Every business has the end goal of increasing their revenue. Whether you’re a solopreneur or a small business owner, no-one wants growth to be stagnant or even worse to decrease. So how do you go about achieving this? To make things simple; there are three key ways that you can look to grow your revenue:
- Increase your customer base
- Increase the amount each customer spends with you on each order
- Increase the frequency customers purchase your product or service
Most people will focus on number one to increase revenue, building up the customer base. However, upselling can be an even more valuable tool when it comes to improving the bottom line.
So, what does upselling involve?
Upselling is the simple practice of selling more to your existing customers. This could mean increasing the frequency with which they purchase from you, or getting them to order in larger quantities. Either way, the aim is to get your existing customers to increase the amount of money they spend with you.
This post will look at four of the ways you can reap the benefits from dedicating more time to upselling.
1. An easier and more cost-efficient selling method
Generating new business from new buyers is just as hard as it sounds. From finding qualified prospects and relationship building to selling each individual product; new business development is not for the faint hearted. Completing these steps takes not only time but money; and even then, there is no guarantee of success. When you look closely at the time and cost involved you must question the value of acquiring new customers vs. focusing on your existing ones. According to Harvard Business Review it’s approximately five to 25 times more expensive to acquire a new customer.
To upsell to your existing customers you need to view the “relationship” as long term. Plan ahead and visualise how you can leverage the relationships you’ve built to maximise value over the long term. The longer they remain your customer the more chance you have of upselling to them.
Out of your existing customer base it’s highly unlikely that any of them have purchased your full line of products and services. Chances are that early on in the relationship they made a small initial purchase to “test the waters” and have slowly increased their purchases over time. If this is the case there is more than likely ample opportunity to continue selling to this customer, what you need to do is find where those opportunities lie.
2. A more profitable approach
From a bottom line perspective, it makes economic sense to focus more on upselling as overall it costs you much less. Existing customers don’t require as much marketing spend and require less time interacting with sales. As the old adage goes, time is money, and seeing as upselling can result in a better bottom line, it’s a factor that any business should take into consideration.
Let’s break this down with an example. Imagine a solopreneur with an online business who has sales of $120,000, Cost of Goods Sold (COGS) at $50,000 and Marketing, Sales and Admin expenses of $60,000. Simple math will tell you that they have a gross profit of $10,000. However, what would happen if they increased sales to their existing client base? Let’s say sales increased to $140,000, which in turn bumped up COGS to $56,000. Now seeing as the sales were to existing customers there is no further marketing, sales and admin expenditure. Breaking out the calculator will tell you that the new gross profit is $24,000, a nice increase through upselling to existing customers. Not bad at all!
3. Customer experience is the differentiator you need
By paying your buyers more attention and love, you in turn gain a better understanding of their needs which better enables you to provide items that work well for them. For example, knowing your customer is a vodka lover, you can make the drink better by offering the ability for a customer to upgrade their vodka martini from rotgut well vodka to a premium vodka. As a result, you actually improve the customer’s experience and they will be happy to pay you more money for it.
The key to selling is to listen, not talk. Understand the buyers needs and plan out how you can solve them. This creates long-term value that is mutually beneficial for both parties.
Your aim is to get buyers to view you as a mutual colleague as opposed to a sales rep. If done well the buyer will be appreciative of your guidance and support, meaning they are more likely to remain loyal and continue to purchase from you.
As you can see, upselling is a win-win situation for both parties. If you’re not already doing it then you’re leaving money on the table, and at the same time, not serving your customers to the highest level. You’re in fact doing them a disservice for not offering the best experience possible.
Ready to boost revenue and your customer experience with upselling? Check out this exclusive FREE 90 minutes training by Russell Brunson (click here) on how you can include upsells in your business and boost sales by an extra 540% with his secret funnel strategy.
If you’re thinking this doesn’t apply to your business as there is nothing you can upsell your customers then I’ll have to say that you’re not thinking hard enough. If you want to be proved wrong and maximize your profit, then go watch the training now.
It was super helpful for me, so I wanted to pass it along to you for 100% FREE. I don’t know if Russell will ever take it down, but I’d recommend you watch the entire presentation while it’s still available.