Companies that aim to upsell their existing customers should develop a hybrid message that reinforces their existing relationships while providing an incentive to break the status quo, suggests a new study commissioned by Corporate Visions.
The study was conducted by Nick Lee, a professor at Warwick Business School, in partnership with the International Journal of Sales Transformation.
Corporate Visions previously has commissioned studies on how to shake prospective customers’ status quo bias to persuade them to consider your products or services, noted Tim Riesterer, chief strategy and research officer at the company.
The firm also has explored how to encourage existing customers to renew their relationships, which requires reinforcement of their bias toward the status quo, he noted.
“The latest round of research shows that the upsell dialogue is different, yet requires some of each from these two message types,” Riesterer told CRM Buyer. “There’s most importantly a relationship or partnership reinforcement aspect to the message, but there’s also some provocation involved with getting existing customers to make the change to upgraded solutions.”
Not Quite There
Upselling to existing customers was “important” or “very important” to their ability generate more revenue, said 87 percent of the participants in a recent Corporate Visions survey. Only 60 percent were satisfied with how many customers they were able to sway and how fast they could convert them.
A winning message, according to the report, centers around five pillars:
- Document results
- Highlight evolving pressures
- Share hard truths
- Explain risks of no change
- Showcase upside opportunities
“The best upsell message — as validated by our research — employs some components of a customer retention story, that it looks to affirm and solidify the partnership by documenting the success to date, and identifying the deep relationships that have been estalished,” Riesterer said.
“This provides the positive, relational foundation for sharing evolving pressures and hard truths that are creating the need to evolve, as well as identifying the risks associated with not making a change,” he explained.
These types of messages are environment neutral and would be effective both in a traditional people-to-people selling environment and an e-commerce transactional environment, noted Riesterer.
The study did not involve live salespeople, he pointed out. The participants simply responded to a variety of messages. The study participants included 426 individuals placed in hypothetical business-to-business decision-making scenarios.
The ability to drive sales to existing customers is critical, because of the difficulty in constantly having to build relationships with new prospects.
“It’s always less expensive to serve existing customers than acquire new ones,” noted Paula Rosenblum, manager partner at RSR Research.
“That’s a pretty standard rule of thumb in just about any industry,” she told CRM Buyer.
It can be up to 25 times more costly for a company to acquire a new customer than to sell to an existing one, based on earlier research from Harvard and Bain, noted Cindy Zhou, principal analyst for digital marketing transformation at Constellation Research.
“Existing customers are familiar with the company’s brand, [have built] relationships, and have the process in place to continue to do business,” she told CRM Buyer.
“The key is to build and demonstrate value to the customer, providing them with a reason to continue to work with the company,” Zhou said, adding that upselling a product has to fit the customer’s need.