What is cross-marketing and what are its goals?
Cross-marketing (also known as cross-marketing or reciprocal marketing) is a strategy used in both traditional and digital marketing and has two primary goals: increasing the average order value and attracting new customers. There are also other secondary objectives, which we'll 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.
This tool is especially relevant during times of crisis, as it offers several advantages over and complements most lead generation channels. For example, a joint promotion between two partners can attract a target audience through targeted advertising on social media. This benefits both consumers, who receive a more attractive price-quality offer, and companies, who save on advertising costs.
The desire to save money through cross-marketing is combined with the desire to generate more revenue from existing assets. In this article, we will examine opportunities to increase the average order value in the restaurant business, online stores, and the service sector.
Types of cross-marketing
Cross-marketing can be implemented in several ways, each of which solves specific business problems.
- Cross-promotions: This tool allows companies to offer more attractive offers to each other's target audiences. The advantage of this approach is enhanced by analytics—each partner can easily track the number of customers who have taken advantage of the promotion using promo codes, QR codes, or cross-bonus systems.
- Joint Events: If two companies have overlapping target audiences and aren't direct competitors, they can collaborate on an event. For example, a building materials hypermarket might organize a joint forum with a major design agency, presenting various finishing, layout, and material options. Such events can involve multiple partners, such as construction companies, furniture stores, air conditioner and stretch ceiling manufacturers. Events also often bring together manufacturers of products from different categories with a similar target audience, such as Red Bull, GoPro, and Snickers—products for young people who enjoy sports and an active lifestyle.
- Cross-posting or cross-streaming: A simple way to share target audiences is by publishing mutual content on social media, blogs, or websites. A company can post information about a partner's new product or promotion, while the partner can post information about sales or other offers. The key is to make it feel natural and not overtly promotional. A similar approach is to host joint live broadcasts or create joint videos. For example, a pastry chef could interview another pastry chef, or two beauty professionals could host a joint Instagram live broadcast. This way, they not only share audiences but also strengthen their reputations in the eyes of viewers.
- Cross-promotion: Many companies have their own internal advertising resources, such as a newsletter subscriber base. Partners can combine their efforts and send newsletters featuring each other's offers to their respective audiences. If internal resources are insufficient, external advertising platforms such as search engines, social media, and other communication channels can be used. For example, television advertising often invites customers to visit a specific electronics store to purchase a specific product from a specific manufacturer. This way, the advertising budget can be shared between the store and the manufacturer.
- Co-branding or collaborations
A collaborative mechanism that combines the identities and corporate styles of different brands serving the same target audience is a way to increase the uniqueness of text by 100%. This is especially relevant when considering product groups that are sold together, such as McDonald's burgers and Coca-Cola. However, there are cases where such collaborations are undertaken at the request of one partner to gain access to the other's loyal audience. An example of such a collaboration is the Pyaterochka supermarket chain and the Black Star music label. Even fashion brands often collaborate with companies from related industries, such as Supreme and Louis Vuitton. Online, you can find collaborations that were the product of designers' imaginations but never saw practical application.
Cross-marketing performs additional tasks
Particularly for small and medium-sized businesses, one of the primary goals is always to increase profits. A distinctive characteristic of Russian small businesses is their focus on the short term, meaning they strive to achieve immediate and immediate financial gains. Therefore, the primary goals entrepreneurs set for cross-marketing are increasing the average order value and attracting new customers. However, there are additional objectives that also contribute to increasing the organization's overall profits in the long term.
Building a positive reputation
A brand, which is a set of promises and emotional factors that influence consumer decisions, is built and strengthened based on two fundamental components: reach and reputation. In other words, consumer opinion of a particular company is one of the key factors in the brand's successful development. There are many ways to strengthen reputation, and cross-marketing also helps "adopt" some of the partner's positive reputation. Some companies even use this tool to mislead consumers. For example, some network marketing companies often publicly claim to be official partners of major automakers, when in fact, they simply source cars for the most successful distributors. This advertising tactic helps build trust among prospective representatives, since ordinary people believe that a partnership with an automotive giant is only available to a large and reliable company.
Components of a positive reputation
Customer acquisition costs (CAC, or the cost of acquiring a single customer) can vary significantly across industries and even within the same industry in different regions. Affiliate marketing helps reduce this metric through deep segmentation. Let's say we have an online electronics store that sells products in various categories: mobile phones, home appliances, photography equipment, and others. Marketers could launch cross-marketing campaigns in the "photography" category with online photography schools, and in the "robot vacuum cleaner" category with a store selling products for young mothers (experience shows that mothers with small children often purchase such equipment to free up more time for themselves and their children). This fine-grained segmentation of consumer segments helps reduce customer acquisition costs by offering personalized services.
Marketing Budget Optimization
One budget is good, but two budgets are even better. When multiple companies combine their efforts to achieve common results, this leads to a massive increase in reach with the same investment on both sides, or, conversely, to achieving planned indicators with minimal costs. In Russia, it's often believed that the sales department brings in money, while the marketing department only spends it, so budget optimization is a significant motivator for entrepreneurs to launch partnerships.
Expanding the product range through partners
A wide range of products or services is a competitive advantage in many industries, as consumers find it convenient to visit one location or website and make all their purchases without wasting time. However, developing a wide range of products always entails costs for warehousing, merchandising, logistics, and other factors. However, a competitive advantage can still be achieved by sourcing products or services from partners, eliminating unnecessary hassle for consumers. Sometimes, entrepreneurs simply resell partner products at a fixed price, leveraging a wide range of products as a benefit for consumers.
Examples and applications
Opportunities to increase average order value 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 cross-marketing. Cross-marketing is a strategy of collaboration between companies operating in adjacent or complementary market segments for mutual benefit and increased sales.
One example of cross-marketing might be offering a restaurant an offer to order 2,500 rubles and receive two free tickets to a newly opened movie theater. The movie theater is interested in attracting customers, and the restaurant increases its average ticket by 251 TP3T. This partnership is a win-win for everyone: the movie theater attracts customers without direct marketing costs, the restaurant increases its average ticket, 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 clients discounted services when combined. A flower delivery service could partner with a jewelry store, offering additional gifts or discounts on jewelry.
Unusual partnerships between companies from different market segments are also common in business. For example, luxury real estate developers may enter into agreements with luxury watch manufacturers, adding prestige and value to their properties. In this case, the watch brand gains reputational benefits and greater media reach, while the developer can offer discounted watches to its clients 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 redeem coupons or promo codes. Even with a limited benefit, the revenue is typically no more than 30%. Therefore, it's important to use limited benefit triggers to motivate customers to make a purchase.
- Partner Selection: Partners should be in a similar price segment and serve a similar or related target audience. They should not compete directly, but should share similar values and interests.
- Negotiations with partners: It's important to find a mutually beneficial solution when collaborating and consider the value of the tool for each business. Negotiations should be based on mutual benefit and consider the economic aspects for each party.
- Economic Calculation: When developing cross-marketing strategies, it's important to consider the product's cost price, average customer acquisition cost, and average order value. Economic analysis will help evaluate the potential profit and effectiveness of cross-marketing campaigns.
- Consumer offer: The offer must be attractive to customers, but not lead to significant revenue losses. A balance must be found between customer benefit and revenue growth for companies.
Cross-marketing offers significant opportunities for increasing average sales and attracting new customers. Properly selected partners, effective negotiations, and mutually beneficial agreement terms will enable companies to achieve success through collaboration 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 conserve budgets and get more value for money.
- Establishing strong partnerships: Cross-marketing promotes partnerships with other companies. This can open up additional opportunities for your business, such as co-branded products, joint events, or mutual support. Partnering with other companies can strengthen your market position 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's visibility and attract more potential customers.
- Enhanced advertising campaign effectiveness: When two companies combine their efforts on an advertising campaign, its effectiveness 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 conversions, sales, and strengthening of both brands.
- Evaluating campaign effectiveness: Cross-marketing allows you to evaluate the effectiveness of a campaign almost immediately after its implementation.
Searching for a company for a joint promotion
Finding the right co-marketing partner can take time, as the success of your advertising campaign depends directly on your choice. The ideal partner will be a company that complements your business, has a similar audience, operates in a comparable price range, and isn't a direct competitor.
To find the right co-marketing partner, you need to follow a few steps:
- Define your goal. Figure out 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.
- Define your target audience. Research your audience and determine which specific group you want to focus your advertising on. Consider ways to attract new customers who might be interested in your product or service. This could be expanding your existing audience or attracting a new target group.
- Identify potential partners. Research the industries the companies operate in and compile a list of potential partners who may share interests and goals with your company. Offer them a partnership and demonstrate the benefits they can gain from partnering with you.
- Establish formal agreements. Pay attention to the formal aspects of the collaboration. Agree with your partner on a joint advertising campaign strategy and draw up the relevant documents that define the responsibilities and accountabilities 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 objectives.
- Determine the timing of the campaign.
- Create 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.
Collaborating with a partner on a joint advertising campaign can be a profitable way to promote your brand and attract new customers. Carefully select a partner, considering your goals, audience, and shared 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 advertising results. Partnering with relevant companies with similar audiences allows for collaborative campaigns that capture the attention and interest of potential customers.
Finding and establishing partnerships takes time and careful analysis, but the results can be significant. Defining shared goals, target audiences, and developing an effective advertising strategy will help achieve synergies and mutual benefits 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 brands, increase sales, and develop long-term partnerships.
However, it's important to remember that successful cross-marketing requires mutual trust, clearly defined roles and responsibilities, and close collaboration between partners. Companies must be prepared to adapt and adjust as they work on joint campaigns to achieve maximum impact on target audiences.
Overall, cross-marketing is a powerful tool that allows companies to strengthen their market position and gain an advantage over their competitors. This approach allows for the pooling of resources, expertise, and experience to achieve common goals and increase the effectiveness of marketing efforts.
