Posted on: Monday, February 25, 2002

60 SECONDS ON BUSINESS
Increase profits with cross-selling

By Dr. Drake Beil
President, Solutions Inc

For the quickest positive impact on your profits with the least possible additional costs, focus on cross-selling by increasing the number of items per transaction.

Let's look at the value of cross-selling. One more item per sale is worth a lot. A major retail store I was working with had an average of 1.2 items per transaction per customer. If we could improve that to 2 or more, they can pretty near double their sales. That's a huge increase in productivity and profits because their customers are already in the store.

What I mean is, they have no additional marketing or sales costs. After cost of goods sold, the extra few bucks per item are mostly gravy. So remember to measure items per transaction: it's one of my favorite indicators of customer value.

With retailers, if someone comes into your store and only buys one thing, you should shoot your salesperson. If a client leaves with only one insurance policy, you can declare victory; but every policy screams for company. Every life policy begs for an accidental death and disability; every liability policy needs an umbrella; every auto has a property and casualty potential; and so on.

The key is adding products and services together that naturally belong. Make it a better deal if they buy more than one thing, and you can do that with the greater profitability each customer now represents.

If someone needs a can of paint, it's ridiculous not to ask, "Do you need some brushes to go with that?" "Some thinner? Gloves? Overalls?" It costs nothing to ask.

Reach Dr. Drake Beil at drake@60secondsonbusiness.