When it comes to customers you probably know that it’s way more expensive to acquire a new customer than it is to keep your existing ones, and that if you can get your existing customers to spend more means an increase in profit which is where cross-selling and upselling come in.
In this blog post, we’ll cover everything you need to know about cross-selling and upselling – two techniques designed to generate more revenue from your existing customer base – including what they are and how to do it..
What is Cross-selling and Upselling?
Cross-selling is encouraging the purchase of anything in conjunction with the primary product. For example, if a customer has already purchased a hosted telephony call centre solution, cross-selling would encourage that customer to purchase headsets.
If your company offers a separate product or service that can complement or enhance a customer’s initial purchase, cross-selling can be an excellent opportunity to generate extra revenue.
Upselling is encouraging the purchase of anything that would make a customer’s additional purchase more expensive with an upgrade, enhancement, or premium option.
With upselling, you’re not offering additional products or services to complement your customer’s initial purchase — you’re offering an upgraded or premium version of the product they’ve just agreed to buy.
For example, if you’re selling subscription software on a monthly basis you could approach customers on the basic tier and offer an upgrade to a higher tier so they gain access to a wider feature set.
Benefits of Upselling & Cross-selling
Increasing revenue is just one of the many ways in which your business can benefit from cross-selling and upselling. Let’s look at some of the other advantages that cross-selling and upselling offer.
Strengthens customer relationships: Cross-selling and upselling aren’t as simple as offering customers the next level version of your company’s product or service. Truly effective cross-selling and upselling requires you to have an in-depth understanding of who your customer is, what their goals are, and what’s important to them. Based on this information, you can tailor their product and service recommendations to the customer’s specific needs.
Of course, this does mean you need to take the time to really to get to know your customers, but this level of care and attention not only increases the likelihood of a successful upsell, it also makes customers feel valued and promotes long-term loyalty.
Increase’s the lifetime value (LTV) of a customer: Cross-selling and upselling not only strengthen relationships and secure loyalty — they can also increase the average order value of each purchase and turn one-time customers into repeat buyers, thereby increasing their LTV.
Builds customer equity: Customer equity is the total combined LTVs of all your company’s customers. Which means, as cross-selling and upselling increase each customer’s LTV, they also increase your company’s customer equity.
Grows your business: Not only does selling to existing customers require less effort than getting new ones, but it also requires less marketing spend. By creating new revenue streams, building customer equity, and decreasing your total marketing spend, you can increase profits and grow your business much faster.
How to Cross-Sell and Upsell
Cross-selling and upselling maybe a proven way of increasing revenue and growing a business, but many dealers shy away from it fearing they lack the skills to do it.
Below are some best practices to learn how to cross-sell and upsell:
Get to know your audience: It’s important to get to know your customers and understand their goals and challenges to identify the most helpful, relevant products and services you could cross-sell and upsell. Ask probing questions throughout the sales process and once they become a customer to get a sense of what matters to them and what their needs are. This information will provide valuable context when the time comes to recommend additional offerings.
Demonstrate value: Don’t just tell customers how great your products and services are – show them. Whether it’s with a testimonial, a customer success story or a case study, it’s important to offer real examples of how customers can benefit from upgrading or purchasing additional products.
Build out the customer journey: You need to map out a customer’s journey so you know how they will use your product or service and how it will help them grow. When your customers get to the point where they’re seeing results (thanks to your product or service), they’ll start telling other people about it and drive referrals.
And, it’s at this point in the customer journey, they’ll likely be excited to hear your cross-sell or upsell pitch and find some extra money for your additional offering.
It’s important to wait until they’re ready before trying to cross-sell or upsell. During the post-purchase period, before they’ve seen its value, you’ll have a hard time selling them additional products or features.
Think about problems and offer solutions: Before you hop on a call or email and attempt to sell to an existing customer, take some time to review your product offerings and find their current spot on their customer journey. That way, you’ll have a clear idea of common challenges your customers face – and exactly which of your products or services you can try to cross-sell or upsell as a possible solution.
Limit your recommendations: Cross-selling and upselling is all about promoting your products and services without coming across as pushy. For example, you might be able to think of three different upgrades and four additional products that could be of interest to the customer but only present the three most relevant options to avoid overwhelming them.
Pitch ideas, not upgrades: You really don’t want to give a customer the impression that you’re trying to get them to spend more money. What you should do is to frame every recommendation as an opportunity.
Let’s say you have a customer who wants to update its call centre. Rather than tell a customer, “You should consider purchasing the premium version of our solution,” you might say, “I see an opportunity to automate call routing and reporting. Would that be of any interest to you?”
Strengthen your sales with cross-selling and upselling
Cross-selling and upselling aren’t always straightforward as it means getting the timing right, awareness of your customer’s pain points and an understanding of their needs.
But if you can keep a pulse on how your customer is feeling, have an idea of the features or products they stand to gain the most from, and know when they’ll be most receptive to an additional offer, you’ll be able to upsell and cross-sell with the best of them.
SIP Trunking Services
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To find out more, contact our team on 0333 344 7570 or email us at partners@wholesalesiptrunks.co.uk
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