One of the most effective ways to increase your business’s revenue and profits is to upsell and cross-sell to your customers.
Whilst lots of businesses claim to understand the upsell and cross-sell approach, many don’t actually do it as a consistent and planned activity, it’s something that happens sporadically or not at all. The result is a missed opportunity to increase your business’s revenue and profits.
Upselling v cross-selling: What’s the difference?
The first thing to clarify is that upsell and cross-sell are two completely different sales tactics. This is great news because it means that you can both upsell and cross-sell to a customer at the same time, it’s not a case of either or. The difference between the two is this,
Upselling is encouraging the purchase of anything that would make the primary purchase higher in price, for example,
- Upselling an increase in a life insurance policy from £500k cover to £1m cover, thereby requiring a higher premium
- Upselling an increase in a Business Communications Data circuit from 40GB to 100GB, thereby increasing the rental cost
- Upselling a MacBook Pro 13”, 128GB at £1,299 to a MacBook Pro 13” 256BGB at £1,499, thereby increasing the sale by £200.
Cross-selling is encouraging the purchase of anything in conjunction with the primary purchase, for example,
- Cross-selling a Home Insurance policy to the person we upsold the Life Insurance policy to
- Cross-selling a Unified Communications System to the company we upsold the 100GB Data circuit to
- Cross-selling a carry case to the person we upsold the MacBook Pro to.
So if you didn’t know before, now you know the difference between the upselling and cross-selling.
Why is establishing an upsell and cross-sell sales plan so important?
There are quite a few reasons why you should put some thought and effort into establishing an upsell and cross-sell plan, these include,
- It’s between 5 to 25 times more expensive to find and sell to new customers than to sell to existing ones; So upselling and cross-selling to existing customers is highly profitable
- For rental and subscription businesses, upselling and cross-selling plays a significant role in reducing churn, by displacing competitor products and services with your own
- As long as the customer is happy, upselling and cross-selling builds customer loyalty and increases customer lifetime value
- Both upsell and cross-sell can be initiated and executed at any point of the customer lifecycle.
At this stage, (before you read further) have a think about how upselling and cross-selling might apply to your product or service. What would your businesses upsell and cross-sell opportunities be? Once you have one or two, read on and keep them in mind as we go through the points below.
What do I need to put in place to start a successful upsell and cross-sell plan?
There are a number of wider sales effectiveness areas that will contribute to a successful upsell and cross-sell plan. These extend (but are not limited) to sales organisational design, sale skills competency, account planning methodology, product knowledge, reward plans and sales processes. For today, we will imagine you have all those areas nailed and we’ll concentrate solely on the six areas directly connected to the upsell and cross-sell plan, which are,
- For new sales enquiries, don’t be an order taker, be curious: When a customer expresses an interest or wants to buy your product or service, don’t just take their order, ask them some questions, here’s some examples,
- What do they intend to use it for?
- Have they used something similar before?
- What did they like the most about their previous product or service?
- Is it for them, or is it for someone else?
This will not only allow you to build a picture of whether or not the customer is suitable to be upsold and/or cross-sold, it also shows them you are taking a genuine interest in them, which they will appreciate.
For example, if we ask the person buying the MacBook “will you be travelling with it?” and they say yes, we should be cross-selling the carry case. If they say no, it would be hard to justify the extra spend, it’s as simple as that.
- For existing customers create an upsell and cross-sell target list: Compile a list of your existing customers and map out which products/service you have sold them and which you have not. For organisations selling high value or complex products, this information should form part of your Account Plans and already be a day-to-day activity (known as “white space mapping’).
An interesting point here is that trying to upsell and cross-sell to existing customers is a great way to find out whether they are happy customers (who are delighted to hear from you)) or unhappy customers (who would rather not deal with you again). If they are unhappy, you won’t be able to sell to them, but at least you will know they’re unhappy and get a chance to do something about it.
- Don’t presume the customer knows your full range of products: It’s often the case (in my experience) that customers can associate your organisation with a single product, this could be something they’ve bought from you before or a product service you are best known for.
This may be because nobody from your organisation has ever tried to cross-sell them to another product or service. So the reason they don’t buy more than one product from you is that they don’t know or associate you with any other products. It’s your job to correct this situation, if you are relying on them to learn your full product portfolio, you’ll be in for a long wait.
- Know how to match your product to their requirement: If you don’t understand (in detail) the product you are selling, you won’t be able to match the added investment of the upsell or cross-sell to the benefit the customer will receive from it. This is called features and benefits selling; the more you know about a product or service, the more able you are to make the connection between what it can do and what the customer needs.
Ask yourself, how often have you decided to buy from someone because they knew what they were talking about and decided not to buy from someone who didn’t? Features and benefits selling, (the discipline of understanding everything about your product, service and its capabilities) is becoming something of a lost art, again a subject for another day.
- Sell the value of the differential
If I cross-sell you the carry case for the MacBook you have just bought from me, I am asking you to pay an extra £75, it’s a small amount to pay to ensure,
- You’re £1,500 investment in the MacBook is protected
- That there’s less chance of you having to pay to repair a cracked screen
- That there’s less chance you have to be without it due to it being repaired
- That it always looks good when you use it in front of customers, for presentations and meetings.
Any of the above could cost much more than £75, so isn’t buying that carry case worth it?
- Be Honest: As mentioned earlier, you can’t implement an upsell and cross-sell plan to an unhappy customer, they want to see the back of you, not give you more of their money. It’s equally as important that you don’t turn a happy customer into an unhappy one by upselling and/or cross-selling them stuff they don’t need and that will not be of value to them.
So upselling and cross-selling only works if you know your products, can match them to your customer’s requirements and have the integrity not to try sell the wrong thing in pursuit of a quick sale. This also includes knowing when to inform someone that your product/service might not actually be what they need. Remember, a lifetime of value from a happy customer is always worth more than a single sale.
(Note: Sales reward and commission plans have a huge part to play here, but (again) that’s a subject for an article of its own on another day).
If you do all of this already, well done, you’re maximising your revenue and profits, you’re also probably taking a lot of business that may well have gone to your competitors.
If you’re not doing all of this, consider putting it in place, you may be surprised at the results.