Existing customers are one of your most valuable assets when it comes to company growth and expansion. But how can you best grow the lifetime value of a customer? Upselling and cross-selling are two classic sales techniques that, when used correctly, can have a huge effect on your overall revenue. Here’s everything you need to know about identifying and leveraging upselling and cross-selling opportunities.
What Is Upselling?
Upselling is a sales technique that provides additional value to existing customers to expand their total relationship with you by offering options that are more expensive than the purchase the customer is currently making, or by offering complementary products or services to the existing buying center.
The goal of upselling is to have the customer swap or upgrade their planned purchase for the more expensive option or adding additional products or service, therefore upping the overall value of the order, deal, or commitment.
Examples of Upselling
Examples of upselling include convincing customers to:
- Add an additional offering to their core or initial purchase
- Trade a “basic” service plan for a “premium” plan
- Subscribe for a 12-month service term instead of a 6-month term
What Is Cross-Selling?
Cross-selling is a sales technique that offers services or products that satisfy related needs or wants based on what the customer is already buying, mainly to a different buying center or team.
The goal of cross-selling is to have the customer expand their purchase beyond their planned purchase and into other buying centers or teams, therefore upping the overall value of the order.
Examples of Cross-Selling Opportunities
Examples of cross-selling include offering customers:
- Selling to different entities or departments within the same company
- Offering complementary services like technical support
- Bundled service deals
Which is Better? A Cross-Sell Opportunity or an Upsell Opportunity?
Both upselling and cross-selling opportunities can grow your average customer value and improve your net revenue retention. So which one should you invest your time and resources in? The truth is, it all depends on your business goals and the profit margins of each service or product. However, there is often space to offer both cross-sell and upsell opportunities within your business.
For example, if your enterprise software has a higher profit margin than your premium package, upselling may be the best way to increase your overall customer value. However, if your goal is to expand your sales to new business entities within a company, cross-selling may be best for you.
Why Are Upselling and Cross-Selling So Important?
Acquiring new customers can be an expensive business – according to Forbes, it can cost up to 5x more than retaining and growing your current customer value. Upselling and cross-selling opportunities are essential because they improve your net revenue retention, or the percentage of recurring revenue from selling to existing customers.
By investing in your current customers through these sales techniques, you can increase your revenue in an incredibly cost-effective way.
Upselling & Cross-Selling Best Practices
The key to these two valuable sales techniques is figuring out how to make them work for you. Here are some ideas to maximize the impact of your upselling and cross-selling campaigns.
Upselling Best Practices
Check out these four best practices to improve your chances of successfully leveraging an upsell opportunity.
- Talk benefits, not features. E.g. Upgrading your subscription will provide you freedom and flexibility – not 3 new features available on your software’s mobile version.
- Solve a problem. E.g. Offer a higher-end option whenever a customer is considering a service that they will quickly outgrow (e.g. limited software seats).
- Use social proof. E.g. Opt for language like “customer-preferred” or “most popular pick” to encourage your upsell.
- Create urgency. E.g. Offer a more premium upsell at a reduced price for a limited time.
Cross-Selling Best Practices
Here are four best practices to improve your chances of capitalizing on cross-selling opportunities successfully.
- Discuss added features or offerings that may be useful to another business unit within the company. E.g. Selling the same software that can meet unique needs for two different teams within a company.
- Offer a discount on your cross-sell add-on. E.g. Get 20% off when you purchase a software solution for two of your company’s teams.
- Keep cross-sell cost low (relative to the initial purchase) to minimize objections. E.g. Get low-cost technical support with the purchase of a software plan.
- Show how the cross-sell adds to the utility of the initial purchase. E.g. Demo your software with add-ons enabled to show how they work together to improve the overall experience.
How Can You Identify the Best Upselling and Cross-Selling Opportunities for Your Business?
Increasing your revenue without fielding new business sounds like a no-brainer. So how can you best identify upselling and cross-selling opportunities within your specific industry or business model?
RevSetter is an intuitive customer platform that offers a broad selection of features to help you maximize revenue from your best accounts. These features include:
- Customer Plans: Manage sales efforts seamlessly. Create customer plans, assign due dates and goals, add notes, and track points of contact.
- Company Map & Insights: Understand your customer’s organization and where stakeholders and decision makers are located within their business. Grow your sales across business units and teams.
- Command Center: See the bigger picture and make educated decisions on the best actions to take within your sales pipeline.
Looking to identify new upselling and cross-selling opportunities for your business? Check out how RevSetter can help you grow the revenue of your existing accounts.