You’ve reached your first revenue milestone once a customer makes the initial purchase. But your sales opportunity doesn’t end here — it’s just beginning. While products sold are a great way to measure revenue, there’s so much more potential beyond this initial transaction.
By putting in place cross-selling, upselling, and renewal processes, you’ll be able to improve customer lifetime value and grow your bottom line even more.
Let’s define each process first.
What is Cross-Selling?
Cross-selling is a term that gets thrown around a lot in business, but do you know exactly what it means to cross-sell?
Cross-selling is the concept of encouraging a customer to purchase additional products in conjunction with the primary product. This is critical and very powerful in the subscription business model, where recurring revenue is the goal.
What is Upselling?
Millions of dollars are wasted every year because of the inability of salespeople and other customer-facing staff to upsell effectively. A lack of precise questioning on the value of a product often leads to costly, low-quality purchases that never even get used.
Upselling is a strategy focused on encouraging these purchases through improved and enhanced products, but it can be challenging to pursue. Your first business sale was only part of the way towards financial growth; you must now do everything possible to ensure that customers will return for upgrades and add-ons. Here is where upselling comes into play.
But take note – The idea behind an effective upsell is to build rapport with clients and show your expertise so that they understand you’re suitable for their needs.
What is a Renewal?
A renewal sale, or a repurchase conversation (“repurchase” only if it is the same product/service), occurs when a customer has a question, concern, or issue needing resolution.
The challenge is that customers will likely not come directly to you with a renewal question unless they have some form of complaint, issue, or problem. A renewal discussion often occurs at the right time. There are five primary categories of renewals — based on the date when the existing contract expires –, and each can be handled differently based on the company policy and sales strategy.
For anything you sell (SaaS, recurring billing, etc.), renewal conversations constitute a significant component of any sales strategy.
One Thing in Common
Salespeople are constantly using different strategies to find leads. This can be limiting, though, since new sales reps may not have the tools they need to find leads. Enter outbound marketing: one of the best tactics you can use to reach leads and generate new business. Using this method, you’ll be able to get prospects and stay on their radar intelligently.
The best salespeople always reach out to their leads and existing customers to stay connected and make sure they’re both happy with the deal they’ve struck. The more they build that relationship, the easier it’ll be to find that next opportunity together – an upgrade, an expansion of services, or a renewal.
Sales, like any other profession, is a game of numbers. Hopefully, you already have your sales machine in place and are starting to see sales trickle in for your product or service. The next step is to build a stronger team to handle these incoming sales and help you reach even higher numbers. Renewals, upsells, and cross-sells are highly effective at achieving this goal.