Cross selling is the Holy Grail for most companies. Let’s face it, it’s the easiest way to grow revenue. While the logic is compelling, most sales reps struggle with it. Why not encourage reps in one product group or service line to refer their colleagues from another? But moving from intent to action takes real effort. The entire company must embrace the cross-selling mantra. And more importantly, they need specific strategies to drive the behavior.
There are two key objectives of cross-selling initiatives: (1) Grow revenue results for the firm (2) Help clients improve their results with additional products and services.
In most cases, firms fall short of achieving these objectives. Mediocre cross-selling results can usually be attributable to one or a combination of the following:
Assessing the breadth of product penetration (i.e., the “white space”) currently in the account is key. You must also evaluate the potential of your product or service portfolio. Do you really understand which ones will resonate with that account? Not all products or services a firm offers will be a good fit. Begin with a true client orientation and evaluate where you can add more value. Map the gaps, build the action plan, and assign follow-up actions to your team.
Have you effectively communicated the value proposition of your integrated offerings? Does your value proposition take a supply-side or customer orientation? Is it codified for the sales professional to deliver successfully? Your firm might have cutting-edge products and services. But communicating that story effectively can be a challenge. You may know how bundling multiple offerings brings the greatest value for the customer. The real question is: How well have you conveyed this message. Is it captivating enough for everyone on your sales team to deliver?
The culture in many firms reinforces the productive tendency and siloed behaviors of account managers. These sales professionals appreciate the importance of their account’s revenue annuity. Not surprisingly, they tend to be averse to introducing new products or services into their relationships. They fear disappointing the client and risking their steady annuity. Anything that could jeopardize a predictable stream of revenue linked to quota and sales compensation will be resisted.
Misguided KPIs can be a major barrier to cross selling. Consider professional services, for example. In this industry the key metric is individual billable hours. Partners (i.e., the firm’s real sellers) put their careers at risk by failing to bill target hours. Billable hours are generated by delivering client work. Naturally, this delivery involves a partner’s individual product specialty. Given a choice between delivery or understanding client issues beyond their personal technical area, the partner will bill hours. This is an example of poor measurement of key indicators. These firms should measure partners on the breadth and depth of account impact. Performance metrics should emphasize addressing client issues regardless of service delivery silo.
So, what exactly can be done to tackle these potential issues? How can companies move beyond simple rhetoric about cross selling? Two important first steps are:
1. Set specific cross selling metrics and goals – Just expecting reps to “do the right thing” and introduce other products into their accounts isn’t enough. You’ll need your account managers to establish clear, achievable cross selling metrics and goals. These must be derived from analyzing their existing account penetration. The goals must define the additional products and services that would be a good fit. Once metrics and goals have been set, it’s more likely that attention will be given to their achievement.
2. Attach a portion of incentive compensation to achievement of those goals – Once cross-sell goals have been set, link their achievement to compensation. Assign an ample portion (25% to 30%) of incentive compensation so it makes a difference. Reps who continue to resist cross selling efforts will now be penalized with reduced compensation.
You can clearly see why cross selling is important. Understanding the barriers is the first step to reaching your cross-selling vision. It’s the right thing for your results and ideally the right thing for your customers.
When you’re ready to tackle and expand your cross-selling initiatives, Brevet can help. We have assisted many other clients in setting and exceeding their objectives. Contact us to start the conversation.