A vital component of retaining and growing high-value customers is to implement and execute optimal cross-selling and up-selling initiatives. Otherwise, diminished customer value and increased expense can result from presenting irrelevant and non-specific offers to customers. Customers increasingly expect organizations to understand their needs and be presented with cross- and up-sell offers that match their needs. When irrelevant offers are presented – or presented at the wrong time – the customer relationship can be diminished, along with customer loyalty.
Effective cross-selling also requires a multi-faceted approach that steers clear of common generalizations. One common assumption is that the depth of a customer’s loyalty is highly correlated with the number of products or services that has been sold to them. There are actually many other critical factors to consider, such as the customer’s need for the specific product you are selling.
Many companies do track a customer’s level of satisfaction with a particular product or service and also monitor the perceived value and utilization of the offering. However, companies must also, as accurately as possible, rethink what incremental products and services they are selling to their customers, how they are sold, and how these campaigns will mostly likely impact customer loyalty and financial results.
Critical Success Factors
Consider the Critical Success Factors associated with successful cross-selling and up-selling:
- Sell the right products to each of your customers. In order for customer value to be optimized, products must be linked to individual customer needs and preferences. Products must also be sold at an appropriate price point to achieve both profitability and customer satisfaction.
- Personalize customer communications. Cross-selling and up-selling is optimized when customers being communicated with the right frequency intervals. Over-communication or irrelevant communication diminishes the impact of ongoing messaging and contributes to churn. By ensuring that offers are targeted to specific customers, cross- and up-sell effectiveness and customer loyalty are increased. Identifying appropriate channels of communication based on customer preference is critical, as well as ensuring that messages are highly relevant to the specific audience being targeted.
- Measure cross-selling and up-selling in relation to the totality of the customer experience. It is critical to understand the ROI and payback of cross-sell campaigns. It is important to project response rates and even consider other product lines that may be cannibalized by each campaign. Further, increases or decreases in churn must also be measured, along with longevity and other standard customer metrics (such as MRC, ARPU and ARPC) if optimal results are going to be realized.
Customer Chemistry’s Approach
Customer Chemistry helps companies optimize their cross- and up-sell results by thoroughly analyzing combinations of variables including customer need, product match, channel relevance, and behavioral propensity.
Consider the following scenarios. In the graph below, you will see one approach (marked in blue), in which a company analyzed a cross-selling campaign based on its most profitable product offer. In another approach (marked in green), the company examined a cross-selling effort based on the offer that best fit the customer’s need.
As can be seen, short-term profit decreased dramatically 25% for the population that was cross-sold the best-fit offer. However, customer lifetime was extended and customer loyalty was enhanced. The best outcome was achieved by following analysis that identified a counter-intuitive approach. This example highlights how Customer Chemistry’s approach optimized customer loyalty and life-time-value.
Customer Chemistry draws on proven business expertise, deep industry experience and winning practices in marketing analysis and execution to help our clients generate profitable growth. If you are exploring ways to profitably manage cross-selling and up-selling efforts, contact one of senior client representatives today at 571-643-0840.