Cross Sell 365…Why, When and How?
Cross selling is not exclusive to the insurance and risk management industry. It translates into just about any business as an essential strategy to build brand loyalty, increase revenues, and drive profits. It involves products and services that complement the original purchase.
Cross selling is based on bringing value to the client in ways that they may not have expected when they hired you. It requires understanding the client’s business, not just focusing on the initial technical issue. Cross selling increases the customer’s reliance on you and decreases the likelihood of switching to a competitor. It is a critical performance indicator of an agency. High-performance, best-practice agencies know why, when, and how to cross sell. In today’s turbulent insurance marketplace and challenging economy, cross selling is no longer an option. It must be part of the life blood of your firm. It is a requirement for your future and that of your business.
Although you may not be conscious of it, as a consumer, you make decisions every day on cross-selling strategies. Examples of cross-sell purchases include souvenirs at sporting events, upgraded seats on an airplane, and fresh squeezed lemonade and cotton candy at a carnival. Cross selling is one of the easiest and most effective means of marketing. It is a winning formula that takes marginal effort as compared to the original sale. After the buyer is committed and has demonstrated pleasure with the initial experience, the subsequent sale or sales are much easier.
Retaining Existing Clients Is Easier than Acquiring New Ones
For many insurance and risk management professionals, the number one priority is to find new ways to increase revenue. They believe they need to sell more, which, in turn means that they need more prospects. As a result, they often get so focused on acquiring new clients, they fail to address the need to retain the ones they already have.
In fact, according to a 2021 study by ISS Marketing Metrics, the success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is only 5-20%!
Plus, it costs 5 to 25 times more to attract a new client. In other words, keeping an existing client for a mere 5% increase in retention can increase your profitability by 75%!
Research on Cross Selling
Beyond Insurance has also performed research on cross selling by surveying more than 7,000 agency principals, producers, and account managers:
My agency has a disciplined, strategic, and results-oriented cross-selling system.
The results indicate that 63% of those surveyed readily admit that they lack, or are uncertain if they have, an effective cross-selling system. This is startling. At a time when customer loyalty and trust is at an all-time low and the cost of new customer acquisition is at an all-time high, agents and brokers must appreciate the importance and value of a disciplined, strategic, and results-oriented cross selling system.
Barometer for Organic Growth
Cross-selling success is an important barometer for organic growth and profitability because it represents the revenue associated with each customer. As cross-selling success improves, so do revenue, customer retention, and the lifetime value of each customer.
The importance of cross selling translates into most successful enterprises. In the fast-food industry, customers are invited to try new products or complimentary items. For example, when ordering a hamburger, the server asks if fries or a shake should accompany the order. In retail sales, the salesperson often extends a special offer to entice the buyer to purchase a complementary item.
An agency that understands the connection between cross-selling success and organic growth demonstrates significantly improved performance. These organizations see cross selling as a key ingredient to the customer experience. With each subsequent purchase, the agency benefits from loyalty and profitability.
As you and your firm successfully execute a cross-sell plan, you will gain enhanced knowledge about the customer. The accumulation of wisdom about the customer is essential to a long-term and mutually beneficial relationship.