Lou Lasday: The Importance of Cross Selling
One of the most cost-effective, excitingly profitable yet totally underused techniques available to marketing management comes from your own database. It's the planned execution of cross selling.
The problem may be that the specialty is often overshadowed by its broader scope programming of Customer Relationship Management (CRM), a most sophisticated program actively pursued by all of the big global companies.
While the great Middle Market of the Gulf Coast might find little need to adopt such a highly structured CRM overall initiative, there's every reason to pick the one singular feature that even the individual retailer or single partner service professional could embrace with great profit potential. The technique is cross selling. It's one, easy-to-enact great element on which database marketers thrive. Cross selling is simply enticing your customers to buy across your multiple product lines within a brand family or across several departments within a store or firm.
Stay with me on this technique, because it works for everybody! Whether you're a plumbing contractor in Bradenton, a four-partner law firm in St. Petersburg, a commercial Realtor in Sarasota or a banker in Naples, this technique is an unquestioned, immediate profit generator.
How about the commercial Realtor who sells a small investment property? Can't he also sell services for the building? Perhaps he owns a landscaping service, a painting service, a building maintenance service. Or, maybe it is simply a tenant management service.
The plumber who is called to fix a simple residential leak in the kitchen should be instructed to notice and comment on an outdated water heater or shower head, suggesting he'll have his office telephone the customer with a further proposal. A small promotional spiff to the serviceman would be in order when the sale is consummated. That's cross selling.
How about the attorney who is asked to construct a simple will for an older client? Without the attorney being overly aggressive, the client may appreciate suggestions as how to retitle ownership of accounts or set up grandchildren trusts or review the client's small business contracts that may exist, perhaps involving other specialists in the firm. That's cross selling!
In the banking industry, the odds of maintaining customers increase as accounts are added to a customer's portfolio. And, because "share of market" becomes "share of wallet" to a banker, this profession absolutely must cross sell not just to increase sales, but in many cases just to retain the customer in the first place. When was the last time you made a bank deposit in person and the teller said, "Let me introduce you to our manager who is standing right over here. Let her give you her card as she walks with you just in case you need a senior bank contact in the future." Or, when was the last time your community banker invited you to a discussion group wine and cheese party with a tax expert speaker?
Not to pick on the community banking industry, but just think of how few accounts you have where you bank. Then think of all the accounts from checking, to mortgage, to home equity and car loans and CDs and college savings and brokerage and on and on you could have.
Did you know that according to author Frank Newell, in "New Rules on Marketing," if you have only a checking account at your local community bank, that institution has only a 50-50 chance to keep you as a customer? Add a savings account of any kind, and the odds of retention are better: 10-1. Three accounts in the portfolio, the odds jump to 19-1. As a marketer, I like odds stacked in my favor.
You're beginning to see the opportunities for your own enterprise already. Remember, please, the customer you have now should be the easiest customer to sell. If you can get that customer who buys only one of your products or services to try a second product or service, you've accomplished a geometric sales event!
Remember, there are only three ways to increase your sales: more new customers; more customers or clients coming to you more often; and more customers or clients buying more per encounter.
So whether you're a plumbing contractor, an attorney, a community banker or commercial Realtor, you need a database - not just a list of names - of who is buying what, how often they are buying and how much. Then make good use of that database.
Marketing from a well constructed, detailed database may just be the single most exciting entry point to the highly cost-efficient, cost-effective initiative of cross selling.
Lou Lasday is an independent marketing adviser who resides on Longboat Key. He creates strategic corporate initiatives for emerging companies. A career direct response executive, he has been a senior partner of a national advertising agency and served as regional president of the American Marketing Association.