Business Glossary

Cross-Selling: A Definition

What is cross-selling?

Cross-selling is the sales tactic of increasing the value of a purchase by selling complementary goods and services alongside it. Done effectively, this benefits the buyer as well as the seller. The buyer gets extra value from their initial purchase and the seller gets additional income.

Example of cross-selling

Many cross-selling examples relate to a buyer’s purchased items that require consumables. For example, printers need ink and paper. Many online retailers will automatically suggest buyers purchase these when the buyer adds the printer to their basket. In the real world, retailers will often display printer consumables alongside printers themselves to encourage buyers to purchase them too.

You can cross-sell services as well as goods. For example, if a buyer purchases a product that is complicated to use, you could cross-sell a training course on how to use it.

Cross-selling vs up-selling

Cross-selling is selling goods or services that complement a buyer’s main purchase. Up-selling is selling a buyer a higher-value alternative to the product they came to buy. For example, if someone buys an ice cream and the vendor also sells them a cold drink, then the vendor has practised cross-selling. If, however, the vendor sells them extra scoops of ice cream, they have practised up-selling.

Cross-selling vs selling add-ons

Cross-selling and selling add-ons are very similar. The difference is that cross-selling is selling complementary items for the main purchase. Add-ons are goods or services that increase the functionality of the main purchase.

For example, mobile phone networks often sell bundles of calls, texts and data. These last for an agreed period of time, usually 30 days. If the purchaser uses up any part of their allowance during that time, they can often buy a top-up allowance for it. This generally provides better value than defaulting to standard pay-as-you-go rates.

Going back to the ice cream example, if the vendor sells the purchaser the ice cream they originally planned to buy but has them add a chocolate flake, this would be an example of selling an add-on.

The importance of cross-selling offers

If you want to maximise your income, you should generally be leveraging cross-selling opportunities as much as possible. All businesses can run cross-selling campaigns. Real-world businesses can and should also train sales reps on how cross-selling works in general and on specific cross-selling tactics they can use.

Cross-selling strategy effectively hinges on creating clear added value for the purchaser. What’s more, that value should be immediately obvious to someone shopping in a hurry and/or paying minimal attention to what they are doing.

This means that the most basic cross-selling technique of all is simply bundling complementary items together in special deals. This creates an immediate, simple and compelling value proposition for the customer. They can get related items they probably need, or at least want, at a lower price than they would pay if they bought them individually.

Using cross-selling to create recurring income

In modern business, one of the most important uses of cross-selling is to convert ad hoc purchases into sources of recurring income. Again, items that use consumables provide an obvious route to cross-sell other products. Now, when businesses sell these items, they may ask the purchaser if they want to sign up to receive a regular supply of the relevant consumables, usually at some level of discount.

The opportunities do not, however, end here. If you can think of any product or service the buyer is likely to want over the long term, then you should aim to provide it for them. If you can’t provide it yourself, then you could team up with a partner who can and you could cross-promote them for a referral fee.

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