppers are likely to buy.
In a B-to-B setting, successful cross-selling requires not only an understanding of the customer, but also strategic planning that aligns with and enables the sales organization to take action from customer insights. Even with playbooks and solid communication from high-level management, sales reps can run into information barriers. In particular, it’s often difficult to pinpoint exactly where the cross-selling opportunity is. This is particularly true for complex sales environments in which there may be multiple stakeholders, and selling additional services would require sales reps to step out of their comfort zone not only to acquaint themselves with new product categories, but also to learn the best way to sell them to customers—that is, communicating the value proposition and so on. This is where analytics can help. Sometimes the analytics can be advanced and predictive, but often even simple analytics can help the salesperson figure out where to cross-sell.
After a customer’s needs are determined based on the behaviors of similar companies, simple reports or even more sophisticated dashboards can be created to bridge any informational barriers by synthesizing this information and presenting a sales rep with additional products customers are most likely to be interested in, along with suggestions for corresponding sales enablement materials. This allows sales reps to significantly increase share of wallet.
Cross-selling isn’t easy. When Amazon first introduced its product recommendation engine, it was understandably greeted with some skepticism. Concerns about privacy and irrelevant suggestions overshadowed its potential for success, but with continued tinkering, the recommendation engine became an integral part of the Amazon experience. Companies that are trying to make the same leap should focus on the following:
- Develop analytics that generate insights to uncover customer opportunities that salespeople may have been blind to.
- Provide playbooks and enablement materials that help salespeople convert insights into actions.
- Address skills gaps. Cross-selling requires a different skill set that may not be readily available. Therefore, it’s necessary to define the selling competencies required to grow customer accounts versus just acquiring accounts. Once competencies are defined, recruit, train and coach sales reps to build these competencies.
Make no mistake: Cross-selling is becoming increasingly important. When done right, it can provide real value to customers by reducing some of the hassle in the purchasing process and by helping customers discover new services that address needs that they may not have been aware of. For sales organizations, this could lead to increased customer loyalty and new business opportunities.
In coming posts, we’ll dive into the remaining two challenges, analyzing why salespeople can’t or won’t succeed at cross-selling. We’ll also discuss opportunities to overcome these challenges, and how to motivate a well-oiled sales force that maximizes value for the organization and for clients.