The Low(est) Hanging Fruit: Cross-Sells

Everyone knows it is easier to sell more to your existing customers than it is to get new customers. But, how do you sell more to your existing customers?

Do you want to look like an analytic superstar with great growth opportunities? Here is a step-by-step on how to run a quick cross-sell analysis to identify growth opportunities.

First, determine the sales cycle time period you want to work with. In most instances, annually is a good start – but if your business has a shorter sales cycle, feel free to use whatever time period is appropriate.

Next, identify the purchase buckets you want to use to segment your customers. This will largely depend on the nature of your business. If you have five skus, this is pretty easy; each sku will represent a purchase category. If you have 100k skus, this becomes more complicated; but based on logical groupings (product similarities, product presentation proximity, etc.), create product categories.

Then, run a customer level sales summary by category. If your ERP can’t provide this report canned, it’s easy to create. First create a table that links your skus to categories. (Obviously, the more skus you have, the more complicated this is.)

Run a vlookup to add category information to your transaction file. From there, you can pivot out a customer level sales summary by category. From here, assign a category permutation code to each customer.

As you see in the above example, this category permutation code is easily created by assigning a letter variable to each category the customer purchases from using an (ifcell>0,”A”,””) function. Then, catenate the category code letters together.

From there, run a summary of the number of customers and total dollars spent by each category grouping.

Common knowledge states that the more categories a customer purchases, the greater their overall value as a customer will be. But, what we can see here is that not all incremental category purchases are created equal. Granted, our example is a very small sample set, but we can identify some areas ripe for opportunities.

Of the customers that purchase from two categories, the customers that contribute the most annual revenue are those that buy both bananas & grapes. In fact, by getting customers who currently purchase only bananas to also buy grapes, you can nearly double their annual revenue. Similarly, the incremental revenue contribution from two categories to three categories increases most dramatically when customers who currently purchase apples & grapes also purchase pears.

Spend some time with the data; more than likely, several of these opportunities will jump out at you.

From here, create your your targeted channel plans and watch your revenue grow.