Cross-Selling: Why It Fails and What You Can Do about It

In today’s market, it is increasingly difficult to attract new customers. Many companies have responded to this reality by ratcheting up their cross-selling efforts, seeking to boost revenues and broaden relationships with their customers at the same time. In theory, it makes perfect sense. In practice, many of these initiatives are failing utterly in their attempts to create sustainable increases in customer wallet share. "Cross-selling has gotten a bad name with customers because it is done improperly, indelicately, or just plain ineptly," explain Huthwaite executives Tom Snyder and Kevin Kearns in their book, Escaping the Price-Driven Sale (McGraw-Hill, 2008). Here, they say, is a look at each of the three major reasons why cross-selling initiatives fail:

1. Salespeople are averse to the inherent risk in cross-selling. Risk? Absolutely. Indeed, many sales reps see only risk in cross-selling. As they see it, they’ve already made a sale to their customer and there’s no upside to bringing in a colleague, only a downside if things don’t go well. "Even if there’s some sort of referral fee or commission involved, most sellers view cross-selling as simply not worth the risk of losing a great relationship," say Snyder and Kearns. The solution: stop thinking of cross-selling from the perspective of wanting to sell something and start seeing it from the perspective of creating value for the buyer. When you create genuine value through cross-selling, the buyer obviously benefits, which in turn strengthens the relationship as a whole.
2. Salespeople don’t sell the products; they flog them. This often happens following a merger or acquisition involving the sales rep’s organization. The combined company has a much larger array of products or services to sell and managers tell their reps to go forth and sell the new stuff. So reps pick up the phone and call their existing customers and start rattling off the list of new products, relying on their existing relationship to spur sales. This approach ignores all the consultative selling and questioning and value creation that the rep used to make the sale in the first place, so it’s no wonder that this cross-selling approach typically results in disappointment.
3. The initiative is rooted in flawed business logic. The value chain starts with the customer and therein lies the flaw in many cross-selling initiatives. "They frequently pit what is good for the selling organization against what is good for the buyer, essentially forcing sellers to offer expanded capabilities without first helping buyers to gain insight on new opportunities they can seize or challenges they can address," say the authors. To fix this issue, salespeople must function as the eyes and ears of a company’s value delivery chain. They must work with buyers to identify problems, known or unknown, or areas of opportunity and then show how they can address those areas.

Effective cross-selling begins with a change in mindset. It starts with a switch from thinking about all the products and services you have that you can sell to a customer to thinking of customers as having an array of needs that must be communicated effectively within the seller’s organization. When you build your cross-selling plan around customer problems you can solve or opportunities you can offer, conclude Snyder and Kearns, then you’re coming at cross-selling from a market perspective and you will be more successful.

For more information, visit www.huthwaite.com.