What is Cross-Selling in B2B Tech?
Tech companies systematically seek to increase their revenue and average customer lifetime value by cross-selling new products to their customers. Cross-selling is typically faster and more cost-effective than acquiring new customers, enabling companies that ace it to grow faster than their peers.
It is no secret that it is notably easier in tech sales to sell more to an existing customer than to acquire a new client. For this reason, many leaders are now making their sales plans for 2025 with initiatives to upsell and cross-sell to the existing customer base.
Companies systematically seek to increase their revenue and average customer lifetime value by upselling and cross-selling to their customers.
Especially in tech, companies systematically seek to increase their revenue and average customer lifetime value by upselling and cross-selling to their customers. Upselling occurs when customers increase the use of the product and buy additional licenses or upgrade to a pricier tier to access additional features. Cross-selling comes into play when the company has a complimentary offering it can sell to its current customers.
What Is Cross-Selling?
Cross-selling introduces customers to products or services that add value to their original purchase. For the company selling, the goal is to maximise revenue and customer lifetime value while fostering stronger relationships and addressing additional needs. For the company buying, the arrangement provides a more comprehensive solution, less vendor management, and ideally ensures better support and more robust integrations across provided systems.
In the context of B2B tech companies, cross-selling can include proposing complementary software solutions, related hardware equipment, or additional professional services. Ideally, all products sold supplement each other and enhance the value customers gain from working with the company. The additional offering to cross-sell may originate from an acquisition, a partnership, or the company develops it to meet a recognised need from their ideal customers.
Key Characteristics of Cross-Selling:
- Complementary: The products or services offered through cross-selling complement the original purchase but aren't upgraded versions of it.
- Enhances Utility: Cross-sold products help users get more out of their original solution or address adjacent needs.
- Holistic Offering: The intent is to integrate the original purchase into a more comprehensive solution that satisfies broader business needs.
Successful cross-selling doesn't just increase revenue from the customer but also increases customer stickiness, improves understanding of the customer's business, and possibly creates additional sales opportunities.
For example, suppose a company has purchased CRM software. Cross-selling might involve offering a marketing automation tool that integrates with CRM to automate lead nurturing, streamline customer data management, and enhance customer segmentation. For the company providing both services, successful cross-selling has not just increased revenue from this one customer but also increased customer stickiness, improved understanding of the customer's business, and possibly created additional sales opportunities with the same account.
When is Cross-Selling Relevant?
The two critical components of successful cross-selling are a complementary product to sell and an existing customer base to sell to. There are no other must-have requirements, but considering how the products create value together, the sales team's skillset and developments in the market increase the likelihood of success. Also worth noting is that cross-selling rarely just happens in scale. It requires planning, preparations, and systematic follow-ups from the management.
For example, a challenging economic climate due to high interest rates and upcoming regulations, like the introduction of NIS2, might open doors to selling more to existing financial enterprise accounts compared to winning over new ones in the short term. However, this would not be a successful initiative without having adequately prepared products and trained teams.
Cross-selling is typically more straightforward and cost-effective than acquiring new customers due to the established trust, shorter sales cycles, and deeper understanding of customer needs.
Cross-selling is typically more straightforward and cost-effective than acquiring new customers due to the established trust (the vendor has a proven track record), shorter sales cycles (less contract negotiations), and deeper understanding of customer needs (increased visibility to operations through existing delivery). For these reasons, cross-selling initiatives should be a regular item on sales leadership's annual plans.
