{"id":241,"date":"2020-11-10T11:32:53","date_gmt":"2020-11-10T11:32:53","guid":{"rendered":"http:\/\/blogs.isb.edu\/cbm\/?p=241"},"modified":"2025-12-31T09:28:28","modified_gmt":"2025-12-31T09:28:28","slug":"isb-cbms-knowledge-creation-seminar-on-cross-selling-b2b-services","status":"publish","type":"post","link":"https:\/\/blogs.isb.edu\/cbm\/2020\/11\/10\/isb-cbms-knowledge-creation-seminar-on-cross-selling-b2b-services\/","title":{"rendered":"ISB-CBM\u2019s Knowledge Creation Seminar on \u201cCross selling B2B Services\u201d"},"content":{"rendered":"

Presenters: Professor Vamsi Kanuri, Assistant Professor of Marketing, University of Notre Dame
\nMs. Jigyasa Kishore, Global Director, Moglix
\nProfessor Kiran Pedada, Assistant Professor of Marketing and BAT Research Fellow, Indian School of Business (Moderator)<\/p>\n

Date: November 04, 2020
\nTime: 6:30 to 7:30 PM
\nCompiled by: Minal Agarwal, Manager, ISB-Centre for Business Markets<\/strong><\/p>\n

ISB-Centre for Business Markets conducted its second seminar in the series of Knowledge Creation Seminars. The seminar was a discussion on \u2018Cross Selling B2B Services\u2019. These seminars aim to create new knowledge in the marketing and sales domain., by showcasing faculty research. The objective is also to provide a platform that allows for easy exchange of ideas and better collaboration between academicians and practitioners. <\/p>\n

Business-to-business (B2B) suppliers are increasingly cross-selling additional services along with the core service to improve profitability, yet the effects of cross-selling on individual buyer relationships across multiple service adoption stages remain unclear. During the session, Professor Vamsi Kanuri presented his research on the dynamic impact of cross selling on buyer retention in on-boarding and post on-boarding service adoption stages. His presentation was followed by a discussion with Jigyasa Kishore to understand the industry perspective. The discussion also enabled correlating between the research findings and some of the best practices followed by companies. Professor Kiran Pedada moderated the session. <\/p>\n

What is Cross selling?<\/strong>
\nCross selling is a practice where supplier firms sell add-on services to their customer firms in addition to core services offered. These add-on services help in enhancing the feature functionality of core products. It is becoming a common practice for B2B firms to move from transactional selling to subscription-based services by offering add-on services as value-added offerings for their clients.<\/p>\n

There are various types of selling activities which firms deploy, such as Solution Selling, Service Infusion, Service Transition and Service Bundling. These are the selling activities in which the firms sell unrelated products\/services vis-\u00e0-vis their core offering.<\/p>\n

Cross selling is different from above selling activities; it enhances the functionality of the core products by selling services related to the core products. There are following benefits of Cross selling:
\n\u2022\tCreate sticky customer relationship
\n\u2022\tIncrease customer retention
\n\u2022\tIncrease purchase frequency
\n\u2022\tEnhance contribution margin
\n\u2022\tEnhance customer lifetime value
\n\u2022\tEnhance supplier firm profitability<\/p>\n

There are the following two stages in Cross Selling: Initial on-boarding and Post on-boarding. At the initial on-boarding stage, the customer firms evaluate the services. Once the learning happens in the initial stage, the offering moves to multiple organizational units of the customer firm in the post on-boarding stage.
\nIn case of B2B subscription services, most of the add-on services are sold in the initial on-boarding stage itself along with the core services. The supplier firms incentivize their sales team for cross selling. The salespersons in return push their customers to buy add-on services along with core services.
\nThe Research:<\/strong>
\nA joint study on cross selling B2B service using the multi-method approach was done by Professor Vamsi Kanuri with his co-authors Prof. Lena Steinhoff at University of Rostock; Prof. Jisu Kim at University of Washington and Professor Rob Palmatier at University of Washington.
\nThey partnered with a global B2B SaaS provider of travel, expense, and invoice management software services, which provided its offerings to business in the retail, education, healthcare, manufacturing and financial services spaces. The SaaS provider with which they partnered is valued at more than USD 6 billion and generates annual revenue of approximately USD 700 million. They offer one core service and 14 add-on services that enhance functionality of the core service. Examples of the add-on services include audit services, business intelligence and invoice management.<\/p>\n

The question which they were studying was: \u2018What are the downstream consequences of selling multiple add-on services along with the core service at the beginning of the sales cycle?\u2019
\nTo get the answer for this research question, they conducted three different studies:
\n\u2022\tThe researchers interviewed nine senior firm executives to understand what drives them to conduct business in the manner they are doing and how their customers react to their selling practices.
\n\u2022\tThey analyzed data for 75,000 subscription contracts between year 2015-2018 across 37 countries.
\n\u2022\tThey ran scenario-based experiments to understand customers\u2019 perspective on the firm selling multiple add-on services along with selling their core service.<\/p>\n

The findings from the study showed that at the initial on-boarding stage, customer firms were essentially trying to adapt to the new service. Their IT teams also evaluated means to integrate the new software into the existing system to use it seamlessly. Firms incurred significant costs in these learning activities and in overcoming hurdles. There can also be a lot of push back from the end-users, as they would like to conduct businesses in their usual way, which they had been following for many years.
\nWhile the supplier firms try to overcome some of these barriers during initial negotiations at the time of selling software, the actual learning begins when the software is deployed at the customer site, which is typically referred to as the on-boarding stage. The supplier firm trains end users in the customer firm and makes them acquainted with the software. <\/p>\n

The study showed that selling a lot of add-on services with core services exponentially increases the perceived complexity of the services. As the end users also have negative notions about the software since their initial belief is that it will cause a lot of disruption in their day-to-day life. Selling add-on services will further complicate the process, which in return will result in customers dropping out during the crucial on-boarding stage.<\/p>\n

Once the software is integrated in the system and the users have got acquainted with it, offering add-on services at that stage time will help in overcoming barriers to acceptance of the core service and the add-on services. This will further increase the switching cost for their customers and will lead to higher retention during the post on-boarding stage.<\/p>\n

Communication plays a huge role in mitigating the complexities and increasing switching cost for end users:<\/strong>
\nSupplier firms are embracing various means to communicate with their customers effectively. Technology has enhanced the means of communication and helps the sales team in moving from face-to-face communication to remote communication, which is now possible with the rapid advancement in communication technologies.
\nHowever, the study showed that during the initial on-boarding stage, using digital communication tools such as Zoom, Skype, Teams, Webex or any other form of video conferencingricher communication such as in-person communication through face-to-face interactions and ,teleconferencing enhances user\u2019s perceived complexity. It is therefore a better practice to have richer communication (face-to-face) that reduces any such complexity. This is even more applicable in the case of large customer firms, with more people and departments to deal with.
\nIn the post on-boarding stage, the customers have learned how to use the services. They are now looking for efficiency and do not necessarily require face-to-facein-person communication. For them, remote leaner communication channels using such as digital tools live chat is adequate. As per their research, at this stage, digital leaner communication is more effective than face-to-facericher communication.
\nWhat is the right number of services to offer at the beginning of the sales cycle?
\nThe research study showed that on offering more than three add-on services along with the core service at the beginning of the sales cycle, the customer sees the value of product to go down across both initial and post on-boarding stages decreases the customer lifetime value. The magic number is three!
\nHowever, if the firms do not consider the attrition of customers during initial onboarding stage and look at the customers who have stayed after initial onboarding, the life timefirm might incorrectly infer from a customer lifetime value analysis that the optimal strategy is selling more add-on services value of these remaining customers goes up on adding more add-on services.<\/p>\n

The following are the three key findings from the study:<\/strong>
\n\u2022\tThe suppliers need to understand that there are downsides of selling too many add-on services at the beginning of the sales cycle.
\n\u2022\tThere are benefits of to employing richer communication, especially at in early stages of deployment.
\n\u2022\tAs more and more B2B services are moving towards subscription based services, it is important to estimate Customer Lifetime Value not as a whole, but to split it up based on the phases of deployment and then cumulatively assess the returns on selling these add-on services.<\/p>\n

Practical implications of the study: What does it mean to a practitioner? <\/strong><\/p>\n

The Industry speaker, Jigyasa Kishore also confirmed the perception of complexity associated with deploying add-on services during initial onboarding stage. Frequent communication geared towards education, awareness and issue resolution determines the effectiveness of cross selling in on-boarding and post on-boarding stages.
\nIn addition to that, supplier firms must keep the following in mind for building relationships and establishing trust with customer firms:
\n\u2022\tThe new technology should be better than the existing one
\n\u2022\tStart small with one service, drive adoption and gain trust before offering other add-on services
\n\u2022\tThe supplier cannot become everything to everyone; it is important to pick and choose
\n\u2022\tBuild a connected ecosystem and not a standalone product
\n\u2022\tTransition from being a vendor to a trusted business partner<\/p>\n","protected":false},"excerpt":{"rendered":"

Presenters: Professor Vamsi Kanuri, Assistant Professor of Marketing, University of Notre Dame Ms. Jigyasa Kishore, Global Director, Moglix Professor Kiran Pedada, Assistant Professor of Marketing and BAT Research Fellow, Indian School of Business (Moderator) Date: November 04, 2020 Time: 6:30 to 7:30 PM Compiled by: Minal Agarwal, Manager, ISB-Centre for Business Markets ISB-Centre for Business […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false},"categories":[1],"tags":[],"yoast_head":"\nISB-CBM\u2019s Knowledge Creation Seminar on \u201cCross selling B2B Services\u201d - Centre for Business Innovation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.isb.edu\/cbm\/2020\/11\/10\/isb-cbms-knowledge-creation-seminar-on-cross-selling-b2b-services\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ISB-CBM\u2019s Knowledge Creation Seminar on \u201cCross selling B2B Services\u201d - 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