For many businesses, the challenge of sourcing new sales opportunities can feel akin to the Greek myth of Sisyphus.
For those unfamiliar, Sisyphus—a figure from Greek mythology—was condemned by the gods to repeatedly roll a boulder up a hill, only to have the boulder roll back down every time he managed to get it to the top. This activity continued in perpetuity by Sisyphus for all of eternity.
Running a business inevitably demands pursuing new customers. This, we cannot (and should not) avoid. However, all too often, the extraction of additional value from existing customers is forgone in preference for exclusively seeking fresh sales opportunities with new customers.
And let’s be honest… we’ve all felt like the Sisyphus of sales at some point in the past!
Fortunately, it doesn’t need to be this way.
Without neglecting the necessity of continually feeding your business with new customers from multiple sources, wouldn’t it be great if you were able to extract additional value from the customers you already had?
Two effective tactics for doing this are cross-selling and upselling.
Cross-selling is the practice of selling additional products to customers. Upselling is the practice of enticing customers to purchase a more expensive item, upgrade, or add-on.
Both tactics provide several benefits to both you and your customers:
- Improved customer experiences
- Increased awareness of your offerings
- Increased customer loyalty
- Increased revenue
- Increased value to the customer
- Lower customer acquisition costs
Whether conscious of it or not, as consumers ourselves, we see upsells and cross-sells in our lives every day:
Source: Coming Back From COVID, Evian Gutman (2020)
So how do you go about extracting untapped value from your existing customers with product cross-sells and upsells?
Determine Your Motivations
Aside from providing additional value for your customers, crystalize the specific motivations for upselling and cross-selling on your end in the first place. Are you trying to…
- Extract maximum revenue from each sale?
- Attract new customers?
- Clear old stock?
- Showcase new products?
Depending on what your goal(s) are, the strategies you use to achieve those objectives will differ.
Prioritize Upselling
Both upselling and cross-selling are effective strategies for adding additional customer value and helping you achieve other business goals, like increased sales. However, where possible, lead with upselling and follow with cross-selling.
Both opportunities exist only because the customer wishes to make an initial purchase. However, upselling aligns directly with the original product being purchased. Cross-selling, on the other hand, actually diverts their attention from the initial product.
The last thing you want is to gamble away any purchase, at the expense of an only potential purchase. Make sure that you sequence your strategies appropriately and intelligently.
Incentivize and Reward
You’re able to offer additional incentives and rewards that encourage customers to accept your upsell and cross-sell recommendations.
For example, customers that spend over $100 might be entitled to free shipping, or customers that buy bundled offerings will receive a gift.
Explain Not Just What, but Why You Recommend
Naturally, the focus of your upsell and cross-sell strategies should be sharing relevant products or services that complement the original product that the customer wishes to purchase.
However, your chances of success will increase greatly if you’re able to explain not only what else you recommend they consider, but equally-importantly, why you recommend it too.
Let customers know about complimentary features and benefits derived from using both products in conjunction or additional benefits gained from using a similar—but superior—product.
Time Your Recommendations
The success of your upsells and cross-sells will hinge largely on the timing of the offers. Your customers need to first and foremost feel comfortable with their initial primary purchase. Only then is it appropriate that they consider upgrades or complementary offerings.
You’ll want to catch customers whilst they are still in a ‘buying mood’. For example, if you have an eCommerce website, this would line up with your Product, Checkout or Thank You pages.
For cross-sell opportunities, it’s often strategic to wait an appropriate amount of time to allow the customer to personally appreciate value from the use of their original purchase. For example, send customers a follow-up cross-sell email a few weeks after their initial purchase.
Offer Encouraging Pricing
Use special pricing to incentivize customers to consider additional or more expensive products.
For service offerings, you can offer trial pricing to lower the barriers of resistance to any of your upsell or cross-sell offers. With trial pricing, you’re essentially suggesting that customers have little to lose, by providing the opportunity to sample the offering without any commitment to purchase.
Alternatively, you can offer bundle pricing. This utilizes your knowledge that the customer has a specific product in mind, to encourage them to consider additional related products too. These additional products are incentivized with discount prices. Buying a phone? Get a phone case for half-price!
Maintain Relevance in Your Marketing
Ensure that you maintain relevance in the marketing of your upsell and cross-sell strategies. Just because you want to push a particular product, doesn’t mean that the customer wants to hear about it.
Understanding your different customer types will allow you to market them the right products wrapped in the right marketing messaging too. For example, a hairdresser that’s buying professional hair products should be marketed to differently than an individual purchasing personal care hair products for themselves.
Maintaining relevance in your marketing will assist in communicating inherent value in your upsell and cross-sell recommendations.
Only Offer Relevant Recommendations
In addition to your marketing, your actual upsell and cross-sell product recommendations need to be appropriate too. Your recommendations should only be those that are relevant to the product the customer was originally interested in.
Similarly, the price points of these recommendations should be commensurate with the initial product too. There’s no point trying to upsell a customer from a Ford to a Ferrari.
For example, if a customer purchases a camera, then a camera lens is an appropriate cross-sell. But if that lens costs twice as much as the camera itself, you may want to reconsider a more appropriate recommendation.
Start Doing Re-Marketing
In the digital space, there are plenty of opportunities to ‘re-market’ to current and potential customers. Re-marketing is the practice of serving a targeted marketing message to someone that has been to your website or done something online that indicates some form of buying intent.
Once someone has visited your website, you’re able to show them an advertisement on other websites and social media that promotes specific products or services you sell.
You’re able to take this one step further and show specific people specific ads based on your knowledge of the pages they’ve visited on your site and the products you can confidently infer they have an interest in.
For example, if somebody checked out shoes on your website, let them know about other related products that may complement shoes and potentially also be of interest to them. You can make this even more appealing by offering a special discount on these products if purchased straight away.
Source: Coming Back From COVID, Evian Gutman (2020)
Help, Don’t Hinder
Remember that upsell and cross-sell opportunities only present themselves because the customer is interested in making an initial purchase with you.
There’s therefore goodwill and trust already in the bank. This shouldn’t be gambled on in the hope of making a bigger or better sale if you run the risk of losing any sale at all.
Fortunately, this needn’t be an either-or decision. So long as you don’t bombard the customer, and ensure that any upsell or cross-sell suggestions provide them with additional value, then your recommendations—whether embraced or not—should be well-received.
Conclusion
Despite the ever-tempting allure of focusing exclusively on acquiring new customers, make sure that you don’t leave money on the table by neglecting untapped value from the customers that you already have. Product upsells and cross-sells are a win-win for everybody: they generate you more revenue, and they add additional value to your customers.
Avoid a repeat of the myth of Sisyphus, and make sure that you think about cross-selling and upselling opportunities when devising any of your marketing and sales strategies.
This article is an adapted excerpt from the book Coming Back From COVID: The Definitive Guide for Small Business Owners to Rapidly Recover From the Coronavirus’ (2020)
DepositPhotos – upselling
