Acquiring new customers is more difficult and expensive than ever. You have less than a 20% chance to sell to someone new vs. a 70% chance of selling to a current customer. That’s why it makes so much sense to upsell and cross sell to your existing customer base. Here are some interesting facts:
- 90% of customers are likely to purchase more than once.
- 60% of customers will purchase more frequently with their preferred companies.
- Repeat customers tend to make larger purchases than new customers.
Getting loyal customers to invest more — in products and services that bring them desirable benefits — is the easier way to boost revenue.
In this article, we’ll take a look at the risks and rewards, and share some helpful strategies for building the lifetime value of your current customer base with upselling and cross selling strategies.
What is the difference between upselling and cross selling?
Let’s start by explaining exactly what we mean by upselling and cross selling. Many people use the terms interchangeably, but technically there is a difference.
Upselling is encouraging customers to buy a more expensive version of the product or service they want. That might mean a new HVAC system that has more advanced features, like quieter operation or the ability to create zones.
Cross selling is encouraging the customer to purchase a related product or service, such as a yearly maintenance contract to take care of their new system or an air purification system to improve IAQ.
Upsell and cross sell: avoiding the risks
The last thing you want is to drive away your loyal customers with the wrong upsell and cross sell approach. To avoid coming across as pushy and self-serving, keep the following in mind.
- Always base your upsell and cross sell offers on your customer’s wants and needs. Doing so helps you build stronger relationships AND increase revenue.
- Be transparent with your offers: nobody wants to feel like they are being manipulated into spending more money.
- Share evidence about the benefits your customer will get by investing in upgrades.
- Time your pitch appropriately. When a customer is thrilled that you fixed their AC so fast, it’s a great time to mention investing in a service contract.
5 ways to grow revenue with upsell and cross sell strategies
1. Pay attention to your customers’ problems
Train every employee who interacts with customers to look and listen for what customers care about most. What problems are they experiencing that you can help with?
To find out, employees need to ask questions and be observant. For example, a customer service rep might hear a customer complain about high electricity bills. She can offer a consultation with a technician who can recommend ways to reduce energy usage.
Field technicians see first-hand what challenges customers face, including problems that customers don’t even realize they have. For example, a tech might see that air quality issues are causing HVAC filters to clog quickly and leading to system performance issues. He might recommend that the customer buy extra filters, and then show the customer how to change them in between maintenance visits. The tech might also offer information about air purification equipment.
2. Offer a range of options for equipment and contract purchases
Even if a customer has told you how much money they are prepared to spend, always offer them choices. Whether it’s a replacement system or a service contract, you can propose Good, Better, and Best options at a range of price points. Be sure to explain what benefits your customer will get with the higher priced options, and why those options are a good investment.
TIP: Always offer detailed and transparent pricing, so people understand exactly what they are paying for.
Learn more: Creating Proposals for HVAC Maintenance Contracts
3. Offer add-on services
For maintenance contracts, contractors often bundle basic services to make it easy for customers to compare services (and prices). However, don’t neglect the opportunity to offer other services the customer might need, such as coil cleaning and duct cleaning, as add-ons.
Make sure your proposal includes information to educate your customers about the value of those additional services.
4. Make customers aware of your entire line of products and services
Make sure your loyal customers know about everything you do. Even if they don’t need it now, a time may come when your customer will need a new product or service that you offer, and you won’t want them going to a competitor just because they don’t know you offer what they need.
One of the easiest ways to do this is to send a customer newsletter periodically. Use it to let customers know about new product and service offerings.
During the pandemic, many HVACR contractors expanded their businesses by selling indoor air quality products and services. If you did so without actively promoting these new offerings to your customer base, you are missing out on an opportunity to upsell and cross sell.
Learn more: Customer Newsletters for HVACR Business
5. Incentivize employees
In our business, everyone who interacts with customers has an opportunity to sell. However, not everyone is naturally motivated to do so. It’s up to you to make it worth their effort.
Increase your revenue by incentivizing and rewarding your employees for their successful efforts to upsell and cross sell.
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