Retaining and selling more products to existing customers is the holy grail. It provides a much lower CAC1, improves NRR2 and makes sense for the client. Which client doesn’t want less vendors with a more tightly integrated product or a service provider they already know and trust?
To do this, knowing your customer is vital. You should know the following five data points on all your customers and report on them regularly, preferably in real time (use software to automate it).
- How much do they spend on your product/services?
- How many of your products/services do they use?
- How much do they use those products/services?
- How happy are they with you (customer health score or at least NPS)?
- What is the potential revenue you can earn if they used all of your products/services?
Knowing these 5 data points will allow you to segment your database to not only improve retention and customer service but increase your cross-sell3 and up-sell4 potential.
Now that you have segmented your database you need to work out the best way to communicate with your clients.
Other than your normal communication cadence based on their segment (i.e group 1 may get calls monthly and visits quarterly), you also need to be aware when someone slips down a level in their customer health score and act immediately to reduce the chance of churn. Other times to contact clients may be 3 months prior to the contract renewal date for SaaS companies or at regular review times for services businesses (i.e annual).
When it comes to up-selling and cross-selling it’s all about knowing as much about your client as possible. What products are they using now? Why and where are the gaps or improvements that can be made for them? Are they happy with their current vendors? etc.
The key is providing value first to become a trusted adviser and only then showing clients how your additional products or services can help solve their problems or increase productivity.
Important note: If you have a low NPS or your customer health scores are glowing red, you need to fix that problem before you can sell clients more products. If you get really creative, sometimes you can even do both at the same time.
- CAC is customer acquisition cost
- NRRL is the percentage of recurring revenue retained from existing customers over a given time period (usually monthly or annually). It takes into account income from upgrades, cross-sales, downgrades and cancellations but not income from new clients in that period. i.e 100% means your current clients spend the same at the start of February then they did at the start of January. 101%+ means they spend 1% more.
- Cross-selling is selling additional products or services to your current clients.
- Up-selling is selling a higher level of the current service or product the client is already paying