Discover the secrets to boosting your sales with cross-sell and upsell strategies in this article by Business Consultant, Dan Cakora. Retaining existing customers is key, and Vendavo solutions can revolutionize your approach. Explore actionable steps and unleash the power of profitability and customer satisfaction.
You’ve likely heard it costs more to land a new customer than it does to retain the customers you already have. Behind that idea sits truly eye-opening stats:
- Depending on your industry, acquiring a new customer is 5X – 25X more expensive than retaining an existing one.
- You have a 14X higher probability of selling to happy existing customers than a new customer.
While I’m not suggesting you eliminate new prospect outreach entirely, the facts can’t be ignored. Current customers are your best source of new business. It’s therefore in your best interest to strategically sell into existing accounts. There are three great methods you can implement but before we dive into each, consider how they differ:
To successfully cross sell into existing accounts, you’ll first want to find and group customers who purchase similarly. Then, compute the average spend profile by product family (PF) for each customer/peer group.
In the below example, you can see that the company has three groups that purchase differently across product families. With known averages for each, you can compare the purchasing behavior of an individual customer in a group to the rest of the peer group average spend profile and compute differences. Your available opportunities lie within that delta.
In product family 1, the individual customer spends 10% whereas the average customer spends 20%. This is a clear unit up sell opportunity. In product family 2, the individual isn’t buying any of this type from you whereas their peers are spending 50%. This is a cross sell opportunity, also called whitespace. In product family 3, the individual customer is buying much more than the average customer in that group. There is no opportunity here but that’s okay. You certainly don’t want to ask them to buy less.
When products of the same family are linked by SKUs and the keys that tie them together, you can see how they fall on the good, better, best continuum, like this simple illustration shows.
For effective up sell scenarios, you’ll want to offer an upgrade to a best or better product to a customer who is purchasing a good product, for example. To ensure this happens consistently, you can include prompts for your sales team at the time of quote, order entry, or point of sale.
How Vendavo Solutions Help
While the basics of implementing cross sell and up sell opportunities are simple enough, performing the analysis and calculations is tough for most companies to do once, let alone on an ongoing basis and in response to changing market conditions. The primary reason is they are trying to do it in Excel
Companies that try to calculate good-fit cross sell and up sell opportunities in Excel will quickly find their vlookups, index match match, xlookups or whatever they are doing to pull data together from multiple sources returns no results. Often, there are more rows than Excel can handle and, even if it can, you won’t see the white space (described above) in results. Excel isn’t custom-built for this purpose, but pricing software will do the heavy lifting.
Vendavo Sales Optimizer will perform the groupings needed for cross sell strategies, do the calculations, and generate the applicable opportunity for every customer for your sales team to follow up on. They can be alerted to add it to a quote or an order, for example, or they have the option to dismiss it.
For up sell opportunities, Vendavo Pricepoint operationalizes the rules that define good, better, best and delivers value based pricing based on various attributes and other factors.
4 Strategies for Increasing Cross-sell and Upsell
How can you get started on your cross sell and up sell strategies? Take these four actions.
- Build high-res customer profiles: Combine internal and external data to build a holistic view of your customers.
- Create discrete, distinct customer growth missions: Avoid overly broad objectives and focus on pockets of greatest opportunity.
- Get started: It’s a common misperception that you have to wait for perfect data, the new data warehouse, or CRM before taking action. Instead, use what you have on-hand.
- Build a repeatable model: Test and learn to log early wins. Build new capabilities and iron out any kinks as you learn and grow.
One final piece of advice is to resist the urge to cross sell to every customer. One in five cross buying customers is unprofitable so keep a close eye on your process. In the end, it’s a worthy journey both for your bottom line and your customers’ satisfaction.
Ready to improve your upsell and cross-sell strategies? Take your sales game to the next level with Vendavo Sales Optimizer. Discover how this powerful solution can streamline your analysis, calculations, and generate valuable opportunities for your sales team. Learn more about Vendavo Sales Optimizer here.