Cross-selling has been vaunted as the big CRM idea, but until fairly recently, most CRM applications did not have the required sophistication or functionality to allow a company to introduce new sales models based on cross-selling and up-selling. However, the software is developing to such a degree that the required analytical and alert capability necessary to cross-match and identify opportunities is becoming a de facto standard.
In theory, a database or data warehouse holding customer data should enable cross-matching as it contains all the information about a customer. CRM applications sitting on top of the warehouse enable this data to be matched with customer requirements. That should allow a company to be able to spot what customer information has changed, what is significant, and to generate a campaign if appropriate in near real-time.
NCR, for example, has released a suite of CRM software that consultants McKinsey and the Gartner Group describe as third-generation technology. It includes a component called event manager which has been built around the fact that significant events occur within people's lives, creating the requirement for a product. The most obvious event is the birth of a child, which alone will probably dictate the purchase of all manner of goods, financial services, and even property. The software is designed to track the event and make an offer at exactly the right time.
However, the reality is that only a handful of firms are actually in a position to confidently introduce new cross-selling sales methods. As far as CRM implementations are concerned, most companies are still at the tactical stage, with implementation taking place in isolated islands such as sales or customer service. There are limited cross-selling opportunities, but to pursue an effective policy, an overall view of the enterprise is required. Since most companies are still lumbering around the problem of gathering data and knowing how to use it correctly, many that have tried, without weighing up all the considerations, have encountered serious problems.
BT's case highlights the hurdles many firms will bump into. Its customers are listed by telephone number rather than by personal details. The information needed to cross-sell is there, but it is not in the required format--and given that it has 20 million customers it faces an enormous task converting it. Data in the wrong format can lead to howlers, which will put the boot into the best laid CRM plans.
One-to-one marketing pundit Martha Rogers has a favorite anecdote illustrating this. A UK utilities company decided to improve customer service by sending out Christmas cards to its best customers. However, half of the cards were returned and when the company investigated it discovered they had been mailed to lampposts, listed as its customers.
Four Barriers to Cross Selling
Industry analyst Nick Hewson points out four common barriers to cross-selling, and data acquisition and use feature prominently.
Customer service and sales staff are in an ideal position to garner information from customers. But asking these people to then identify cross-selling opportunities between each other's departments requires a significant leap in cultural outlook on behalf of the management, and a significant training investment.
Quality of data.
A recent report by industry analyst Ovum warns that existing customer information may be no more than 60 to 70 percent accurate, and recent data audits reveal that on average 12 per cent of the records companies count as customers consist of duplicated, corrupt or incorrect data.
Relevance of data.
Because CRM applications have usually been implemented with a tactical operational aim in mind, the data within the systems is relatively unsophisticated and fragmented between departments. Unless data is centralized into a single customer data warehouse it is probably not suitable for cross-selling.
In-house expertise and knowledge to exploit the collected data.
Often the marketing staff lacks the technical know-how to aim, refine and execute their goals by segmenting the customer database.
A sound economic plan is a vital precursor to any cross-selling model. Most companies today may have as much a grasp of performance measurement as they do of quantum physics - they know it's important but the details seems to elude them.
Whether cross-selling in a Web or bricks-and-mortar environment, customer service is vital to an operation's potential for success. "You need to set up the call centre in such a way that there is a dialogue. The person having the conversation should be able to drop in one or two questions that may elicit information that can be used to cross-sell. And a lot of this comes down to structured training and dialogue," says one pundit.
CRM vendor Remedy, for example, reveals that it was forced to confront the issue of cross-selling between its own helpdesk and its salesforce. "Historically, these two divisions don't talk to each other," says a spokesperson. He adds that the commission structure discouraged cross-selling. "We are now taking our own medicine--it's no longer possible to treat a customer separately. Now the whole temperature has changed and each customer has a key account manager."
The obstacles to successful cross-selling are daunting, but the return on a well-considered strategy will be a reward in itself. The technology is in place, but the real question is are companies committed to clearing internal obstacles in order to create an environment for a profitable cross-selling strategy?