Cross-sell, up-sell, affinity partnership, capture rates and synergy are all terms to describe the holy grail of marketing. The thinking: I have one set of customers who buy cars from me, why can’t I just sell them a house while I am at it?
That was what General Motors had it mind when it bought the Better Homes & Garden real estate franchise.
When you buy a house from Century 21, then it would seem to follow that you will take out a mortgage from Cendant Mortgage, right?
Or when you buy a travel ticket to London on Expedia, maybe you will use LendingTree to find a lender for your home loan.
The Holy Grail is generally considered to be the cup from which Christ drank at the Last Supper and the one used by Joseph of Arimathea to catch his blood as he hung on the cross.
But no one has ever found the real Holy Grail and no one has found the holy grail of marketing: cross selling customers from one industry to the next. Certainly, no one has found that in real estate.
This week, Barry Diller’s InterActiveCorp announced plans to separate his Internet businesses into two publicly traded companies, IAC and Expedia. What happened to the synergy the folks at IAC talked about just a few months ago?
We are not saying that Diller has failed at cross selling, but synergy was a word often used to describe his collection of Internet properties.
The point is if it was easy, this bundle of companies might still be hanging out together. Or better yet, if it was easy, Diller was probably one of the smartest guys to figure it out.
Another smart guy who seems to have given up on the notion is Henry Silverman, the titan who put the Cendant empire together.
The corporation is spinning off Cendant Mortgage. The hope that the mortgage channel would be a cross-selling machine with Cendant’s premium realty properties never panned out.
Cross selling is inherently flawed, and we think it’s because the idea takes the customer for granted.
Duh, I bought a house from this guy, why not a car, a mortgage and a sweater?
But it doesn’t work like that. Most purchasing decisions are compartmentalized by the consumer. Consumers think, who is the best person to sell my house, who is the best lender to make me a loan and who is selling my favorite automobile? These things are not necessarily related.
This consumer truism in the enlightened age will not stop companies from trying or, even worse, promising the cross-selling opportunity to investors. So be it, but we don’t buy it.
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