Increase your revenue and profitability with Upselling
Who should use Upselling?
Regardless of whether a business is looking to increase or simply protect it’s current revenue and profitability, it is essential that existing customers are not overlooked in the ongoing quest for sales, profit and growth.
It may seem an obvious step for marketeers to throw budget towards the acquisition of new customers (who doesn’t want to grow their customer base?), but an already faithful group of existing customers offers proven loyalty over new, and as such should not be forgotten. Countless studies have shown that it is significantly more cost effective and profitable to increase sales amongst your current customers than spend money recruiting new ones. Indeed it is reported that some 65% of a company’s business comes from existing customers*.
One of the most efficient ways to build loyalty and maximise the return on an existing customer while keeping them happy along the way is through upselling. And at a time when protecting and increasing revenue is more important than ever, spending up to five times as much to attract a new customer rather than nurturing an existing one* certainly doesn’t make business sense if time and budget are limited.
“65% of a company’s business comes from existing customers” *
How does Upselling work?
For a business to put upselling into practise it’s essential to understand exactly what it is and how best to implement it as part of a robust and successful sales strategy.
Upselling put most simply, is when a business encourages a customer to enhance their choice and make a higher purchase, resulting in a more profitable sale. For example, promoting the purchase of an iPhone 12 Pro Max over an iPhone 12 Pro, or increasing a sales contract from six to 12 months.
Upselling can offer many benefits to both the business and consumer and the advantages are numerous.
For a business:
- Increased average order value from a customer sale (AOV)
- Increased lifetime value of a customer (CLV)
- Increased profit margins
- Satisfied customers which can lead to positive reviews and new customer referrals.
Upselling is advantageous to a customer in several ways, including:
- Receiving a more personalised and relevant experience
- The offer of a more convenient and appropriate solution
- Satisfaction with both the purchase and the purchase experience.
When is Upselling not Upselling
Commonly, there are other techniques which are often termed upselling but are in fact not. These are typically cross-selling and down-selling. While both are still profitable sales strategies, they have different roles in the sales process. They can provide both a business and its consumer with a different solution to that of upselling.
Cross-selling differs in that a consumer is offered a related product or service, rather than an enhanced product choice, as a means of generating additional revenue. Selling shoe polish for a new pair of shoes is one example of cross-selling.
Down-selling is an effective sales technique whereby a business can better meet a consumer’s needs by offering a more budget friendly or convenient option when they have rejected their original intended purchase. For example, an older laptop if they can’t afford a newer, more expensive version. This can be beneficial when a business may be about to lose a sale entirely.
When to use Upselling and Cross-Selling
As outlined above, upselling can provide mutual benefits to both businesses and consumers. However, this is only possible when it is used appropriately and at a time when most relevant. In order for upselling to be integrated as effectively as possible into a business’s sales strategy or CRM programme there are a number of important areas to first be considered:
- Relevancy-any upselling must be relevant to the customer’s need. For this to be possible, it’s essential a business has a thorough understanding of what their customers require and what exactly they can offer to fulfil that need. For example, they may want more enhanced cyber security software but they don’t want a new laptop.
- Relationship-when a business is able to identify a customer’s needs and offer credible solutions to those needs, the relationship between the two can be vastly improved and solidified for the long term. For example, consistently offering the latest software upgrades so that the customer trusts and relies upon the business.
- Timing-identifying the opportune moment to upsell to a customer is key. It could be at the point of purchase (“Would you like to extend the insurance on this product?”), at the exact time they have the need (“Your insurance has run out-can we extend it for you?”) or during a conversation with a sales or support team member (“I see you need to make a claim, can we offer you more enhanced cover for the future?”).
- Value-businesses should prove their value to the customer, make it clear why they are trustworthy and what the customer gets out of it. Done successfully this will ultimately lead to increased revenue and better levels of customer retention.
How Flexpricer can help Upselling
As we have already touched on, the time and money spent prospecting for new customers is wasted if your valuable existing clients are neglected. The Flexpricer B2B app allows businesses to identify and target their clients, upselling and cross-selling products more relevant and suitable to their needs.
By upselling and cross-selling to this easily reachable pool of customers Flexpricer provides the opportunity for higher sales and profitability at a fraction of the cost of acquiring brand new customers. Instantly available within Salesforce, it offers a straightforward CPQ solution for any business looking for additional opportunities to grow their revenue.
The sales focused pricing and quote features mean upselling and cross-selling to customers are quick and easy to implement, connecting a range of products to the consumer and then proactively offering a higher product in the range (or a lower product as a down-sell if the risk of losing the sale seems likely). The cross-sell option also provides users with additional products relevant to their purchase.
Flexpricer really does allow businesses to maximise the value of each and every customer.
* https://www.forbes.com/sites/jiawertz/2018/09/12/dont-spend-5-times-more-attracting-new-customers-nurture-the-existing-ones/?sh=5cbb33f85a8e
