How to Successfully Cross-Sell
McKinsey & Company’s “Capturing Cross-Selling Synergies in M&A” white paper discusses a fascinating paradox. Firms increasingly rely on cross-selling to generate post-transaction revenue while frequently falling short of fully realizing their cross-selling opportunity.
This article builds on the report by presenting a methodology to assess a salesforce’s capacity and capability to cross-sell successfully. It applies to both M&A and organic growth.
Most Salespeople Lack the Ability to Cross-Sell
Analysis of data comprising over 1.9 million salespeople curated by Objective Management Group reveals the reason so many firms fail at cross-selling. Fewer than 1 in 5 salespeople presently have the skill set to execute a cross-selling strategy. Specifically, only 17% of all salespeople are either currently capable or likely to successfully cross-sell. See the figure to the right.
Applying this data to a sales force of 50, you can expect that:
- Capable: 3 likely to successfully cross-sell
- Likely: 6 should be able to cross-sell with minimal development
- Potential: 17 cannot presently cross-sell but have the potential to cross-sell after development and coaching
- Questionable: Even with a substantial investment, the remaining 25 are likely to take over 24 months to develop a robust cross-selling competency.
Cross-Selling Capacity and Capability Building Methodology
- Assess the Salesforce, Systems, and Processes: Use a salesforce evaluation to identify which sellers can cross-sell, the magnitude of the gaps, what type of training is required, and the expected return on investment (ROI). This allows ownership to set realistic expectations for growth by understanding who is capable of improvement, how much they can improve, and the training and coaching required to achieve growth objectives.
- Stratify Salespeople and Develop Curriculum: The salesforce analysis will provide the data to stratify the salesforce into the four groups identified in Figure 1. The evaluation findings should be used to create a custom development curriculum to address the unique needs of each group.
- Salesperson and Sales Leadership Development: In addition to salesperson development, the salesforce analysis includes sales leadership and sales management recommendations. The key to successful sales development is training sales managers to coach to the content in the context of the sales process. Sales managers that coach effectively and spend enough time coaching have salespeople who are 49% more effective than salespeople reporting to managers with weak coaching skills who spend minimal time coaching.
- Sales Process. The sales process must be customized and optimized to include cross-selling because training must introduce your formal sales process.
While our experience is consistent with McKinsey’s finding that most firms fail to capture cross-selling synergies fully, there is a better way. By applying modern analytics, firms can substantially increase the synergistic opportunities that cross-selling offers, but that is too rarely realized.
Jim Peduto is the Managing Partner and the co-founder of Knowledgeworx, LLC. Jim combines practical insight and big data to help CEOs and owners transform their businesses.