Upselling & cross-selling: how to improve customer lifetime value
Last updated: May 23, 2023
Imagine that you could only get one sale from each of your customers before they left your company for good. You might get by in the beginning. But over time, you’d become exhausted by the never-ending search for new leads and business.
That’s why it’s so important to invest in customer retention and customer lifetime value. The more revenue you can earn from your existing customers, the less you need to rely on the sales cycle to attract new ones.
Upselling and cross-selling are two vital ways to do this. Done well, these strategies encourage customers to spend more money with your company in an organic, non-intrusive way, while also generating incremental profit for the company.
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That gives you more time and resources to improve the things that make your business great, rather than just staying afloat.
But upsells and cross-sells can just as easily backfire if they’re overly pushy, poorly planned or they don’t promote the right products.
In this post, we’ll explain the importance of upselling and cross-selling, how to create an effective upsell/cross-sell strategy, then give you some tactics to inspire your next campaign.
What is upselling? What is cross-selling?
Upselling is a technique of encouraging someone to buy more products than they originally intended, typically by incentivizing them to switch to a more expensive product/subscription, adding features, or gaining additional content in their basic subscription. (For example, a software company might offer to move you from a basic self-service plan to an enterprise level plan that offers more one-on-one help from account managers.)
Cross-selling is a technique of increasing a customer’s average order volume by selling complementary products or services to them.(For example, a publisher might offer to add an additional subscription to your order for a discounted per-magazine rate.)
How to create a smart upselling and cross-selling strategy
Say you’re flying across the country for a big wedding — and not only was your flight delayed for hours, but the airline didn’t offer any food vouchers or even an explanation of what was going on. Then as soon as you’re finally in the air, the flight attendants start asking you to sign up for the airline credit card, pay extra for food and drinks, upgrade your seat, buy more flights from the airline etc.
Chances are, you’re not buying anything they’re selling. But if you’ve had some time to settle down before getting the hard sell? You might consider shelling out for the airline credit card or an extra flight.
To gain real revenue from your upsells and cross-sells, you need to present the right offer to the right people at the right time. And that takes a bit more foresight than just sending a flight attendant down the aisle 20 minutes after takeoff.
Take the following steps to perfect your upselling strategy:
Upsell and cross-sell at key points in the buying journey
It takes a lot of effort to overcome someone’s reluctance to make a purchase. But once someone’s been convinced to buy, they’re much more likely to add that one extra thing to their order.
Keep this in mind as you build your upsell strategy. For best results, upsell your subscriptions at times when your customers are already primed to make a purchase. That includes:
- Product/publication pages: On pages for each product/publication, promote complementary or related products. (On a landing page for a magazine about manufacturing, you might link to publications about auto manufacturing and transport, for instance.)
- Checkout pages: There’s a reason that every grocery store keeps the magazines, candy bars and sports drinks at the checkout counter. People are more inclined to add to their cart when they’re in the process of buying. So promote related products on your cart and checkout pages as well.
- Order confirmation emails: You can also promote other products in your order confirmation emails. But note that under the CAN-SPAM act, promotional messages can only take up 20% of transactional emails, so keep your upsell message brief (or consider including it in the email header or footer).
- Subscription renewal reminder emails and subscription milestones (6 months, one year, etc.): If someone’s having a good experience with you, subscription renewal reminder and milestone emails will remind users about the value your company is providing them. This puts them in the right frame of mind to consider additional purchases, so it’s a great time to make an upsell. (Note: You can create, automate and personalize subscription reminder emails using Omeda’s subscription management solution.)
Leverage social proof to convince buyers
According to the social proof principle, we’re heavily influenced by the opinions of others — and this applies to our purchasing decisions. If we see other people buying a product, we’re more likely to follow suit — even if we’ve never met them before.
Applying social proof to your upsell ads can give customers the final push they need to learn more. So instead of saying,” recommended articles,” you might say, “ Other visitors have read” or “you might also like,” as shown in our own on-page Content Recommendations:
Upsell quality over quantity
If you upsell random products at random times, your customers will perceive it as a cash grab and get annoyed. Instead, focus on a smaller number of upsells that complement your core products and add value to the customer experience.
Ground your offers in customer data
Your upsells won’t yield real revenue unless they lead each subscriber to the products/publications best suited for their needs. So before creating your upsell campaign, dig into your customer profiles and customer data platform to identify key marketing segments, including:
- what products/publications are most commonly bought together
- what content is most popular among your readers and which articles are most frequently read together?
- If you’re recommending articles to your readers, which ones are most popular? Which have the most crossover appeal between segements?
- what additional content your subscribers are viewing on your website, especially if it’s behind a paywall or meter (if someone’s providing their email address to view articles related to a topic, chances are that they’ll at least subscribing to a magazine on that topic)
- your subscribers’ job title, industry, age/location and other demographic information
- your subscribers’ average order volume
- If applicable, see what sessions, breakouts and panel discussions, and webinars your subscribers attend
This ensures that you’re offering each individual subscriber with the most compelling offer — and helps you generate precious incremental revenue from your upsell campaign. (And on Omeda, you can take in this customer data from every touchpoint, from events and.email to print, then find it in one easily accessible database.)
4 proven upsell and cross-sell tactics
Now that you’ve thought through your pricing and messaging, it’s time to create your offer. Start with these tried-and-true upsell strategies.
Personalized product recommendations
Spamming customers with upsells will turn them away, so you’re best served prioritizing the ones that are most likely to drive sales.
Use your purchase data to identify the products that are most commonly purchased together, then create upsells featuring those pairings. (If you use a CDP, you can easily query this information, then create a new campaign targeting a lookalike audience.)
For instance, if subscribers to your biotech magazine most frequently buy your bio-engineering magazine as well, consider promoting the latter publications to anyone who buys the former.
The purpose of upselling is gaining incremental revenue by incentivizing customers to make purchases they otherwise wouldn’t have considered. One of the most effective ways to do this is through bundling, offering multiple products/publications at one slightly reduced price.
For instance, if an individual subscription is $5/month, your bundle might offer 3 subscriptions for $12/month (or $4 per publication). This introduces your audience to products they wouldn’t have subscribed to otherwise while bringing in more revenue for your organization. So while you’re slightly discounting the cost of each publication, you will offset that difference by the increase in subscriptions (if you’re choosing the right publications to bundle).
“Build your own bundle”
If your customer data is accurate and complete, your curated bundles should resonate with the majority of your audience, But limiting users to a pre-set selection of products can still cost you sales (i.e., if someone likes two products in the bundle, but hates the third, they may still not buy).
“Build your own bundle” packages let subscribers create their own bundle from a selection of products so they get the offer that’s best for them.
This doesn’t just increase the likelihood of a purchase — it also gives you more intel about your subscribers’ interests/preferences. You can use that information to create more compelling bundles — and earn even more sales in the future.
Promoting your new products to your existing audience is a great way to drive momentum for new arrivals while also increasing your customers’ lifetime value.
To do this, highlight new products/publications on your website via personaliizations (these are more personalized website pop-ups). With Omeda, you can customize these messages so they appear only to the most relevant, interested audience. If you’re promoting a new magazine, you could query customers that are subscribed to similar magazines, then distribute the pop-up only to those users.
Lead scoring and automation
In an ideal world, all your customers would be satisfied enough to not only keep their subscription, but add onto it over time. But not every subscriber is created equal. And that’s OK — because 20 percent of your customers will drive 80 percent of your revenue, according to the Pareto Principle.
To maximize revenue, you need to identify those high-value customers, then encourage them to add on to their purchase.
One of our clients — AC Business Media — used our lead scoring solution to identify their most promising customers and leads, based on engagement criteria specific to their business. Their lead scoring model — which prioritized repeat engagement with their webinars, whitepapers, and content — revealed that 15% of their audience were “super users.”
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