Marketers often focus their efforts on new business, but sometimes, the fastest and most cost-effective way to grow your business is to look at your existing customers. In fact, the success rate of upselling or cross-selling to an existing customer is around 50% higher than selling to a new one for the first time.
Business leaders should have a clear strategy for how they find new customers, but also how they retain existing customers and increase their spend. In this post, we’ll look at four ways you can increase the amount that your existing customers are spending with you.
The best place to start is understanding your customer’s behaviour. Most businesses will have more than one product or service. A good exercise is to map out your existing offerings and see who’s buying what. Unless all of your customers are buying all of your services - quite an achievement - it will be easy for you spot gaps. It will also be easy for you to spot customers that are under-spending or customers who used to spend more than they do at the moment.
You may also wish to group your customers by their sector, size or business needs. If particular offerings are popular within one of these groups but there are customers within that group that haven’t bought them, there may be an opportunity there.
Track your customers’ purchase history, if something changes find out why. Follow up and reengage them.
Up-selling and cross-selling are similar but subtly different. Up-selling is encouraging existing customers to buy higher value services and cross-selling is encouraging customers to buy other services that could fit their needs.
In either case, the best time to do it is when customers are in the process of making a purchase. Existing customers who are currently in the market are going to be much more likely to increase their spend than those who aren’t.
Offering useful combinations of complementary products at a discounted price is a common cross-selling practice, one that Amazon do particularly well. Alternatively, you can promote a more expensive but higher-quality version of the product they’ve already decided to buy in order to increase the value of the sale. A direct comparison of the original product and the more expensive one, clearly demonstrating the added value, is a good way to achieve this.
The other way to sell offer more to your existing customers is to develop new offerings. Obviously, this will require more effort than promoting your existing services. But once you’ve maximised the value of your current customers and services, this is the next step.
A useful model for understanding this decision-making process is the Ansoff Matrix, which we’ve featured before. This article is focussed on the quadrants on the left and this section of the article is focused on the bottom left area specifically.
If you decide to develop a new offering, it’s important to be clear about the value it adds for the customer and how you will take it to market. Ideally, you want to develop offerings which compliment your current services, making them easier to upsell or cross-sell. You may want to analyse what your best-selling services are at the moment and ask yourself if there’s anything else that you can offer as an add-on. Ideas which are rooted in what you know already works are a safer bet than those which are quite separate from what you currently offer.
Customers appreciate businesses that offer them the benefit of their expertise. Adding value by offering advice is a great way of building relationships and encouraging customers to spend more. This advice can be passed on individually, or it can be published on your website or distributed via a newsletter.
If you do decide to create content for your website, your focus should be adding value for your customers and helping them solve problems. Content which is transparently promotional tends to underperform and may actually have a negative impact. After all, we don’t need any more spam in our inboxes.
As with all marketing activity, track your performance and keep a record of what’s working and what isn’t. If you notice that a particular cross-selling or up-selling tactic is performing well, then double-down on it. As mentioned earlier, increasing your existing customers’ spend is the most efficient route to growth and a proven tactic that can do this is a boon for any business.
Your customer relationships are important so don’t try and squeeze so much value out of your existing customers that you drive them away or irritate them. Be careful and systematic in your approach and focus on adding value rather than just driving up the price. Start by analysing your current customer base and what they’re buying, then look for opportunities to cross-sell or upsell. Once you’ve made the most of your existing customer relationships, it’s time to develop new services or find new customers.