3 Cs of Cross-Selling: How You Can Satisfy Customers AND Drive More Revenue
In a low growth economy, many companies understand that one of the best way to grow revenues is by selling more goods and services to existing customers. At the core of this strategy is ‘customer focus’ – providing better solutions to satisfy more customer needs. Yet, this easier said than done. A variety of factors can combine to scuttle the best designed plans. Managers can overcome these barriers and be ‘cross sell ready’ by optimizing their organization structure, product portfolio and incentive schemes.
A corporate buzzword for the past decade, CF is a simple idea: understanding and targeting a customer’s full gamut of needs will enable the delivery of solution value, therefore catalyzing the cross selling of other products. Our clients that have gotten CF right have generated millions of dollars in profitable, new revenue along with higher customer satisfaction scores and lower marketing costs. Though each firm had a unique CF strategy, they all share three important characteristics: a deep understanding of customer needs across a purchase life cycle; a shift from selling products to marketing solutions and; a focus on relationships versus transactions.
Despite a compelling premise, increasing cross-selling rates is not a slam dunk. There can be multiple organizational barriers to better performance. For example, most firms are organized in product, geographic or functional silos making information sharing, collaboration, and joint selling very difficult. These silos often extend down to the IT systems, restricting visibility into a client’s sales history and requirements. Secondly, compensation schemes and metrics often do not support cross selling versus other goals like client acquisition. Finally, the culture in many organizations is a barrier to implementing a CF mandate, collaborating or cross selling.
Our consulting experience suggests that the difference between leading cross sellers and under-performers comes down to who can get the 3Cs of organizational alchemy right:
Customer-focused firms have deep knowledgeable of their customers and the capabilities to enable them. Len Lyons, General Manager of Workplace Medical Corporation a leading occupational health service company, asserts: "We demonstrate to our clients that we’re experts in our field and in theirs. People maintain strong loyalty to someone they trust and for us, this has had the added benefit of significant growth through customer referrals." Companies with a strong CF have well-developed people, technology and marketing competencies. Their workforce features a large coterie of generalist, and team-driven problem solvers who can interact directly with the customer. Formal corporate education programs and defined career paths cultivate and reinforce these vital individual traits. Moreover, these firms will have: an advanced CRM and data management systems that deliver a comprehensive view of each customer and prospect’s buying behavior; a long term, relationship-inspired sales approach and; product and R&D teams that are connected directly with buyers and users.
Being internally cooperative (as well as with channel and supply chain partners) is critical to aligning around customer needs and deploying maximum capabilities. Workplace Medical implemented this shift in two steps. Says Lyons, "first, we systematically recalibrated our entire organization and marketing strategy from a transaction focus to a solution-driven model. Then, we led our clients through a paradigm shift in the way they perceive the nature and value of our service."
Customer-focused enterprises encourage and reward cooperation across the organization. For example, they foster accountability by having all team members measured against key performance indicators like customer satisfaction and cross selling rates. And, they subordinate departmental metrics to larger, more customer-centric measures. However, achieving higher levels of cooperation and information sharing will be problematic in low-trust cultures. Many firms will need to undertake change management initiatives to get recalcitrant or skeptical employees (particularly disinclined sales people) to go along.
Maximizing cross selling activities requires internal departments as well as channel partners to be strategically and tactically aligned. High levels of coordination – enabled through supporting technology, regular communication and processes – are needed to share information, efficiently deploy resources and solve multi-faceted customer problems. One way customer-focused companies achieve this is by putting sufficient authority in the hands of an ‘owner’ who is closest to the customer or segment’s requirements – and opportunities. In some of our clients, the leaders needed to dismantle their siloed department-based structures and replace them with multi-functional, autonomous customer-based teams.
Improving a firm’s organizational model to deliver high cross selling rates is not for the impatient or clumsy. It is part culture change, process redesign and incentive re-engineering. Furthermore, cross selling efforts need to be consistent with the company’s value proposition and brand image, not to mention the best interests of the client. Managers should expect to spend at least six months transitioning to a new model while they work through hiccups. Though the process is time consuming, the rewards are undeniable.
Mitchell Osak is managing director of Quanta Consulting Inc. Quanta has delivered a variety of winning strategy and organizational transformation consulting and educational solutions to global Fortune 1000 organizations. Mitchell can be reached at firstname.lastname@example.org