When businesses are looking to grow their earned revenue, there are many marketing strategies they make use of to encourage leads and sales to buy more of their services. Sometimes your most valuable market is found in your own wheelhouse; by targeting your existing customers, you are more likely to make increased sales. This is where upselling and cross-selling come in – these are two strategies used by marketers that grow sales from prior customers and lead to higher retention and income rates.
You may be wondering what is upselling and cross-selling, and can these strategies be used for your business? There are many ways that implementing these approaches can be beneficial to your business. Keep reading for our full guide below.
What Is Cross-Selling?
Cross-selling refers to a method of sales where the customer is encouraged to purchase something in conjunction with their primary purchase.
For example, say a customer has purchased one of your services. Cross-selling would encourage them to purchase a second service to compliment the first, ultimately making sure their purchase is more expensive. A customer interested in purchasing a hairbrush can also be convinced to buy a hairdryer, a more expensive product, if they know the outcome will be better for them.
This strategy is targeted specifically at increasing the revenue earned from a single customer. As a result, the main target is to boost the ROI of your business and drive higher earning potential from each sale.
It’s easier to make sales to customers that are already familiar with your business. Compared to fresh leads, these customers are already familiar with your brand and services and have expressed prior interest. These characteristics mean that it will take little extra convincing to cross-sell another service to them. It’s not uncommon for businesses to sweeten the deal a little more by offering a discount, a free trial, or some sort of incentive.
What is Upselling
A similar strategy to cross-selling is upselling. Upselling techniques refer to a method of convincing customers to make a more expensive purchase rather than their original intended purchase. As for upselling examples, a customer might have an interest in your lower-tier package, but with some input and negotiation from your sales team, they can be convinced to purchase a medium or higher tier instead. This leads to a higher ROI for your business from that customer.
Upselling comes down to suggesting a product that will be an upgrade from the purchase they originally had in mind. The trick with this strategy is listening. By following that person’s user journey, and understand pain points they may have, your sales team can introduce the idea of a more comprehensive and expensive service with a higher likelihood of acceptance.
Upselling can be more effective than cross-selling. It’s easier to sell a customer a higher-cost package one-off than it is to convince them to buy more than one service, but both approaches have their own merits and disadvantages.
Upselling Vs Cross-Selling
These strategies are sometimes referred to interchangeably, but the reality is they are representative of very different scenarios. The main similarity is that both approaches can take place at the point-of-sale and be facilitated by a salesperson or customer success person using a BPM tool. These team members can both cross-sell and upsell to customers that they think would be interested, usually, once they’ve purchased an initial product.
Cross-selling can alert customers to services they may not be aware of and help them build trust in your brand. Upselling, on the other hand, is more concerned with showing customers how their needs may be fulfilled better by a higher-tiered package. Another thing that both these strategies have in common is providing additional value to customers.
Customers often express interest in multiple services or features during email and phone conversations, and this is where the opportunity to cross or upsell arises. It’s important to pay attention to the customer’s interests and questions, as these can signal the biggest opportunities to launch these strategies. Whatever you recommend has to truly fulfill their needs.
How To Upsell And Cross-Sell
So how do you enact these strategies for your business? The first step is to study your customer demographic data and understand their goals. Every industry has it’s pain points, and by knowing these ahead of time your sales team will find it easier to spot cross-selling or upselling opportunities.
The key is to try to map out the customer journey from start to finish and identify the step at which most cross-selling and upselling potential arises. Typically, the best time at which to mention cross-selling or upselling is when they’ve purchased a service from you in the past, or while they are onboarding for your service.
The easiest way to be able to cross or upsell to customers is during phone or video calls. One-on-one contact gives your sales team the chance to really bond on a personalized level with customers, and once that trust is established they will be more inclined to spend.
Cross-selling and upselling are two key ways that service businesses can increase their revenue from their existing customers. While similar in nature, these methods do differ, but their ultimate goal is the same; to understand customer needs and recommend ways to alleviate them that are mutually beneficial.
The good news is that implementing these strategies for your business is less complicated than you think. It’s easier to sell to existing customers than to leads that have not seen the value of your services yet, and that’s what you will need to capitalize on. To kick off the process make sure you are using tools that help you track customer journeys, and that your sales team is taking a more personalized approach.
These are two methods you should add to your marketing strategy for maximum ROI, customer retention, and success. Contact us for assistance.