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The Art of the Upsell/Cross-Sell

Pat F, Guest Author

Apr 3, 2018 @ 4:00PM 4 minute read

As we've seen in the article 7 Ways to Guarantee Customer Loyalty, keeping the customers you have is far less time consuming, requires much less time investment, and eliminates much of the stress of trying to get new ones. Studies have shown that it's 7x more expensive to get a new customer than to keep an existing one, and the probability of selling to a new customer is 14x higher than trying to sell to someone new. The evidence is quite clear: investing in customer retention strategies will give you much more bang for the buck and help ensure long-term, sustained business for you.

We've looked at a variety of ways to keep your existing customers happy and reward them for their loyalty, but a particularly effective way to maintain a longstanding relationship with customers is to increase the amount and type of services you can sell. This is the art of cross-selling and up-selling, where you identify complementary services and products that will improve the customer experience and increase the value you can offer them.

Think back to every time you've ever been asked, "Would you like fries with that?" THAT'S all about selling more, in context, and for more value, and it's as common in business as sending an invoice.

Effective cross-selling and up-selling will provide a tighter bond with your customers because doing it effectively puts you in a position of being a trusted advisor. It also increases the amount that customers will spend on your services over time because it gives you an opportunity to educate them on the wide range of things you can do for them. When done right, this type of selling and servicing will get increase customer’s likelihood of calling upon you when services are needed.

Let's think about the distinction between the two types of selling. When you cross-sell, you give customers additional products or services to the ones they are originally looking for. It might be similar to what Amazon does when it constantly tells you, "Customers who bought this product also bought this OTHER product", although, for those in field services, it could be done during service calls and in marketing collateral (according to Amazon, recommendations like this increased sales by as much as 30%). While the services you market during cross-selling are relevant to your customer's needs, they may be a bit different from what the customer originally engaged you for. For example, if you were hired to clean carpets, this would be a good opportunity to explain that you also clean drapes, how effective you are at cleaning them, and how adding a drape cleaning service to the carpet cleaning service will garner them a bundled discount.

Up-selling, on the other hand, is all about increasing the overall amount that a customer spends for a particular service. The idea here is that after you have engaged with the customer, you find ways to sell more of the same service. You have to make sure you are smart about pricing so as not to be a turn-off, but it's an effective way to get the customer to buy more while they're already committed to working with you. Let's look at the carpet cleaning example again. Maybe a customer has hired you to clean the living room carpet because it has a stain; this would be a good time to ask, "When was the last time you had all your carpets cleaned? Since I'm here and have my equipment, I could do the entire house for a discounted rate."

What Are You Selling?

It's important that you and your employees know the context for what you sell. First off, you should recognize that there's a difference between selling products and selling services. If you are a carpenter hired to build cabinets for a customer's kitchen, it would make sense to use your expertise to advise a better quality of wood than what the customer originally wanted. It may be that they chose their wood based on price alone; you can offer them a good deal on a better quality of wood that will actually last them for many more years and will endure much more wear and tear. That's a great way to up-sell with materials.

In that same example, the customer might request your services to deliver the cabinets unpainted; they want to save money by painting it themselves. You could up-sell them by offering to paint the cabinets before you install them - you might explain that, while they might save a few bucks doing it themselves, they'd need to paint a lot of cut-outs and they will need to purchase or rent an expensive spray paint machine that will eat into whatever savings they have to realize. In this case, you can work with them to come up with a mutually acceptable price. You get paid more, the customer feels like he got a deal, and you have an opportunity to demonstrate a broader set of your services.

Knowing what you are able to offer, and the appropriate times and places in which to offer them is critical to customers trusting you.

When, Where, and How to Up-Sell and Cross-Sell

Have you ever heard a good salesman use the acronym, "ABC"? It means, "Always Be Selling," and for many, it's a behavior they live and breathe. You should not do that, however. Look, you want to sell more goods and services, but if you make a pitch every time you see your customers, it'll just become annoying and that's a sure-fire way to lose business. It's also disingenuous and frankly can border on being sleazy if you are just trying to constantly sell more, more, more. You should be ruled by the notion of providing value, not just getting a bigger invoice.

Much of the time, you'll be hired to do a job, and upon completion of that job, you're done with that customer for the time being. That's just basic business. But there certainly will be times when you see an opportunity to offer additional and/or complementary goods or services, and when you do, you should be jumping at the chance. To do that, you need to know your selling points and their distinct value.

Another critical aspect of up-selling and cross-selling is to know your customer. Understand their needs, and have a sense for their budget. Trying to cross-sell something that costs 3x the price tag of the original service is way out of whack and will be a turn-off. A good rule of thumb is that anything you sell as an additional product or service shouldn't exceed the original price point by more than 25%. If you go much beyond that, it becomes too big in the customer's mind and can become an immediate "no."

Up-Selling, Cross-Selling, and Intelligence Gathering

Every time you attempt to up-sell or cross-sell, you're going to learn something about the customer. You'll get smarter about their likes and dislikes; you'll come to understand what they value and what price points make sense for them. A good business person will use every up-sell or cross-sell situation as an opportunity to gather intelligence about the customer.

It would make good sense to catalog that information and use it to get smarter about how you provide services to that particular customer. You'll start to understand if your customer wants a great bargain, or if they like convenience. Perhaps they like to negotiate, or maybe they totally recoil when you even bring up additional services. What's important, however, is that you're engaging the customer and in so doing, you're helping navigate the future of your relationship with them so you can provide better and more tailored services for them, and they can come to trust you.

Some businesspeople are reluctant to engage in up-selling or cross-selling, but these are effective ways to retain customers and generate additional revenue. By offering additional and complementary products and services in an appropriate context, you can demonstrate value, capability, and your ability to be a trusted advisor to your customers.

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