01 Jul Strike Gold from your Old Customers: Through Cross/Up Selling
Telling information to your customers is plain selling. To upgrade to up-selling or cross-selling you have to ask them the right questions. Because then you just don’t sell to your customers but create value for them.
Up-selling is convincing customers to purchase a comparable higher-end product than the one in hand, while cross-selling is to make customers buy related or complementary items. Up-selling and cross-selling provide maximum value to customers and is an effective and easier way to increase revenue without using newer marketing channels.
Cross-selling increases customer loyalty and thereby enhances customer lifetime value and retention. It is a prime growth strategy. A classic example would be cross-selling of credit cards to people creating a savings account. On ecommerce product web pages cross-selling is often resorted to during the checkout process demonstrating the product variety to customers. Amazon credits up to 35% of its revenue to cross-selling.
The main benefits of cross-selling include increased sales revenue, greater customer satisfaction as the product better fits their needs and in B2B businesses, higher Customer Lifetime Value (CLV) through deeper integration in a customer’s business. Pitfalls of cross-selling can be explained like wherein, you unintentionally put-off the customer purchasing swim wear for the summer, by promoting winter clothing to him or her. Not having accurate data can lead you to approach a customer by phone who usually places orders via email; then you may not be able to touch base. Also without strategy you may land up approaching clients with too many cross-selling options confusing them so much that they don’t make any purchases at all! This calls for proper analysis of customer data and metrics related to cross-selling marketing campaigns to ascertain which efforts produce cross-sales without reducing overall profitability. And also, which customers should be left out of cross-selling or approached with say up-selling.
Effective cross-selling needs thorough mining of the customer database. Identify which products and services go together: What do customers typically buy as add-ons to their purchases? What products are usually purchased together? Or even, what products have been successful in previous cross-selling campaigns? Identification of the right customers for cross-selling starts with the data you gather from your customers at every stage of their customer life cycle. Organising this data requires an effective CRM system equipped with AI-assisted sales analytics. AI tools can automatically contact customers who display interest in certain products without the intervention of sales reps thus making them available for other roles where they are needed thus saving time and cost.
- Offer your customers valuable additional products and services. Don’t just think about your revenues. A robust CRM will shoot fewer strategic offers that will most likely get converted than bombard clients with a plethora of offers of no value.
- Cross-sell from interfaces where your customer has had user experience with you. For example if your company’s website has been used to place orders; emails or targeted ads can be the best manner to attract your customers’ attention. You can also include information for complimentary products on your blog posts. Encourage cross-sales by creating inter-customer interaction in online groups.
- In the prevailing digital sales climate, social media influencers can be approached with incentives to promote your supplementary products targeting potential buyers, on their social media pages.
- A comprehensive analysis of data is needed to know which of your affiliates are sending the most remunerative clients or referrals onto your path. They can be compensated handsomely to enable them to work more for you thereby generating good returns
- Data mining of existing customers will lead to hitherto unknown connections that can be used in targeted promotions to cross-promote your products.
All the above means of potential cross-sales need business intelligence tools to organise and analyse data to help create sales campaigns to benefit your company and its customers.
A customer, who has already said “Yes” to your product, can be made to say “Yes” again to a pricier product or service with tact, by the value you bring on the table for them thus increasing customer satisfaction. They include premium memberships, greater work collaboration, or a product made of luxury materials.
The most opportune time to do an up-selling is to do it at the time of purchase, or immediately after a customer has bought a product or service. This period of time is when the customer is highly eager to use the product or service and in this fertile phase the customer can be convinced with greater ease to try the higher edition. They are more receptive to an upgrade. However the value adds must be real and not forced, if an up-sell has to click. A good quality CRM will mine data to focus on the strength of your relationship with your customers and suppliers, to gauge their receptiveness to the up-sell for precise promotions. It will also have to know your company’s products and services thoroughly and hence needs to be highly customised. Similar should be the state of mind of your sales reps and managers, as customers buy from people with credibility. Sales automation software helps in gathering and analysing customer history for creating the perfect sales pitch to the existing customer base going right down to individualised offers. It is also important that an up-sell not exceed more than 25 per cent the price of the current product with the customer, lest it miffs him or her. The rule is up-sell, don’t oversell. These insights can also be given by a CRM software.
- Note that invariantly, the target up-sell customers whom you contact, are actually the ones who are most engaged with your products and services. This relationship with your pet existing customers must be nurtured with regular follow-up to assess their current needs and preferences. Open-ended questions throw up a wealth of information.
- Whom do you earn from the most, can help you to up-sell strategically.
- Scour online for customer reviews, interactions over social media, page views, and shares to know the market well and design successful campaigns for up-selling.
- Between the basic and highest-end versions of the product, offer at least 3 price ranges of options to help potential buyers make an informed choice.
- Offer additional products that are relevant to what the customer has already bought or intends to buy.
- After a successful up-sell, also stay in touch with your customers by offering assistance during the new customer lifecycle and share relevant and timely product or service insights.
- Remember, an up-sell is a sales tactic where the customer wins and then you win.
- Invest in an AI-aided software solution that provides contextual and relevant insights into your customers and their markets in real-time, helping you get a competitive edge.
- If you have just solved a customer service issue, then the time is right for an up-sell to improve the situation further.
- During a free trial or money back guarantee offer, the time period is relatively risk free for an up-sell.
The common ground where cross-selling and up-selling are similar is that they both provide additional value to customers, instead of restraining them with just already-encountered products. In both cases, the sales objective is to increase order value from customers through additional product options that they may not previously know about. To get that breakthrough is to understand what your customers’ value, and then offer products and corresponding features that meet those requirements. These measures help strengthen client relationships, uncover revenue opportunities, shorten sales cycles, and drives sales for your organization.
Not all customers must be targeted with either cross-selling or up-selling. Salespeople have to keep a sharp eye for unprofitable customers and not waste time on them with these additional buying opportunities. Examples of unprofitable customers would be those who overuse your customer service department; who make excessive returns; or who consistently demand your attention much beyond the service levels you offer. Software solutions throw up these red flags.
Selling to existing customers has always been one of the most effective and easiest ways, to increase your revenue and profitability. Cross-selling and up-selling increase revenue substantially, because existing customers are far more likely to buy than a new prospect. Marketing Metrics puts the likeliness of making a sale at 60-70 per cent for existing customers and only 5-20 per cent for new prospects. It’s much more effortless for customers to see value in a better version of something they already have, than in something different. Yet many salespeople squander these opportunities for lack of skills and training. Guide your salespeople to maximize the potential of their existing customers through effective cross & up selling expertly aided by CRM.
The cost of adding new customers varies depending on the product and the industry. However studied indicate that adding a new customer can cost between 4-10 times more than it does to keep an existing one. Thus retaining customers is wiser. Cross-selling and up-selling helps here and also has a huge impact on your profits. Surveys reveal that just a five percent increase in customer retention can lead to a 25-95 per cent increase in profits. Here’s how: A new potential buyer makes the sales rep go through the full sales cycle again, whereas a well-implemented cross-selling and up-selling move occurs at the end of the sales cycle. This translates to a spurt in profits without much effort.
Cross-selling and up-selling may be more complex than straight selling a single product, but the kind of returns in profits and lifetime customer value achieved, is well worth the effort. It helps you quickly maximize on an important key performance indicator: your customer’s lifetime value. It is noted through sales experience across the world that strong customer retention has a big impact on the bottom line of a company and maintaining existing customer relationships is five to ten times less expensive than winning new ones. Surely, old is gold.