Aiming to increase your revenue and profits? Well, the surest way to do so is to increase your sales. Perhaps you are thinking of launching an all-new digital marketing campaign to attract more customers and expand your base of clients and customers to fulfil that goal.
Well, you may want to reconsider that line of strategy. Turns out, attracting more customers may not necessarily be the most effective way to raise your revenue. After all, the process of acquiring brand new customers can take up a lot of time and resources. It can be a costly and time-consuming process – particularly for companies and businesses who have a limited pool of resources to work with from the start. Even then, after attracting potential consumers and clients, these customers may not stay to make another purchase with you.
Ways To Optimise Customer’s Purchases
Apart from upselling, there is another strategy in the same vein, known as reselling.
Upselling involves the increase of revenue through increasing the ticket item and volume of your customer’s purchases. This is an old marketing tactic commonly seen by salespeople in various industries. Telecomm industries display this example best through the use of bundled services. They provide add-ons and larger data and messaging plans and convince their customers on upgrading their mobile plan to include more services, and a larger monthly fee.
Reselling works with a similar concept. Increase your revenue through reselling by increasing the number of purchases your customer makes. This is commonly seen in subscription-model services or products which require regular top-ups and refills, such as pen cartridges, printer ink cartridges or razor blades. Dollar-Shave Club is a brand best known for employing this strategy.
Lastly, there is cross-selling. Cross-selling involves the partnership of two or more companies, where companies share their customer base. This is a good business and marketing strategy as it not only saves your customer acquisition cost, but it also allows you to tap into another area.
Today, in this article, we will talk more about upselling.
Understanding the Lifetime Value of Your Customer
Gathering new customers, undeniably, is a process that takes time to grow.
Hence, while it is still a vital part of any business, for companies and organisations who are looking for more concrete, tangible and effective ways to increase their revenue, it may be wiser and more sensible to focus on your existing customers.
Think the answer doesn’t make sense? Well, just think about it – you already share a relationship with your existing customers, so there is no need to spend a large amount of time and resources to build and cultivate trust as it were for a completely new customer. Instead, it would be simpler (not to mention, faster) for you to maintain and strengthen your current relationships with your existing range of customers.
Do not place all of your focus on how to sell your products and services to more people.
On the contrary, you should be thinking about how to see more of your products and services to the same people.
This notion is easily explained through the concept of ‘Customer’s lifetime value’. Simply put, in an ethical way, how much can you earn from a customer in your business setup?
- Are there ways in which you can make the customer purchase more regularly, effectively turning him/her into a returning customer?
- Are there ways that you can leverage on that customer to bring your more customers, such as with a reward-referral system in place?
- Are there any methods whereby you can bring your customer more value by suggesting another product/service that he/she might need, effectively passing on a lead to your partnered companies?
Extracting the most of your customer and milking the lifetime value has lesser to do with the customer’s ability to pay and the unethical practices that it insinuates. Instead, it has more to do from a business point of view – businesses should do what they can to get the most out of their resources. One of which includes the customer acquisition cost.
If you are able to leverage on every ounce of value from a customer, it would also give you a major upturn on your customer acquisition cost.
Be Familiar with Your Customer Base, Indsutry and Marketplace
Of course, there are many factors in play when it comes to business.
Apart from customers, businesses also have to concern themselves with the marketplace and industry. These are important factors that can affect your customer’s decisions and purchasing habits.
- Are there new rival firms in your industry?
- What are the latest trends in the marketplace?
- Are there any new products that your customers are interested in?
- Are there any new products that your customers are dissatisfied with?
If you think that there is nothing new to learn about your set of existing customers, you would be surprised.
Completing simple market research and analysing the results can easily reveal new opportunities and characteristics regarding customers that you think you already know. In taking a closer look at the market you are selling to, you can find out more about what your customers truly need and desire – then sell it to them.
If you are not sure where to start in regard to getting to know more about your customers, here are some actions that you can take to kick start your market research:
How to Gather Data to Sell More to Your Customers
- Gather feedback from surveys as well as interviews.
- Take note of the reviews that your customer leaves on any social platform.
- Keep yourself updated with articles and publications related to the industry.
- Conduct market analysis to collect more data.
- Try categorising your data based on different variables (e.g. demographic, gender, geographic) to observe if there are any particular nuances about your customers
Knowing the Right Time to Upsell Your Customers
Studying your market by observing your current customers can unveil a surprising amount of information. From needs that are not met to feedback about certain products, keep a keen and open mind in order to identify hidden opportunities that you can grab in order to make more effective sales.
The key to making an ‘upsell’ pitch lies in value.
If your customer is facing more problems, problems which you can solve or find the solution to, it is a good opportunity for you to try.
For example, interior designers are in the service line of designing and renovating houses. However, as their clients are commonly families who are in the midst of moving out to a new house, they would commonly find themselves in the need of cleaning services, moving services and sometimes, even storage facilities.
Hence, under this train of thought, it is not uncommon for interior designers to offer a more holistic package where these services are included, for customers who are willing to pay more and save the trouble of doing it themselves, or source these services on their own.
After all, when it comes to moving into a new HDB home or relocating to a condominium, these are the many services that a newlywed or family would be looking for. Since these services are catering to the same customers, why not bundle their services together to market it as a package deal?
In the same vein, it is common for movers to either throw in disposal services as a value-added service or charge customers for disposing of old furniture. After all, moving in new furniture often comes with the issue of homeowners needing to dispose of the old one.
How to Profit Immediately from This Concept – Joint Venture
There is a method to take this step further and apply the concept of upselling to joint ventures.
Joint ventures involve partnerships with other companies.
The idea is that companies can share their customer bases and prospective clients, such as in the previous examples of movers, designers, cleaners in the renovation industry. Other related services may include lighting contractors, carpenters or even aircon servicemen. These are home services that are closely related.
That’s the guiding principle behind the joint ventures. By partnering up with companies that offer complementary services up to your vertical, you get to improve upon your suite of services while earning a higher margin by charging your clients for convenience at your one-stop shop.
Know Your Customer Needs and Wants – Offer What They Truly Need
Naturally, over time (regardless of which industry you work in) your business is likely to expand and diversify the range of products or services that you sell.
Some of them will be a hit with your customers while others may fall a little short in terms of reception and sales. In situations like these, it is important that you curate the products and services you offer – based on your existing customers.
While not every single product or service that you sell will become a best seller that reels in millions, it remains vital that you check in on which ones fall under the radar and end up providing insufficient returns on investment (ROI). The importance of being more careful with your product and service selection lies in the fact that items that are not selling well can affect your business significantly in more ways than one. Let the problem grow, and it can impede your business growth seriously in the future.
Having Too Many Similar Options is Not A Good Thing
For starters, if the product or service is not selling well but is still included in your business, although it allows you to offer a wide variety of items, it can often lead to an over the paralysis of options. When faced with too many things to choose from, it becomes more challenging for consumers to make a decision. Oftentimes, as a result, they may even avoid making a choice at all.
Instead of cluttering your offerings with unnecessary variety, it is much more cost and time-efficient to focus on a fewer sets of products. This way, it will not interfere with your existing customers’ decision-making process, you will also be able to devote more of your resources to brushing up and perfecting your current product and service line-up.
While different studies vary on the optimal number of options you should offer your customer, the general consensus gathers around numbers ranging from 5 to 12, depending on what kind of products or services you offer and the industry that you are working in. Of course, it can be extremely challenging to establish a balance between offering only what is needed while meeting your customers’ every need.
This is when being familiar with your market, comes in handy. Rely on the data and understanding of your customers to manage the number of choices you offer depending on the criteria and goals that they prioritise when making decisions about what to purchase.
Maintain Rapport with Your Customers – Cultivate a Strong Bond
Considering the cutthroat competition in every industry, remaining competitive is always a challenge. That is why it is doubly important to maintain a close rapport with your existing customers. After all, they have already made the decision to make a purchase from you – don’t let this chance away and make an effort to build a trusting relationship from there.
Of course, when we encourage you to follow up with your customers, we do not mean that you should bombard them with spam, or only approach them when you have a new product or service you would like them to purchase. Instead, we are asking you to provide these customers with something that adds value to their lives and shows your appreciation for their patronage.
Given the sheer number of other businesses in your industry, it is likely that your customers have a fair number of options to choose from when making a purchase. However, they chose to patronise your store. That is why it is important that you show your gratitude and appreciation. At the end of the day, customers are what completes and propels a business forward to greater heights, right?
You can make full use of a variety of platforms in order to cultivate a stronger bond with your customers. From Instagram to emails and phone calls, build a person connected with your existing customers. When you are releasing a brand new product, package or service, you can update them easily through targeted or customised emails. Keep them updated and part of your family – while it may take time to deepen and grow, maintaining a strong rapport with your customers is one of the most effective ways to ensure increased sales at a consistent and sustainable pace.
Reward Your Customers – Creating a Customer Reward System
In line with cultivating a stronger bond with your existing customers, it is important to thank them for their continued patronage by rewarding them for it. This way, you can build trust and loyalty between yourselves and ensure that even when other competitors offer them similar products and services, you can lower the risk of them switching ‘sides’. In addition, it is much easier to sell to customers who are already purchasing from you and who feel appreciated by your service and gratitude.
A simple yet effective way to reward your customers is to create a loyalty programme. A loyalty programme rewards their customers for their repeat patronage, which will encourage them to do so consistently rather than purchasing from a range of different competitors. You can carry out the programme via a phone application or a physical card. After purchasing a certain number of products, the reward that your customers win can be anything you choose, from a discount to a free add-on item. With an attractive reward, there will be no reason why customers would not want to buy from you.
Encourage Your Customers to Spread the Word – Building a Referral System
While we mentioned at the start of the article that trying to attract new customers is a time-consuming and challenging process, we don’t mean to say that you should avoid doing so at all costs. Instead, how about attracting and gathering new customers… by depending on your current existing customers?
How will I do that? You may ask. The answer is actually simpler than you think – it can be done through the word-of-mouth tactic.
Word-of-mouth is a seemingly simple yet surprisingly valuable marketing strategy. It is not something you can physically control, although you can play up the factors that encourage it.
By encouraging your customers to spread the word to their families and friends, you create new potential customers that are more likely to trust your business and its services because they have heard positive experiences about it.
For instance, you can easily encourage customers to spread the word by
- Rewarding them for doing so through referral codes, discounts and others.
- Hosting competitions and contests on social media platform to promote sharing.
- Encouraging customers to leave positive reviews on your website or social media.
While there are many ways that you can sell more to your existing customers, here are some simple yet effective tips that you can easily employ to boost your sales.
Seek to first understand your customers, maintain friendly relations with them, reward them for their loyal patronage and encourage them to spread the word. Be sincere and genuine in respecting your customers, and they are likely to reciprocate.
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