Buried treasure

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Cross-selling and upselling are hidden gems that most marketers ignore. Here are four reasons why they shouldn’t, and four ways to get it right.

When you look at businesses whose performance goes from average to great, says Ottawa-based sales guru Colleen Francis, 1 their corresponding sales closures go from 25 to 33%, and stop there.

But, in those very companies, Francis adds, customer retention goes much further. In businesses doing well, it can hit 70%. In the really high-performing businesses, in fact, when new customer acquisition plateaus at 33%, customer retention can touch as much as 95%.

That was one reason that we, in “Keep the Old…Or Get the New?” 2 made a case for why marketers should raise the ante on customer retention.

Two Goldmines

If we think beyond after-sales service and relationship-building with new customers, what we find are twin customer retention goldmines – cross-selling and upselling.

Cross-selling and upselling clearly stand out as the two most profitable ways by which marketers improve customer retention. Customer experience thought leader Colin Shaw reports3 a Marketing Metrics finding: when the chances of closing a sale with an existing customer are as high as 60-70%, with a new prospect, it’s just 5-20%.

The account-based marketing (ABM) pros at Terminus cited4 a survey conducted by BAO Inc. that found that only 18% of marketers used ABM for better customer engagement, even though 74% of marketers stated that increasing marketing ROI was their “primary” goal.

Looks like B2B marketers don’t prioritize cross-selling and upselling enough. But they can.

Here’s why… and how.

Four Levers

Cross-selling and upselling hand you five powerful levers:

  • You’re selling to a customer you already know, points out Adam Ramshaw,5 consultant at Sydney-based customer management company Genroe. You have important CRM and behavioral data on them. And there’s no need to incur the high acquisition costs that go with new customers.
  • You’ve already gained the customer’s trust. Your offering’s been tried and tested and, because it’s worked well, it’s been bought. But it isn’t only your product or service, it’s your company’s brand, as well.
  • Trust begets loyalty. Greenbank’s Ian Hirst writes,6 “It’s difficult to replace you if your company is part of the client’s DNA.” This loyalty opens conversations more easily around new services and related products.
  • Happy clients are four times more likely to send referrals your way than new customers, writes content marketing expert Aaron Orendorff, citing Temkin Group’s ROI of Customer Experience, 2016 report.7 Customer marketing is sweet.

Four Keys

Here are four keys to winning at the game:

  • “Know your customers,” says Lee Polevoi.8 Talk with them. You’ll get the answer to the question, “which other purchases could complement what my customers have already purchased and help them achieve their goals?” Spell out the benefits of using multiple offerings together and watch the revenue grow.
  • Don’t go after the wrong customer. Not all customers are profitable for your business. In an insightful article, Harvard Business Review contributors Dr. Denish Shah and Dr. V. Kumar warn against cross-selling to what they call “service demanders” (habitual over-users of customer service), “revenue reversers” (the ones who contribute to your revenues but take it back in other ways), “promotion maximizers” (who buy only when steep discounts are offered), and “spending limiters” (who spend a small, fixed amount with you and cross-buy within it).9
  • Put out informational, educational content, says Marketo10. The more (and the less salesy) it is, the better, because serious customers will search, looking for answers to their questions. The conversion rate for customers who do their homework is 17% higher than that for ‘impulse’ buyers. So use sales enablement tools to develop, repurpose, and track.
  • Observe, listen, respond, and dialog with your customer. Automation tools help you pick up behavioral cues, while CRM and analytics data give you insights into predicting where your customer will go next. But make sure these digital enablers, including the web and social, don’t replace the personal, authentic touch.

In the end, cross-selling and upselling are about winning friends and influencing people. (Apologies, Mr Carnegie.) Who wouldn’t want that?

References:

[1] Growth Strategies: Why Up-Selling and Cross-Selling Provides the Path of Least Resistance
[2] Keep the old… or get the new?
[3] 15 Statistics That Should Change The Business World – But Haven’t
[4] Customer Marketing: The Missing Piece of the ABM Puzzle
[5] Cross-Selling: the why and how for successful companies
[6] The challenges and solutions for effective cross-selling
[7] Measuring Customer Retention: Five Magical Metrics to Demystify ROI
[8] 6 Tips for Successful Small-Business Cross-Selling
[9] The Dark Side of Cross-Selling
[10] Lessons from Financial Services: Cross-Sell to Your Customers Without Pushing Them Away

 

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