Discover the power of upselling and cross-selling products to boost your average revenue per user. By using these techniques, you can create stronger customer connections and increase your business's earnings.
The rise of the subscription economy and the shift towards subscription-based revenue models across various sectors has underscored the significance of customer retention as a cornerstone of sustained business success. Many companies grapple with the dilemma of balancing efforts between customer acquisition and retention.
However, it's crucial to recognize that for a subscription business, maintaining an existing customer is significantly more cost-effective than acquiring a new one. In fact, research indicates that the expense of acquiring a fresh customer can range from five to seven times higher than retaining an existing one.
Statistics reveal that a mere 5% increase in customer retention can yield remarkable profit growth ranging from 25% to nearly 95% over a specific timeframe. The following are a few ways by which you can profit while retaining customers.
Encourage users to switch to more advanced editions with extra features and unique value.
Introduce capabilities that enhance the current offering, catering to the same buyers.
Monitor product usage and charge for actual usage or overages. This method is especially effective as businesses generating even a smaller percentage of revenue from usage-based pricing tend to grow rapidly.
Introduce a separate offering that fulfills a different buyer need from the initial purchase.
Extend the offering to other individuals, teams, or units within the same account.
To execute your upsell and cross sell strategies effectively, focus on three fundamental components:
Craft a pricing structure that encourages value-driven upsells. As customers engage more with your service, they should sense an increasing level of value.
Pinpoint the ideal recipients for your upsell or cross-sell endeavors. Delve into:
Purposeful touchpoints within the customer journey
Optimization of touchpoints for upsell and cross-sell interactions
Adequate allocation of resources for each touchpoint
Utilization of pertinent customer data for accurate targeting
Remember, your pricing strategy is a collaborative endeavor. Identify the key players within your organization who need to be empowered to ensure seamless customer adoption of new offerings. Think about roles like support and global services.
Industries are witnessing a shift from product-focused to on-demand services due to digitization. The subscription business model, replacing pay-per-product, is becoming popular. Explore our concise handbook on Billing, Pricing, and Inventory Management tailored for industries thriving under the subscription business model.
“We achieved better delivery time, reduced delays in pricing and enhanced our execution speed with RackNap.”
Director, Microsoft Managed Services
Automated orders with cross-selling and up-selling capability.
Reduced manual processes and manpower saving.
Strong support capabilities with control in customers’ hands.
Users across 6 continents trust us as we have everything ready.
*Source: Case studies of Technova, Reliance Infosystems, STS
Your express lane to turbocharge subscription business growth. Take the leap today and unlock your business's full potential!