Feb 21, 2012

From the Archives: How to Upsell Loyal Customers

[caption id="attachment_393" align="alignright" width="377" caption="The Small Business Authority"]

[/caption] What were you reading about a year ago today? Every once in a while, we like to go back in time and revisit the conversations we’ve begun. Last year at this time, we were telling readers how to upsell loyal customers. Here’s a refresher.

Does your bottom line need a boost?

Here are the surest tactics to affect profitability. They are designed around the customers who already know you, know your products, and are poised to buy something. That’s one definition of loyalty, but there are others. In fact, there’s an interesting debate on customer loyalty and profitability that is referenced at the end of this article. Before you put into action the ideas included here, you need to think about how you would define your most loyal customers. Let’s say you’ve already collected some data on who your customers are and what they buy. That’s a good starting point for a concept that has marketing magic: CRM. Customer relationship management is a way to leverage everything you know about your customer into the next sale. There’s a lot of software out there that “does” customer relationship management, but remember that CRM is not a technology—it’s a way to manage your business. Use the information you have to understand why your customers buy from you and not from a competitor down the street or on the web. Good data includes what your loyal customers have bought in the past, how long it has been since their last purchases, and which offers they responded to. Once you know your customers intimately, you can offer to provide solutions to their needs, not just a list of products or services. You can provide the solutions via targeted email newsletters or offers. If you field a sales staff, train your staff members to collect information on trends that would interest particular customers. Impress these loyal buyers by knowing why they like you (free shipping? No-hassle returns? Dog biscuits by the front door?) and you’ll make them super loyal. Don’t go for mass conversions. Go for the best few. Regardless of whether your business is brick-and-mortar, online, or a combination of both, you can reach your customers via email. Ask if you can use those email addresses to send them useful information and special offers. A blog is a great way to establish rapport with customers. It gives your business a face and a personality, and it gives you a chance to talk about benefits on a regular basis.

Now, let’s upsell

Upselling can be a simple matter, but it takes some forethought. And it takes an attitude that could be summed up in the phrase, “Assume the sale.” Here are a few ideas to get you thinking. If you walk into a wine store, frequently you’ll find low-key signs throughout the store that are giving you information (“Wine Spectator rated this wine 95”). You don’t find these signs on the bargain bins; just on the shelved wines. The signs offer sales information without doing a hard sell, but they are designed to upsell customers. They’re created with the assumption that the customer is a little intimidated by the selection process but will walk out of the store with at least one bottle of wine. The purpose of the signs is to gently steer customers to make choices that have good margins, will satisfy the customers, and bring them back again. Your website could similarly offer information from professionals or experts. Remember, assume the sale: If the customer is on your website, she is presumably looking to buy something. Give some thought about a way to use experts to address the specific needs of your loyal customers. On your website, just the way you mix products can produce positive results, so experiment. Offer a mix of price points in a category and show them side by side. Face-to-face sellers do it as well. The Apple Store’s friendly, well-trained staff does it exceptionally well. If initial conversations determine that the customer has a $50 budget for an accessory, show the customer the features of the $85 model, then the $70 model, then the $49.95 model. Go best, better, good. You’re likely to sell the $85 product. Understand that when customers are shopping with you, it’s all about the experience (lucky you if that’s the case!), so find ways to enhance the experience. An example: The fine-dining restaurant where the waiter doesn’t just ask, “Does anyone want dessert and coffee?” but instead wheels out the dessert cart and suggests a little something to finish the meal. Extra incentives for high-spending customers are good ways to upsell if you package things strategically (e.g., 20 percent discount on merchandise if you buy a one-on-one workout package at the gym). Or set thresholds to get the incentive: If a customer is poised to buy $85 worth of pet products on your website and free shipping kicks in at $100, chances are he’ll impulsively add another squeaky toy or two if it doesn’t take time to find it. So make sure there are some eye-catching items advertised on the checkout page for $25 (or for $14 and less). Make the experience of shopping with you a little bit special, and the customer will notice. Don’t ask, “Are you finding everything you need,” but ask, “You know what would look great with that sweater?” That’s the foundation of a good relationship with a loyal customer. For additional viewpoints on what defines customer loyalty and how the definition relates to profitability, visit whyloyaltymatters.com.