The Pareto Principle applied to business tells us 80% of revenue comes from only 20% of your customers. Since it can be so hard (and expensive!) to get new customers, looking to your existing customers to expand your revenue or to grow into a new product or service offering is a great way to keep your business profitable.
Upselling your customers is increasing the cost of the product or service they’re buying or have already bought. This might be access to something “premium” versus the basic service for a higher price or adding a consumable item like additional batteries with an electronic toy creating a package. Cross-selling is providing your customer products or services that are related in some way to what they have bought/are buying. You might sell a set of wine glasses with every bottle of wine or a hairdryer with the purchase of every hairbrush.
How can you apply these concepts to grow your revenue? You have to start with understanding.
Use Big Data to Understand Your Customer
The first step to leveraging upselling or cross-selling is to fully understand your customers. Do you know who is buying your product or service? Do you know what other items they buy or might buy? Like most modern businesses, you are likely sitting on a ton of Big Data about your customers. One way to understand how your existing customers might buy in the future is to access predictive analytics to analyze all the mountains of information you have.
Create Customer Personas and Journeys
Use the information collected in your Big Data sort to segment your customers into relevant groupings. The old demographic concepts of grouping by age or gender don’t always work in modern selling. Organize based on hobbies and habits and create customer profiles. Once you have that, you can start to create growth milestones and journeys for how a customer can move through your offerings. For example, maybe there is a clear upgrade path for a consumer electronics product, or a logical way they purchase access to your services such as first buying an e-book, then a webinar training and finally your direct consulting services at the highest rate.
Educate Your Customer
Once you understand who you’re talking to and how your business relationship will evolve over time, you can start to educate them about their journey. They likely have no idea that buying a pencil or picking up the phone has made them a happy customer of yours for life! You need to tell them. Be clear about the benefits they receive from using your products and services by giving them educational tools they access in a self-paced way. Blogs, videos and white papers are all relevant tools and great ways to educate and inform your existing customers – or even their customers. Push information to them by using your newsletter services or social media, which they opt into to ensure you are compliant with the current regulations.
Putting it into Practice
Ecommerce companies use many tools and techniques to easily upsell and cross-sell to their customers. Setting up apps and plugins on your website can automatically display the relationship between your different products and provide opportunities to upsell and cross-sell. These plugins can be set up on the product pages, at check-out, have highlighted “Other people have purchased” or “You might like” sections, or even set up an abandoned shopping cart e-marketing to encourage them to come back to your store.
Service-based businesses can still use these same techniques with different tools. Consider this part of that customer journey. Look at all the different ways your customers enter the sales process, at every price point, and how you could tailor communication based on where the customer enters their journey.
For both product and service companies, consider working with influencers or brand ambassadors in a more official way. Using an affiliate program can convert customers into evangelists who sell, upsell, and cross-sell for you. There are many services that provide links and tracking that make this coordination a snap. Bonus, you also get great user-generated content to use in your marketing efforts.
Upselling and cross-selling should be a part of your overall sales and marketing strategy. Still not sure where to start? Let Mach Media help create the right strategy for your business.