What is cross marketing and what are its goals?
Cross-marketing (also known as cross-marketing or reciprocal marketing) is a strategy that is used in both traditional and digital marketing and has two main goals – increasing the average check and attracting new customers for the business. In addition, there are other side objectives, which we will discuss in more detail in this article.
The essence of cross-marketing is the exchange of target audiences between companies, which means that customers of one company can become potential customers for another company.
The use of this tool is especially relevant in times of crisis, as it has a number of advantages over most lead generation channels and complements them. For example, a joint promotion by two partners can attract the target audience using targeted advertising on social networks. This is beneficial both for consumers, who receive a more attractive offer in terms of price and quality, and for companies, which save on their advertising budget.
The desire to save money through cross-marketing is combined with the desire to get more revenue from existing assets. In this article, we will look at the possibilities of increasing the average check in the restaurant business, online stores and in the service sector.
Types of cross-marketing
Cross-marketing can be implemented in several ways, each of which solves specific business problems.
- Cross-promotions: Within this tool, companies offer more attractive offers to each other's target audience. The advantage of this approach is enhanced by analytics - each partner can conveniently track the number of customers who have used the promotion using promo codes, QR codes or cross-bonus systems.
- Joint events: If two companies have overlapping target audiences and are not direct competitors, they can hold an event together. For example, a building materials hypermarket can organize a joint forum with a large design agency, presenting various options for finishing, planning and materials. Several partners can take part in such events, such as construction companies, furniture stores, manufacturers of air conditioners and stretch ceilings. Events are also often held that unite manufacturers of goods of different categories, but with a similar target audience, for example: Red Bull, GoPro and Snickers - goods for young people who love sports and an active lifestyle.
- Cross-posting or cross-streaming: A simple way to exchange target audiences is to publish mutual materials on social networks, blogs or websites. In this case, a company can post information about a new product or a partner’s promotion, and the partner can post information about the start of sales or other offers. The main thing is that it looks natural and does not seem like direct advertising. A similar approach is to conduct joint live broadcasts or create joint videos. For example, a pastry chef can interview another pastry chef, and two beauty professionals can conduct a joint live broadcast on Instagram. In this way, they not only exchange audiences, but also strengthen their reputation in the eyes of viewers.
- Cross-promotion: Many companies have their own internal advertising resources, such as a mailing list. Partners can combine their efforts and send mailings with each other's offers to their audiences. If internal resources are not enough, external advertising platforms can be used, such as search engines, social networks and other communication channels. For example, in television advertising, you can often see an invitation to visit a certain electronics store to buy a specific product from a certain manufacturer. In this way, the advertising budget can be distributed between the store and the manufacturer.
- Co-branding or collaborations
A collaboration mechanism that combines the identity and corporate style of different brands that serve the same target audience is a way to increase the uniqueness of the text by 100%. This is especially true when considering product groups that are sold together, such as McDonald's burgers and Coca Cola. However, there are cases when such collaboration is carried out at the request of one of the partners in order to gain access to the loyal audience of the other. An example of such collaboration is the supermarket chain Pyaterochka and the music label Black Star. Even fashion brands that produce clothing often carry out joint projects with companies from related industries, such as Supreme and Louis Vuitton. On the Internet, you can find collaborations created by the imagination of designers, but never put into practice.
Cross-marketing performs additional tasks
Especially for small and medium-sized enterprises, one of the main goals is always to increase profits. A distinctive feature of Russian small businesses is their focus on the short term, that is, the desire to achieve growth in financial results immediately and here. Therefore, the main tasks that entrepreneurs set for cross-marketing are to increase the average check and attract new customers. However, there are additional goals that also contribute to increasing the total profit of the organization in the long term.
Building a positive reputation
A brand, which is a set of promises and emotional factors that influence a consumer’s decision, is built and strengthened based on two main components: reach and reputation. In other words, consumers’ opinions about a particular company are one of the main factors in the successful development of a brand. There are many ways to strengthen a reputation, and cross-marketing also helps to “adopt” part of the partner’s positive reputation. Some companies even use this tool to mislead consumers. For example, some network marketing companies often publicly state that they are official partners of a large automaker, although in fact they simply purchase cars for the most successful distributors. Such advertising tactics help to create trust among future representatives, since a partnership with an automobile giant, in the opinion of ordinary people, is only available to a large and reliable company.
Components of a positive reputation
Reducing the cost of attracting new customers (CAC, the cost of attracting one customer) can vary significantly in different industries or even in the same industry in different regions. At the same time, affiliate marketing helps to reduce this figure through deep segmentation. Let's say we have an online store of equipment and electronics that sells products of different categories: mobile phones, household appliances, photographic equipment, and others. Marketers can launch cross-marketing activities in the "photographic equipment" category with online photography schools, and in the "robot vacuum cleaners" category - with a store of goods for young mothers (practice shows that mothers with small children often buy such equipment to free up more time for themselves and their child). Such a precise division of consumer segments helps to reduce the cost of attracting a new customer by offering personalized services.
Marketing Budget Optimization
One budget is good, but two budgets are even better. When several companies join forces to achieve common results, this leads to multiple increases in coverage with the same investments from both sides or, conversely, to achieving planned indicators with minimal costs. In Russia, it is often believed that the sales department brings in money, and the marketing department only spends it, so budget optimization is a significant motivating factor for entrepreneurs to start partner activities.
Expanding the range through partners
A wide range of products or services is a competitive advantage in many industries, as it is more convenient for consumers to visit one place or website and make all the necessary purchases without wasting time. However, the formation of a wide range is always associated with the costs of a warehouse, merchandising, logistics and other factors. At the same time, a competitive advantage can still be obtained by supplying goods or services from partners, saving consumers from unnecessary hassle. Sometimes entrepreneurs simply resell partner products without increasing the price in order to use a wide range as one of the advantages for the consumer.
Examples and possible applications
Opportunities to increase average check through cross-marketing
In the restaurant business, where the average bill is 2,000 rubles, there are opportunities to increase revenue and attract more customers through the use of cross-marketing. Cross-marketing is a strategy of cooperation between companies operating in adjacent or complementary market segments for mutual benefit and increased sales.
One example of cross-marketing could be a restaurant's offer to order for 2,500 rubles and receive two tickets to a newly opened movie theater as a gift. The movie theater is interested in attracting customers, and this allows the restaurant to increase the average bill by 25%. Such cooperation allows all participants to win: the movie theater attracts customers without direct marketing costs, the restaurant increases the average bill, and customers receive a nice gift.
Similar cross-marketing strategies can be applied to other industries. For example, a nail salon could partner with a hair salon, offering customers joint services at a discount. A flower delivery service could partner with a jewelry store, offering its customers additional gifts or discounts on jewelry.
In business practice, there are also unusual partnerships between companies from different market segments. For example, luxury real estate developers can enter into agreements with manufacturers of expensive watches, adding prestige and added value to their properties. In this case, the watch brand receives reputational advantages and greater information coverage, and the developer can offer watches at a discount to its customers or collaborate with the manufacturer on advertising campaigns.
It is important to consider several key issues that may arise when implementing cross-marketing promotions:
- Revenue: Not all customers who receive an offer will activate coupons or promo codes. Even with a limited benefit, the revenue is usually no more than 30%. Therefore, it is important to use limited benefit triggers to motivate customers to make a purchase.
- Selection of partners: Partners should be in a similar price segment and serve a similar or related target audience. They should not compete directly, but should support similar values and have common interests.
- Negotiations with partners: It is important to find a win-win solution when collaborating and to consider the value of the tool for each business. Negotiations should be based on mutual benefit and take into account the economic aspects for each party.
- Economic calculation: When developing cross-marketing mechanics, it is important to consider the cost of the product, the average cost of attracting a customer, and the average check. Economic analysis will help to assess the potential profit and effectiveness of cross-marketing campaigns.
- Consumer Offer: The offer must be attractive to customers, but at the same time not lead to significant revenue losses. It is necessary to find a balance between the benefit for the customer and the growth of revenue for the companies.
Cross-marketing offers significant opportunities to increase the average check and attract new customers. Properly selected partners, effective negotiations and mutually beneficial terms of agreements will allow companies to achieve success through cooperation and mutual support.
Advantages
The point of engaging your company in cross-marketing is to reap significant benefits. Here are a few ways this can manifest itself:
- Reduced Advertising Costs: When two companies collaborate on a single advertising project, it usually costs less than if each company were to conduct its own advertising campaign separately. Splitting costs helps save money and get more value for your money.
- Establishing good partnerships: Cross-marketing helps develop partnerships with other companies. This can open up additional opportunities for your business, such as joint products, joint events, or mutual support. Partnering with other companies can strengthen your position in the market and attract new customers.
- Expanding Brand Promotion Opportunities: Cross-marketing allows you to expand your brand promotion opportunities through joint promotions. You gain access to new audiences, diverse approaches, and new advertising channels. This allows you to increase your brand visibility and attract more potential customers.
- Increased advertising campaign impact: When two companies join forces in an advertising campaign, the impact can be increased by 1.5-2 times. Joint promotion allows for greater reach and impact on the target audience. This can lead to increased conversion, sales, and strengthening of both brands.
- Evaluating the effectiveness of a campaign: Cross-marketing allows you to evaluate the effectiveness of a campaign almost immediately after it has been completed.
Search for a company for a joint action
Finding the right co-marketing partner can take some time, as the success of your advertising campaign directly depends on your choice. The ideal partner will be a company that can complement your business, has a similar audience, operates in a comparable price segment, and is not your direct competitor.
To find the right co-marketing partner, there are a few steps you should take:
- Define your goal. Understand what exactly you want to achieve. Whether you want to attract more leads and sales, increase your social media following, or improve your company's visibility. A clearly defined goal will help you choose the right partner and develop an effective advertising strategy.
- Identify your target audience. Research your audience and determine which specific group of people you want to focus your advertising on. Consider attracting new customers who may be interested in your product or service. This could be an expansion of your existing audience or attracting a new target group.
- Identify potential partners. Research the industries the companies operate in and make a list of potential partners who may have common interests and goals with your company. Offer them cooperation and demonstrate the benefits they can get from partnering with you.
- Make formal agreements. Pay attention to the formal side of cooperation. Agree with your partner on the strategy of a joint advertising campaign and draw up the relevant documents that will define the duties and responsibilities of each party.
When collaborating with a partner on a joint advertising campaign, the following issues should be discussed:
- Develop an advertising strategy and campaign goals.
- Determine the timing of the campaign.
- Create the necessary promotional materials, such as posters, flyers or discount cards.
- Estimate the budget and costs of the advertising campaign.
- Conduct a final evaluation of the campaign results.
Working with a partner on a joint advertising campaign can be a profitable way to promote your brand and attract new customers. Be sure to carefully select a partner based on your goals, audience, and common interests to maximize the effectiveness of your advertising campaign.
Conclusion
Cross-marketing is an effective strategic approach that allows companies to expand their audience, increase brand awareness, and achieve greater results in their advertising efforts. Partnering with relevant companies that have similar audiences allows them to jointly create campaigns that attract the attention and interest of potential customers.
Finding and establishing partnerships takes time and careful analysis, but the results can be significant. Defining common goals, target audiences, and developing an effective advertising strategy will help achieve synergy and mutual benefit for all partners.
Cross-marketing allows companies to expand their reach and attract new customers, while joint advertising campaigns improve the results and effectiveness of marketing efforts. Ultimately, cross-marketing helps strengthen the brand, increase sales, and develop long-term partnerships.
However, it is important to remember that successful cross-marketing requires mutual trust, clear definition of roles and responsibilities, and close cooperation between partners. Companies must be prepared to adapt and make adjustments as they work on joint campaigns to achieve maximum impact on the target audience.
Overall, cross-marketing is a powerful tool that allows companies to strengthen their market position and gain an advantage over competitors. This approach allows for the pooling of resources, expertise, and experience to achieve common goals and increase the effectiveness of marketing efforts.
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