In the book Marketing Metrics, the author states, “The probability of selling to a new prospect is 5-20%. The probability of selling to an existing customer is 60-70%.”
That’s where the fairly simple concepts of up-selling and cross-selling come into picture. Though often used interchangeably, there’s a meaningful difference between the two.
Up-selling is convincing your customers to go for a high-end version of the product they are looking for or for an add-on or an up-gradation of the existing ones. Classic example would be recommending a comprehensive insurance cover over the basic version that the customer intends to buy.
Cross-selling occurs when you sell customers offerings that supplement or complement the purchase they have already made, say, when you offer to sale a helmet on purchase of a bike.
AI and Machine Learning conduct in-depth market-basket analysis based on your ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) sales data. Predictive analytics incorporates a series of data mining techniques to arrive at the likelihood of possible cross-selling and up-selling to your existing customer-base with astounding precision and skill.
It helps you gain significant competitive advantage and substantial cost-reduction and an increase in the Average Order Value(AOV) of the product or service that you are offering. When done right it works wonders. When done poorly it can annoy the heck out of people.
Let us simplify these concepts with a classic sales joke that’s been doing the rounds for quite a while –
“A young man from California moves to Florida and goes to a mammoth ‘everything under the sun’ kind of a departmental job looking for an urgent job vacancy they had advertised in the local newspaper.
The manager asks for his prior work experience and the young man says, “Yeah. I did work as a salesman back in California. And I can sell anything under the roof.”
After the usual round of preliminary questions the manager before being off to his chores says, “Well, we would see that for sure young man. You start from tomorrow and at the end of the day I’ll come down and see how you did.”
His first day on the job is done and after the store is locked up the boss comes down and asks,” How many customers were you able to convince today?”
The salesman answers, “One, Sir!”
The manager, regretting over his own decision to recruit him says, “Are you kidding me? Just one sale throughout the day. Our sales people fetch us a good 20-30 customers on an average on any given day. Now tell me how much was the sale for?”
And pat comes the reply, “$101,299.50 Sir!”
Now the manager’s curiosity is at peak. He enquires,
“$101,299.50 ???!!! What the hell did you sell?’’
And the salesman replies, “Sir, first I sold him a small fishhook. Then I sold him a medium fishhook. Then I sold him a large fishhook. Then I sold him a new fishing rod and some fishing gear.
Then I asked him where he’s going for fishing and he said down the coast. So I told him he’ll be needing a boat. So we went down to the boating department and I sold him a twin engine Christ Craft. Then he said he doubted if his Honda Civic would pull it off so I took him down to the automotive department and sold him that 4*4 Pajero.
I then asked him where he would be staying and since he had not planned about it yet I proposed him to try out the camping sleeper tent .I took him to the camping department and he was impressed with our collection on display and bought one.
Then I told him that the experience would be incomplete without a crate of chilled beer, an ice-box and some snacks to complement.”
The manager with his jaws dropped in awe asked in astonishment, “You sold all that to a guy who came in for a fish hook??!!”
“No” answered the salesman , “ he came in to buy a champagne and a cake for his old time buddy as he was visiting him this week-end after a long time to invite him over for his marriage next month. And I suggested him why not the two of them plan a gala bachelor’s party and have some fun the unusual way. And what best than to go fishing and having an adventurous experience under the starry sky!”
Well the above narrative might sound a little exaggerating but nevertheless is a mantra of how cross-selling and up-selling accelerate sales growth!!
Brian Tracy once quoted -“Approach each customer with the idea of helping him or her solve a problem or achieve a goal, not of selling a product or service” and that’s exactly what our salesman at this departmental store did.
Now that’s conventional way of doing business. Let’s fast-forward and see how exactly new-age AI and advanced algorithms can fast-track your conversion rate?
It tracks the products or services your customers browse, view, like or buy and the system recommends other products that are bound to most likely arrest the attention of a particular user via simultaneous and multiple marketing platforms ranging from social media platforms, e-mail campaigns and onsite widgets to foster impulsive purchases.
Amazon has attributed upto 35% of its revenue to cross-sell and up-sell through its “Frequently Bought Together” and “Customers Who Bought This Item Also Bought” features!!
Adopt these practices to polish your selling strategy and you will make a customer for a lifetime and not just a sale!
- Cut down on the options
Too many recommendations distract the customer and the essence of value propositions you try to demonstrate gets diluted and eventually lost. Listen to what the customer wants. Put yourself in the buyer’s mind when deciding what to recommend.
- Value Add
Highlight the relevance and make them visualize the benefits. Make it a win-win situation for both. Sell benefits and not the product. Suggest what best suits them rather than blabbering about a not-so-doing-well product that you want to get rid off the shelves. Do not try to trick them into a purchase that they don’t need.
- Re-define Your Marketing Policy
Strategize and work on the message that you want to convey through your branding and marketing campaigns. Do not celebrate closing a sale, celebrate opening a relationship. Connect emotionally for a long-lasting relationship.
- Adopt Bundling
Create package offers. Announce discounts and incentivize your customers. Craft personalized offers.
- Study Preferences
Segment ads by time\day based on past behaviours and trends. Create targeted lists of past buyers. Use remarketing to target cart abandoners.
- Keep the Price Range in Mind
Do not go overboard and recommend an add-on or a complementary thing which is more than 25% of the primary product they intend to buy.
Let us come together to leverage your experience and utilize our expertise to score a bonus! Embrace AI and Machine Learning to make most out of the inside scoop you have on your existing client base rather than re-inventing the wheel!