Kazybek Shaikh. Cross-selling – women’s invention of «surplus profit»// Женщины Восток-Запад. №9-10 (108-109) October- November 2010

Cross-selling – women’s invention of «surplus profit».
A businessman or a business lady not seeking surplus profit are really just do not know how to do it.
To start a conversation let us try to understand what it means that attractive «surplus profit». Surplus profit is a profit greatly exceeding in terms of magnitude the normal ability to return the result of an organized business system.

• Being out of competition - at the expense of monopoly over-pricing of goods and the almost complete absence of competition. This method is good, but requires a completely innovative business proposal or a strong political influence, which provides leadership. Both of these factors are quite rare and very expensive.
• Deficiency - find or create the conditions of temporary imbalance of supply and demand. The method is applied by monopolists, marketmakers of the largest suppliers or the organizers of consortia for price collusion - just better stay away from this.
• Optimization of costs - you tighten your own belts, deny yourself and your employees additional benefits, prospects, and costs respectively, cut staff, or cut working area to 0.7 sq.m. instead of 10 sq.m. per person. And here it is the surplus profit! 
• Removing the previously untapped potential of existing businesses.
  • Expansion of product line by developing products and services related to your core business.
  • Creation of partner networks of purchases.
  • Creation of partner networks of sales, which in turn are subdivided into: 
    • Creating agency network (institutional agents and the SP agent (sole proprietorship)).
    • Cross clienting. Technology of sharing customer pools.
    • Cross-Selling – thar is what our article will tell you about.

Cross-selling.
Cross-selling, a method of sales, which envisages selling goods or services of a business together with additional products and services of partner companies.
The essence of cross-selling is that you expand your company's product line (and hence revenue) without incurring transaction costs of maintaining these sources of profit. Also, you create a tool for retaining customer loyalty. It sounds somewhat paradoxical, you gain more profit from the client and in doing so he feels better, having saved time and money; others’ experience confirms this.

As an example, let's consider one of the most non-difficult ways of making money, i.e. letting an apartment.

Your profit in renting out an apartment depends on the flat area, the complexity of its design (repair, design, furniture, etc.), location and technical bells and whistles.

All these form the rent price for the customer and, accordingly, the rate of your return; you can not price it above others without the risk to remain a spinster (in business sense).

But you want surplus profits! And then you start building a partner network.

So you offer your property to let at a not very high price and tell a potential customer that for those who rent this flat there is a 5% discount for the following services:

• Purchase of food products
• Cleaning
• Laundry
• Cooking and washing up
• Payment of utility bills
• Car wash
• Taking care of pets
• Taking care of flowers
• Plumber and electrician services, etc.

Then you go to the suppliers of these services, sympathize with them about the high cost of advertising and attracting new customers with expensive maintenance costs of business. Then you ask them how many% of the profit they are willing to pay a person to whom they won’t need to pay wages, taxes, insurance, pension contributions, to organize his/her work, to buy him/her a computer (and then watching as he/she happily plays with it or chat on the internet), to motivate him/her infinitely, to appeal to his organization skills and conscience ... ..in short, the figure will be 20% at least.

And here begins the most enjoyable.

You have endless clients who consider your price for the apartment acceptable and you choose the one who suits you.

The client is happy, he rented a cheap apartment and he does not worry about domestic issues, for solution of which he would have to pay anyway, but in our case he solves them at a minimum cost of energy and time, and with 5% discount.

No talk about the happiness of the suppliers of the services who are now more worried about retaining your client.

You do not invest any tenge to the development of new business, but at the same time you receive 15% of net profit. My personal experience shows that sometimes the aggregate profit from cross-selling is comparable with the profits from core business. And it also increases the cost of your self-brand for creativity and customer orientation.

It is important of course to understand that cross-selling is a business technology. It presupposes a certain discipline of business processes, workflow management systems, monitoring, etc. so in Kazakhstan there are not many specialists in the development and implementation of cross-selling programs.
But it is possible to learn everything. E-mail your questions and we will be happy to tell and show you everything.

We increase the market value of your self-brand.

Kazybek Shaikh – General director of «SHAIKH» Creative Solutions Agency.

Scanned version...

Kazybek Shaikh. Cross-selling – women’s invention of «surplus profit»// Женщины Восток-Запад. №9-10 (108-109) October- November 2010

Page 1

Page 2

Page 3