Not only can you sell ancillary services at higher profit, but you create a stickier offer at a new acquisition cost of zero. Ironically, buyers would prefer to buy from a known seller than take a risk with someone new. They are waiting to be sold.
Yet few companies sell ancillary services well. Companies throw away billions every year on unproductive sales and marketing offers instead of being intentional about selling more to existing customers.
Imagine: you always wanted that BMW 5 Series. You research the dealer cost online, visit three dealerships, and drive the lucky salesman down to his knees. You feel great about yourself until the following year, when you experience the nightmare of every German car owner: a flat tire. Lacking the patience to shop, you fork over the $700 and hope it doesn't happen again before your lease runs out.
Here are five ways to extend your product or service offering with your existing customers.
1. Sell them financing.
Square and Amazon are all-in on financing because it's hugely profitable. Armed with data about merchants they control, they can pinpoint opportunities to fund lower-risk companies. According to Motley Fool, Amazon is even in talks with banks about providing check services.
One of our clients, a supplier to printers, started offering printing presses to round out their offering. They soon learned selling financing was more profitable than the presses themselves. It's not difficult to find banking partners who may be willing to lend to your customers while paying a hefty commission.
2. Cross-sell with a purpose.
While just selling more stuff to customers seems simple, many companies struggle to raise their average transaction.
In call centers, emerging technologies prompt agents to offer items complementary to those pulled up on their screens. Artificial intelligence will only magnify such opportunities as systems identify client buying history and demographic data in real time.
Online, astute ecommerce providers are intentional about offering multiple choices for every product or service offering (such as a good-better-best), specifically designed to trade clients up. They often repeat this behavior at the shopping cart with more opportunities to promote accessories.
Companies that rely on cross-selling have systems to track their progress via separate lines on the income statement, key performance indicators and incentive plans specifically tied to such activities.
Finally, to cross-sell more effectively, use exception reporting to identify what your customers are buying and not buying.
3. Provide support or configuration.
Circa 2018, we are in a new world. Companies are not buying heavy, highly customized solutions. They're buying agile, easy-to-configure ones.
In a recent Vistage poll of small- and mid-market business owners (as a contributor to the Vistage Research Center, I helped craft the survey), the software application they were most likely to implement in 2018 was CRM (customer relationship management).
These tools are highly configurable and representative of the types of solutions companies will provide: low-cost, cloud-enabled and easy-to-implement. Yet users will need help from integrators who can configure to suit, as opposed to selling custom development.
4. Offer online education.
Clients love to have access to experts who can solve problems. Creating education is popular online because it's cheap. Creating "how-to" videos has never been easier.
Companies are providing step-by-step guides--often for free--only to upsell them on the value-added content for a fee. For example, there is a proliferation of legal support online for both consumers and businesses that may offer things like divorces or bankruptcy, with limited access to an attorney.
One of our clients created a portal to sell a financial services product, in effect to their own competition (thereby leveraging their salespeople). Then they sold a "certification" so salespeople had more credibility in the marketplace. Certifications are an easy sell because they provide third party validation.
5. Manage provider's inventory.
Providers of new products are often shocked to learn that big-box retailers expect them to manage their own inventory in their stores. But the savvy sellers build a competency in inventory management and then lever those systems with smaller retailers who need the help. This strategy can apply to B2B (business-to-business) as well.
Those companies who are managing inventory may not be able to charge a premium for it, but they can push high-margin products to the right locations at the right time, optimizing their profit.