Most businesses today divert their efforts (social media, marketing, offline advertising etc.) towards attracting new customers, but they often neglect the revenue-generating ability of existing customers. Bain and Co. reports that a company’s profitability can increase by 75% if it’s able to retain only 5% of its customers.
Apple is a great example of breeding on customer retention to generate revenue. The Cupertino Company recently reported their Q4 2013 performance, and they have surpassed Wall Street expectations of 31 million iPhone units by selling 33.8 million units, enjoying hefty revenue from loyal Apple fans.
Whether customers are offered add-on products and services or new launch products at discounted prices, upsell and cross-sell marketing requires the right approach, because mistakes translate into loss of customer loyalty.
So how do you convert current customers into extra revenue? Cross-sell and upsell during customer service interactions right?… Wrong. This can annoy the customers because they are already spending time dealing with a product defect. AchieveGlobal’s survey also reveals that 40% of customers were annoyed when employees tried marketing (upsell and cross-sell) during interactions related to customer service.
Some better techniques include:
1. Making an offer/ introduction at the right time
Customers respond differently in different time periods. Continuing with Apple’s example, the company introduced the new cases for iPad Air quickly after unveiling the new tablet, because they know that customers are more likely to respond at the beginning and they may not be able to generate enough sales if they introduced the cases 2 to 3 months later (remember they are also competing with other case makers).
This shows that finding the correct window of opportunity can lead to revenue optimization. Also, this approach can go hand in hand with i2i lead generation, which is a strategy for discovering contacts among existing customers who are most likely to respond to an offer. Companies that specialize in such services apply customer profiling techniques to identify revenue optimization opportunities at the right time.
2. Let customers weigh in
Existing customers are more likely to buy products and services when they are able to make suggestions and contribute to new products that a company makes. Spreadshirt, the company that sells custom apparel, thrives on this strategy. They allow customers to contribute to the shirt designs (and even make their own designs) and feature the best ones on their product pages.
This leads to sales as well as referrals (existing customers invite peers to check out their creations). You can implement this approach with an existing audience by letting them make suggestions or contribute towards a product feature. While you may not be able to develop a site like Spreadshirt, you can get customer feedback utilizing free tools like PollDaddy.
3. Deliver maximum value
You should present the bigger picture to the customer. For example, if you’re a mobile retailer, you can show the customer a slightly used Nexus tablet and a brand new Nexus tablet. The customer can purchase the slightly used device at a low price, but explain to him/her that the new tablet will have a greater lifespan, good finishing and provide greater value.
Maximum value can stand for convenience or something prestigious. You should assist the customer through the process of discovering that by spending only a little additional money, he/she can be happier… with a better airplane seat, free drinks or other similar perks/benefits.
Do you depend on existing customers for revenue? Feel free to leave comments.