Distributor fights recession using cross-sell to expand share of wallet

Client

A national distributor serving the healthcare industry

Challenge

As the recession of 2008-2009 deepened, our client watched their cross-sell buying rate follow the same downward trend as the NYSE Healthcare Index, made up of 50 leading healthcare stocks. Whereas in March 2008 over 19% of our client’s customers bought products from a new category, by early 2009 that number had dropped to  15%, with a corresponding loss of revenue. Our client asked for help  jump-starting their cross-sell program.

Loyalty Builders solution

The company was already using Longbow, our web-based direct marketing system, so our approach was straight-forward: use Longbow to identify new products and product categories that existing customers were likely to buy.  Sales reps were given lists generated by Longbow showing the three most likely cross-sell opportunities for each of their customers.

Results

The immediate improvement in cross-sell results was dramatic. As shown in Figure 1 below, despite a continuing drop in the NYSE Healthcare Index (red line), our client’s cross-sell buying rate went in the opposite direction, up, climbing 20% from a 15% buying rate to an 18% rate.





Further, the average revenue per order from the targeted buyers went from $69 to $82, a 19% rise, as shown in Figure 2.

Conclusion

Cross-selling is always challenging.  However broadening the market basket of existing customers is a long term strategy that can not only build revenue but build long term relationships –  experience shows that the more items a company buys from a vendor the more loyal the customer tends to be.  Targeting likely cross- sell prospects is the first step in this process.