Cross-selling is a marketing strategy that has had a long history of success for brick-and-mortar businesses. It’s something we encounter every day and, most likely, don’t think twice about it. It’s the store that places the toy and its accessories in the same display or the impulse items next to the checkout stand. While convenient for the buyer, the strategy is also very smart business, especially when combined with a keen sense of the customer and what she or she wants or needs. A strategic approach to cross-selling can add significantly to each sale value and sustain increased revenue generation over time.
The same concept when applied online can be even more valuable for SaaS companies. Here’s why and some tips to help you get started.
Why Is It Important?
Building a SaaS business means having to acquire new customers. But, new customer acquisition is expensive. And so, at some point, to sustain the business, you’re also going to have to focus on your existing customers and figure out ways to generate additional revenue from them – aka increase their lifetime value. Strategies for doing that vary and some will cost you more operationally than others. While increasing customer lifetime value is the goal, so is reducing costs. Because cross-selling typically uses products or services already in your catalog, it presents the perfect opportunity to increase revenue with little to no increase in operational costs. Tweet
How To Cross-Sell?
The key to an effective cross-sell is to make the customer feel that you are providing a valuable service. An example is Amazon prompting a customer buying a baby car seat to also add a seat protector for her vehicle. In this case, Amazon is adding value by suggesting something, possibly overlooked, which will protect the customer’s car from damage. In addition to increasing customer satisfaction – and loyalty – the cross-sell adds an extra $20 to the order value. As with the example, the key to cross-selling is adding complementary items that the customer feels they must have.
The following four tips will help you cross-sell effectively.
Know your customer. To effectively cross-sell, you must first know how your customers use your products. What problems are solved by your product and what combination of items provides the most value? The most valuable answers to those questions will come from your existing customers. Monitor shopping behavior, gather feedback through surveys, or reach out personally.
Show them the savings. Offer an incentive for customers to add complementary products by offering a discount. You can phrase it as, “these two items can be purchased together for $$.” Show them that waiting and purchasing the additional item later will cost more.
Make sure navigation is smooth. Test and retest how your website and shopping cart guides customers through the cross-selling process. A confusing or cumbersome sequence of pop-ups will cause frustration and lead to shopping cart abandonment. Additionally, be sure to offer the additional product when it makes sense. For example, don’t cross-sell right before the order is placed. Instead, show complementary products as soon as the customer begins to review their cart, within the product window, or right after they add the original item to the cart.
Try a post-purchase cross-sell. If the customer does not add a product at checkout, all is not lost. Post-purchase cross-selling techniques can be effective, too. Use a pop-up that appears right after the order completes. Make it easy for the customer to add the product to their purchase. Even better if you can do it with just one click. Also make sure to temper the tone of the message, so that it’s less sales and more customer service. Try a message like, “Thank you for purchasing product A. Seventy-five percent of our recent customers added product B to increase ….” Use data to authenticate the pitch or testimonials from previous customers.
An effective cross-selling strategy will not only help generate additional revenue but also build deeper relationships and increase customer lifetime value. Tweet
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