Savvy business owners know that making your current customers more profitable is just as good (sometimes better) than acquiring new ones. They’re already convinced by your sales message, have first-hand experience with your products or services and are easy to communicate with. At least, that’s the theory. What confuses some entrepreneurs are the specific, implementable steps to actually enhancing customer value. While the exact details will vary depending on your unique business, the process itself is explained below.
The simplest way to make your customers more profitable is by selling to them again and again. Admittedly, this does not work in every market. A barber can only sell as many haircuts as a person truthfully needs. But many businesses have the opportunity to sell over and over to the same people, and all it often takes is the gumption to step up and ask for the next sale.
Don’t hide the fact that people can buy from you again. Emphasize it, give convincing reasons for doing it it and make doing it as easy as possible. A company-wide commitment to selling multiple times to the same people will pay off in spades. This is literally found money – money that already belongs to you and is just waiting to be claimed.
Your customers will never be as profitable as possible unless you have other, higher-priced things to sell them. This does not have to be complicated. If you sell equipment, offer paid training on how to use it more effectively. If you sell information products, offer an advanced version for more money. What you sell doesn’t much matter, so long as you can prove its value to a customer and justify a higher price. In their book RFM & Beyond, Donald Libey and Christopher Pickering offer formulas to calculate how much additional revenue and profit per customer an up-sell adds.
The difference is huge. If your company does not already practice up-selling, start now.
Cross-sells are a similar but somewhat different strategy. Instead of trying to sell a customer on a higher-priced, more advanced purchase, you sell them something that’s comparably priced and complimentary. For example: a “companion guide” to the book you already sold them, or an indoor counter-top grill to go with the griddle they just bought. You’ll be surprised to find how often an existing customer can be persuaded to buy a similar or complimentary product – and how inexpensive it is to make the sale.
Simply calling the customer or sending them an e-mail with the offer might be all it takes.
Of course, you aren’t limited to selling higher or same-priced items as the customer’s original purchase. There are also down-sells: selling less expensive products or services to your existing customers. As with up-sells and cross-sells, the possibilities are really endless. If there are any possible accessories to your main products, these work very well as down-sells. And once someone has bought from you already, the persuasion needed to sell them something that costs even less is minimal.
If you have not yet done so, brainstorm a list of goods or services you could potentially down-sell to your current customers. Train your salespeople or update your website to reflect the availability of these new options.
Partner Marketing offers even more lucrative opportunities for monetizing your current customers. If you truly have no up-sells, cross-sells or down-sells to offer (or even if you do) there are often chances to pitch your customers on someone else’s products or services. Be warned, however, that great care must be taken to do this well. If your customers get the sense that you are just shamelessly pitching to them in order to boost sales, the initiative will fail.
The impression must be created that you are selling them something truly beneficial, something that will make a real difference in their lives and that was hand-selected just for them. Discuss how “exclusive” of a promotion it is, and use phrases like “special offer” or “unique opportunity.” So long as the product does deliver the goods, the effort will add many extra dollars of profit to each existing buyer who participates.