Do not ignore your most valuable potential market when expanding your business: your current customers. Upselling and cross-selling is an incredible opportunity for outside sales teams, and neglecting them can be detrimental.
Competition is as intense as ever in the bid for client trust in sales. Upselling and cross-selling is a way to get ahead of competitors and increase the value of your customers. It is the perfect way to meet your revenue goals in a way that profits your business the most.
Not only can upselling and cross-selling to customers be a great opportunity for you, but it also works to help your customers and maintains their trust. In fact, upselling has less to do with pushing more goods and services on a customer, and more on focusing to meet your customer’s needs.
In this article, we will explain what upselling and cross-selling is exactly, why you and your customers need it, and tips for increasing your upselling and cross-selling capabilities.
Upselling vs. Cross-Selling
Upselling and cross-selling are often used interchangeably in sales conversations, but they are actually two separate entities. In order to implement them correctly into your business, you need to understand the differences between the two and what they mean for the customer.
Upselling is a sales technique where the customer is offered a higher priced option or add-on to the product they are purchasing. Examples of an upsell could be introducing a larger screen to a customer looking at televisions or adding a warranty to the product being sold.
Cross-Selling, on the other hand, is offering a complementary product or service that the original product does not cover. For example, offering a credit card to a customer that is opening a checking account. They are related, but not overlapping, products that the customer might find useful.
The most well-known example to show the distinction between upselling and cross-selling is McDonald’s. “Would you like to Supersize that?” is a classic upsell, while “Would you like fries with that?” is a cross-sell. One is adding to the product you have, while the other is offering a completely different, but complementary, product.
Upselling and cross-selling are closely related and useful in both increasing your profit and anticipating your customer’s needs. In order to be successful, though, you must thoroughly understand what your customer is looking for and offer them products at the appropriate time that demonstrate your understanding.
Many banks fail to take advantage of upselling and cross-selling: American Bankers Association found that less than half of the banks they surveyed even had a strategy in place for cross-selling to their customers.
6 Reasons to Upsell and Cross-Sell
Upselling is essential for businesses, but how exactly? Here are 6 reasons that both you and your customers want upselling and cross-selling:
1. Increases Profits
It is no secret that a customer that buys more means that your institution will make more money. Growth for your business does not mean simply retaining the customers that you have: it is necessary that you continue to grow your wallet allocation for the current customers you have.
The great untapped market in your business might be your actual customers: even amongst customers that believe strongly trusted their bank, they only dedicate 25% of their total investments to their primary bank. Once you have gained your customer’s trust, there is still an incredible amount of investments they could be making with you if you use upselling and cross-selling to your advantage!
2. Increases Customer Loyalty
When businesses refer to upselling, too often what comes to mind is greasy car salesmen offering services and products that customers do need to weasel them out of a few dollars. In reality, though, this could not be further from the truth. The point of upselling is to give the customer all of their options so they can make a knowledgeable choice. It shows customers that you care and expect their needs.
In fact, upselling and cross-selling is closely related to customer satisfaction. They develop loyalty for the banks that they feel look out for their financial well-being. Customer loyalty can be a problem in the sales industry: it is common for customers to lack engagement and leave quickly. Any action that businesses can take to increase loyalty will help minimize the costs of losing customers, especially new customers.
Not only does customer satisfaction mean a reduction in churn rates, but they also offer the best opportunity for free marketing. In the age of information, there are few people that will trust their business to an institution without checking reviews on it first. Happy customers are the best form of advertisement that you cannot buy.
3. Increase in ROI
Signing on new customers can be a costly undertaking: for most banks, the average customer may take years until they begin to see a profit. Upselling and cross-selling to your customers allow you to see a profit quickly and receive a better return on your investment. You already did the hard work of marketing, finding and selling successfully to your customer; your business would be wise to get as much from the interaction as possible.
You leave money on the table when you neglect upselling and cross-selling. Offer customers products that are relevant to what they are looking to get as much of a return as possible.
4. Increases Customer Lifetime Value
Not only will upselling or cross-selling bring in a greater initial profit after signing on the customer, but the overall value of the customer over the course of their lifetime will also be greater. If you sell a credit card after a home loan for a customer to furnish their new house, for example, you will be bringing in much more profit over the course of the years than you would with a mortgage payment alone.
Not only will you increase their lifetime value by increasing the amount they buy, but by increasing their loyalty. You will see much more from a customer that stays loyal to you. Again, the increase in customer loyalty will pay off over the long run.
5. Balances Growth Between New and Existing Customers
Research has shown that increasing customer retention by as little as 5% increases profits anywhere from 25% all the way up to 95%. Maintaining a balance, then, between the customers that you sign on initially and the ones that you maintain is absolutely essential to the survival of your institution.
Maintain a healthy ratio of new to existing customers to help to ensure that your business is making a profit. While gaining new clientele is a healthy goal, also keep in mind ways to keep the clients that you sign on. One way to do this is through upselling and cross-selling. Customers who feel that their bank continues to look after their needs by offering relevant and helpful products and services will be far more likely to stay.
6. Offers Convenience and Flexibility for Customers
The benefits of upselling and cross-selling are not just for businesses. In fact, it works so well for businesses because it works well for customers too. Many customers do not want to shop around for a new institution when they need a certain product or service. By offering them more choices or relevant add-ons, they do not have to take a risk with a new company to get what they need.
Most customers will stay with what they like if they know what is available. Since you have established trust with the customer, you can have the first shot of their business by telling them the related products and services you offer. When you upsell or cross-sell to a customer, you give them the convenience of staying with you and the flexibility to choose what they need.
Keys for Successful Upselling and Cross-Selling in Sales
Now that you know the importance of upselling, the question is how to implement a successful upselling strategy to grow your business. Upselling is a delicate matter, but if proper care is taken, you will find a great untapped market. Here are some keys to upselling:
Trust is Vital
Customer relationships are all about trust. You build this trust by getting to know their wants and needs. When you come to understand your customer, you can easily anticipate their needs and offer them the products and services right for them. How do you come to understand them? Communication. It is vital to keep engaged and in contact with customers, and potential customers in order to understand what they want. Customers trust will then earn a more expanded business.
Track the Customer Journey
In order to make sure you are upselling the right products to the correct customer at the proper time, it is important to flag potential upsells by tracking the customer journey. Customers tend to communicate through more than one medium when they are serious about purchasing, so keep track of them through a CRM. An integrated CRM will let your entire company to both understand the specific customer and allow anyone to both cross-sell and add to the customer journey.
Customer journey data can predict the likelihood of responding to an upsell offer. Customers have come to expect personalized and relevant information. In order to successfully upsell, you need to make a relevant offer to that specific customer based on preferences and recent interactions.
Be a Sales Consultant Versus a Salesman
Become an expert in what your customer needs. This way, instead of simply trying to “sell” a product to a potential client, you can suggest ways that your other products can serve your customer. Understand your customer’s business and how it relates to your product. Find places that they could improve by using your product or service. You are in the perfect place to make suggestions because you are a product expert and have insights to offer that they can’t find elsewhere. This expert understanding can make you come across as a sales consultant versus just a salesman.
Be Relevant to the Customer
Although upselling and cross-selling can be great tools for the customers, few things annoy the customer more than wading through products and services that do not relate to them or their experiences. Relevance is key in upselling and cross-selling. Is your customer buying a house, starting a business, starting their first job? These are important factors to keep in mind when considering what products or services will or won’t work for them specifically. Don’t try to sell an auto loan to someone that is coming to you about a business loan.
It comes down to knowing your customer. Keeping track of your customer and their needs will help to ensure that you are making relevant recommendations that will enhance your relationship.
Upselling and Cross-Selling: Tapping into Your Best Market
If your business is not utilizing upselling and cross-selling, you are leaving money at the table. Offer your customers relevant products to make sure that they are getting your full range of services and you are getting the best ROI possible.
To make see how Map My Customer can make a difference in your upselling or cross-selling power, sign up for a free trial today!