Cross-selling

Cross-selling is the action or practice of selling among or between clients, markets, traders, etc. or the action or practice of selling an additional product or service to an existing customer. This article deals exclusively with the latter meaning. In practice, businesses define cross-selling in many different ways. Elements that might influence the definition might include the size of the business, the industry sector it operates within and the financial motivations of those required to define the term.

The objectives of cross-selling can be either to increase the income derived from the client or clients or to protect the relationship with the client or clients. The approach to the process of cross-selling can be varied.

Unlike the acquiring of new business, cross-selling involves an element of risk that existing relationships with the client could be disrupted. For that reason, it is important to ensure that the additional product or service being sold to the client or clients enhances the value the client or clients get from the organization.

In practice, large businesses usually combine cross-selling and up-selling techniques to enhance the value that the client or clients gets from the organization (and vice versa).

Cross-selling of professional services

Benefits that can accrue to the customer include the efficiency and leverage that result from using a single supplier for multiple products. When buying complex professional services, like consulting needed to make and integrate an acquisition, the use of one firm reduces the fingerpointing that is common when a problem occurs in an area that straddles two or more services; if only one firm is responsible, fingerpointing is eliminated.

For the vendor, the benefits are also substantial. The most obvious example is an increase in revenue. There are also efficiency benefits in servicing one account rather than several. Most importantly, vendors that sell more services to a client are less likely to be displaced by a competitor. The more a client buys from a vendor, the higher the switching cost.

Though there are some ethical issues with most cross-selling, in some cases they can be huge. Arthur Andersen's dealings with Enron provide a highly visible example. It is commonly felt that the firm's objectivity, being an auditor, was compromised by selling internal audit services and massive amounts of consulting work to the account.

Though most companies want more cross-selling, there can be substantial barriers:

A customer policy requiring the use of multiple vendors.

Different purchasing points within an account, which reduce the ability to treat the customer like a single account.

The fear of the incumbent business unit that its colleagues would botch their work

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