The reason for sharing this case is that the client was suffering from some very common problems, seen in many other businesses by this Business Growth Specialist. They had effectively only one offering.
- There was no scope to upsell, down-sell or cross-sell.
- There was no deluxe version.
- They were working in the dark, suffering a total lack of knowledge about what was going on in their business. There was no clarity. There was no analysed data to help them identify where they make their best profit, and where they make less. This issue is, alarmingly, all too common. Managers have to operate with inadequate accounting systems. Or their systems are just not set up in a way to provide them the kind of analysis they truly require.
If this describes your situation too, there are simple steps to resolve these issues, covered below!
The client happened to be in Financial Services (I use that term in the loosest sense).
How was this problem affecting them? Well, they had effectively a single offering, but it was tailored to the needs of each individual client. Therefore, if facility A is the best fit for a client rather than facility B, that is what they will be sold since that represents the best value for them. There was a Rolls-Royce version, facility E, but that is only sold to those rare people that truly need that higher level of functionality. But because they only offered the right fit solution for any client, there is no bells and whistles premium product, so there’s no scope for an upsell.
There is a token gesture element of slight cross-selling, which gives them the opportunity to get back in front of the client slightly more frequently in case anything has changed, such that they can perhaps refine the service provided a little bit better, but they really do have a major challenge. What’s the answer in that situation?
In my opinion, you have to be really, really good at what you do when in that position, so that you are the dominant player, the natural choice for people who need that particular product or service you happen to be selling, so that you get the lion’s share of that market, even though you have no upsell, cross-sell or down-sell whatever.
Let’s take a moment to demystify the above terms. If you were to visit a car showroom with a particular model in mind, for example a Ford Focus. If then as you explored the various options, the functionality, the equipment levels and how you would use the vehicle, it became clear that in reality you might need, or you might get better value shall we say, from a Mondeo instead of that Focus. That is a classic example of an upsell. It might just be that you went in expecting to buy the standard, not the basic but the standard level and they sold you to a higher spec, possibly they persuaded you that you should go for a bigger engine. It still has the same effect, that they’re parting you with more cash. That is an upsell.
If instead you realised while there that you could not afford to buy the car of your choice new, they would probably suggest that you buy a pre-owned model, which is now affordable within your budget. They are keeping you as a customer, but they’re not parting you with quite as much money as they had hoped, and you had originally anticipated. That is a down-sell.
Oh and while they’re at it, if they then sold you an extended warranty, together with some accessories to go in the car, that is a cross-sell because it’s something additional to what you originally intended to buy. It all makes sense when you put it in those terms, doesn’t it?
If your situation is that you too lack a range of models, you don’t have budget alternatives (pre-owned in the above), you don’t have a deluxe offering, how can you exploit these concepts in your business too? How can you generate that extra profit that comes from having such offerings? Differentiation is the answer, through Innovation, which doesn’t necessarily mean a high-tech advanced design exercise. Further examples and ideas appear in Premium pricing … priceless?
This can be merely thinking through a different process and/or what else you could offer the same customer base that they would value. That you, as a trusted provider, could sell to them, and make a good profit on. Even if you’re buying in and reselling somebody else’s product or service. Now there’s a thought! Or perhaps a way of deluxe-ing what you offer is to come up with a bundle. We are familiar with bundling where you can buy just a PC. But you might be offered a PC with a monitor and a mouse and a keyboard, sometimes even with a printer, and if you add up the individual components it looks as though it’s a very attractive deal for you. That is bundling.
So who else’s complementary product or service could you sell to your customers alongside of and to augment your product or service, that your customer base would value? That you could make a good profit on, and with virtually no additional marketing cost to you? That’s an interesting challenge for you!
There was no measure of profitability on the various levels of facility. Ooops! They knew this was a problem, our session merely confirmed in their minds that this was an issue that needed to be addressed, and quickly. Then there was the ongoing service, going through that facility. How profitable is that? It’s a variable, a moving feast, depending on how much activity the client has over a period of time. How does that impinge on the profitability or otherwise of the service? Impossible to say, with no data to support a decision or an opinion, one way or the other.
It’s a challenge isn’t it? The obvious solution is to start monitoring the data in a better way, then at least they can see how to move forward and hopefully identify who the ideal client or customer would be. That is in terms of which facility they would have, what volume of transactions they would need to have, etc in order to make them a really good profitable client for the business in point.
This is something which can be fixed. In exactly the same way, if you have no measurements going on in your marketing right now, you have no understanding of what is and what is not working well. Similarly if you have no clear view as to who are your better prospects and/or your ideal customers. These are issues which we can address; we might begin with an estimate, then start gathering data to prove or disprove that estimate. As we add more data and refine it so we can identify the biggest problem; you have to start somewhere. If you don’t have any data at all currently, now is a good time to start collecting it.
What if I’m collecting the wrong data, you ask? Well, I’m not sure there is such a thing as “wrong data”! You may realise later that there is better data, which will mean more to you, and help you take better decisions. That will become apparent with the passage of time so that you can then start measuring additional metric points. Pulse Points I call them, because they are measuring the life flow of the business. Very often these are non-financial.
If you would like help with evolving such ideas, please get in touch, either here or by email to [email protected].