Cross-selling is an invaluable sales tactic that agencies and businesses all around the world use to develop their companies. It’s a tool that has wide-reaching benefits across many aspects of a business. Cross-selling can help agencies generate leads, improve customer loyalty, and drive sales. In fact, it is one of the most effective ways for companies to build their revenue and increase their profits.
However, companies need to be careful that they use the right cross-selling practices. Otherwise, the tactics they implement may harm rather than help the agency.
What is cross-selling?
Cross-selling is a method that companies, businesses, and agencies employ to generate more sales. It does this by recommending items to the customer related to, in addition to, or complementary to the item the buyer is already committed to purchasing.
How is it different from upselling?
Upselling and cross-selling are two terms that are often assumed to be synonymous, but they actually relate to different sales tactics that agencies can use. With cross-selling, companies promote related products to customers who are purchasing specific items, whereas, with upselling, companies try to entice customers into buying higher-end versions of the product they’re already committed to purchasing. This “higher-end” version can consist of upgrades or extra features to the original product or simply a more advanced version of the original.
For example, with cross-selling online, the sales tactic would look like visual prompts or ads that pop up on the product or check-out page when a customer is making a purchase. Online upselling tactics would consist of a warranty or similar upgrade being offered on the same product or checkout page.
Five advantages of cross-selling
There are many varied advantages of cross-selling — from building customer loyalty to improving profits and more.
1. Builds customer loyalty
One of the most important things that any selling tactic can do for a company or agency is building customers’ loyalty. When customers feel a stronger connection to a particular company, they’re much more likely to remain loyal to them and even go so far as to become brand ambassadors. Cross-selling encourages this behavior by offering customers several products they will love, turning them into recurring customers, and lowering the agency’s churn rates.
2. Improves profits
One of the main points of cross-selling is to increase the business’ profits. The most obvious way is by promoting related products to customers to entice them to buy more items than they had initially planned to purchase.
3. Develops more leads
One of the most valuable advantages of cross-selling is that it has the rare ability to increase lead generation. Customers who feel understood by a company are likely to recommend it to others, allowing agencies to benefit from not only the original customer, but any referrals they choose to send to the agency.
4. Greater convenience
There isn’t much that customers today prize over convenience, even in the smallest sense. Cross-selling allows customers to experience the benefits of this amenity in real-time. They can find their product and related items without having to jump across countless different websites or even drive around to different stores on the hunt for products cross-selling offers up-front.
5. Streamlines purchase processes
Piggybacking off of the advantage of convenience, cross-selling further simplifies the purchase process by streamlining it. Sometimes, customers will try to draw out making purchase decisions for a long time as they attempt to ensure they’re choosing the best product for themselves or because they’re hesitant to commit to a product. With cross-selling, customers are provided with an added incentive to move more quickly through the purchase process, thereby streamlining the process.
Possible disadvantages of cross-selling
While there are many advantages to using cross-selling tactics, companies must be aware that there can be disadvantages as well, especially if they misuse tactics or practices. Knowing what these potential drawbacks are, agencies will be better able to avoid them in implementing their own sales tactics.
1. Bad practices may increase customer unease.
Cross-selling tactics are designed to put customers at ease and help encourage loyalty and retention, but the opposite can happen if mishandled. If agencies don’t cross-sell the right items to their customers or offer a much higher cost than the original purchase, customers may feel like they are being tricked with an old bait-and-switch tactic.
This will cause customers to fall away from your company and go to another where they feel like their needs are being better met. Above all else, agencies must put their clients first, especially when trying to grow their company because it is ultimately the customer’s decision to purchase or not that will determine how much money the agency makes.
2. Bad practices may compel customers to buy items they don’t need.
Similarly, when customers are offered items unrelated to what they are purchasing, they may feel pressured to buy things they don’t need. This may increase initial purchases, but it can have a detrimental effect on long-term customer retention. Agencies can avoid this by being aware of who their target audience is and what they need so that they can offer items that will suit the clients they have.
Best cross-selling practices in Insurance
The best way to avoid the pitfalls and disadvantages of bad cross-selling practices is to develop good cross-selling practices. There are many ways agencies can do this — from focusing on both old and new business to nurturing existing customers with appropriate attention. Let’s look at some of the best ways your agency can develop and maintain good cross-selling practices.
Focus on new and old businesses
One of the best ways companies can build good cross-selling practices is by equally focusing on new and old business. Oftentimes, when agencies are doing well with new clients, they can tend to neglect older businesses, or vise versa — when their old business is doing especially well, they don’t put much effort into garnering new business. Successful agencies will equally focus on their different business aspects so that they are open to new opportunities and pay attention to older relationships. Agencies must remember that they are built on their client bases, both old and new, to continue to grow and maintain a solid business reputation.
Identify your situation
Customers may come to your company from one of two places: either they have already purchased an item from you or they are new customers. Each group needs to be handled differently to encourage the most growth in the agency-client relationship and in the agency’s overall revenue.
With customers who already own the product, it’s best to closely follow up with them to ensure that they feel understood by the company and appreciated for their business. The key to working with these customers is repetition and good follow-up.
With new prospective clients, it’s best to engage with them by identifying the item they are most interested in and offering them products related to that original item without pushing customers to make a purchase beyond their means. The key to these customers is to raise product and brand awareness, educate them about the product, and identify what they need before selling it to them.
Cross-selling products to the right customers
No matter what services or products an agency offers, they need to ensure that the right products are being offered to the right customers. When the right customers are offered products, they are much more likely to purchase them and engage with the company beyond the initial transaction. However, when products are offered to the wrong customers, they may feel pressured into a purchase or misunderstood by the company. This can cause companies to lose customer retention, which will raise overall costs for the company as they will have to invest more in garnering new leads.
Cross-selling can help agencies find the right customers to sell to by checking customer data for age, gender, purchase history, and much more.
Nurture them using email marketing
Email marketing is a great way to nurture client relations and build brand awareness for lesser-known insurance types. Emails are sent to clients who are already engaged with the company through site subscriptions, previous purchases, or related purchase histories. The emails can entice customers to become more involved with agency projects and products and promote customer knowledge of the company.
Following up with customers is another way that agencies can increase client retention and knowledge of the company. It allows agencies to develop stronger relationships with their clients by engaging with them after purchases, thereby showing that the customer is valued beyond their initial transaction.
Examples of cross-selling in insurance
While it’s easy to think about the theoretical applications of cross-selling sales tactics generally, it may be a bit more challenging to picture how they would apply to real-life insurance sales situations. To help clarify how cross-selling benefits insurance agencies, here are a few examples of how they actually work:
- If clients have group health insurance but no dental or vision options, insurance agencies can easily cross-sell the missing benefits to them.
- Suppose an agent is able to save a client money on an existing expense, like Medicare supplements. In that case, they can then ask if the client would like to add an additional product on top of their existing Medicare plan or replacing it with a better policy altogether.
- If you have clients who are happy with their existing policy, wait until you complete follow-up emails or calls to offer them new benefits that they may now be interested in buying.
- Bundle several different insurance policies together at a discount to encourage the client to purchase more than they originally intended to, eg. grouping dental, vision, cancer, and health insurance policies together.
CRMs and cross-selling
CRMs, or customer relationship management services, can help companies with their cross-selling initiatives a lot. The content and information garnered from CRM data systems can be studied and implemented so that the right customers are being offered the right products based on real data from ages to incomes to past purchases and more. This data can also be used in email marketing campaigns and other marketing strategies to trigger more promotions and increase profits.
With insurance CRM software, agencies can determine which products customers are primarily interested in and which supplementary products or services they require the most to encourage them to purchase more items.
Additionally, suppose customers are being advertised products that they feel they will actually benefit from. In that case, they are more likely to trust the company promoting them and return as loyal customers in the future. The customers’ retention about the agency’s products and services will also increase as they feel more understood.
Cross-selling is a sales tactic that many agencies and companies can benefit from. The advantages are numerous — from increased revenue to strengthen customer relationships and lead generation — and there are very few disadvantages that can easily be fixed with the implementation of the right practices. Additionally, the right practices are easy to identify and easier to implement when agencies are educated on what they are.
Cross-selling systems can easily be used by insurance agencies in real-life situations to grow their businesses, especially if they rely on tried-and-true CRM data gathering that allows the right customers to be reached and presented with the right products.