5 Steps to Boost the Purchase Rate

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The need for aggressive selling to current customers increases as your customer base hits critical mass. Often, an organization's customer base will rise rapidly over its first few years.


But as it converges on its share of the market, acquisition rates tend to slow, and the organization begins to rely on subscription continuations, yearly product upgrades or sales of ancillary products or services as its main revenue sources. This trend puts added pressure on the marketing and product groups tasked with growing customer value through increased share of wallet or share of customer.


The situation is aggravated when your organization is siloed along disparate product lines. Now you have multiple pieces of your organization fighting for the same customer dollar (or, in the eyes of the customer, for as many dollars as you can get). Complex organizations need a concise direct marketing strategy for speaking with their customers without irritating them and increasing the risk of customer attrition.


As with most DM programs, there are proven methodologies for increasing the effectiveness of your efforts. This article discusses five steps you can take to boost your upsell, cross-sell and upgrade rates while increasing customer loyalty.


1. Obtain a holistic customer view. Though many view this as pie in the sky, obtaining a holistic customer view can be easier than you think. Many organizations invest millions to develop a customer-centric data warehouse that aggregates data across the enterprise. However, you need not fret if you lack the resources to pull together a data warehouse of that magnitude.


An analyst often can create this view in a small-scale analysis database used exclusively for profiling customers and developing marketing strategy. This shortcut method of data aggregation is becoming popular, as it is affordable, fast and effective. It will not satisfy your customer relationship management needs, but a small analysis database can support your customer-focused direct marketing needs.


The advantages of a holistic view are many. The data lend tremendous insight into the dynamics of your customer base; enable development of advanced analytic tools (discussed in step 2); link the disparate worlds of behavioral, attitudinal and geo-demographic (or firmagraphic) data; and provide the data to perform a lifetime value analysis.


2. Use advanced analytics tools. Fortunately for companies that rely heavily on ongoing sales to their customer base as a main source of revenue, these activities generate strong data patterns that a seasoned analyst can uncover easily.


Predictive upgrade models are some of the strongest model types in the industry; the same general power exists for models that predict customer cross-sell and upsell. This power comes from the dynamic of the database itself. With a business model focused on increasing customer value through ongoing sales, patterns emerge after a few efforts. These patterns are detected in the models and can greatly increase the accuracy of your targeting and decrease the number of customer communications you need to send to meet your sales goals.


Cluster analysis is another analytic tool that can drastically increase the level of targeting in your campaigns. It identifies like groups of customers with similar traits. These traits can be used to target offers, messages and products.


For example, a company with multiple product lines can do a cluster analysis to determine what groups of products customers tend to buy together. Let's assume the analysis finds that a given group of customers buys products A, B and C. If some customers in this segment have only products A and C, they would be great targets for product B. Similar analysis can be done on geographic, behavioral or attitudinal data. Findings can be used for specific messaging, product bundling or offer development.


The combination of predictive modeling and clustering is powerful in targeting lists. If you know who you should market to based on a predictive response model, and you know what you should market and how you should market it based on a cluster analysis, you have an excellent foundation upon which to build your marketing strategy.


3. Take a multi-wave approach with front-loaded creative tests. When you market frequently to existing customers, especially if you run programs like annual software upgrade campaigns, control packages quickly grow stale. To combat this, leverage a multi-wave approach to your efforts. If possible, take a multichannel approach.


The first wave of the campaign should contain most of your creative and offer tests. Response rates tend to drop after the first wave, so you get the best information from the initial communication. Once the information gains statistical significance, immediately roll out the winners as the control package in the subsequent waves. Stage the waves so that the information learned in the first wave can be incorporated in the latter stages.


Often, information from a large-scale campaign cannot be leveraged until the next entire campaign, which many not be until the following year. However, this approach lets you leverage the information in the latter stages of the current campaign. By doing so, you can greatly decrease the steep drop in response typically associated with multi-wave campaigns.


4. Recognize the relationship. These are your customers, so do not treat them like prospects. Address them by name and reinforce the relationship as much as possible. To use an old analogy, try your best to be the corner grocer.


Copy should reflect the relationship. Use phrases like "we take your input seriously and incorporated your most requested features into this year's version..." Make customers feel connected to the process and give them a vested interest in the relationship. The deeper that customers feel involved in the process and the more they think their input and needs are considered, the deeper their loyalty to your company will be.


And always give your current customers better offers than you do to your prospect universe. Ensure the price you give them is better than the price new customers receive, and clearly state this in the copy. Again, not only does this strategy encourage purchase, it deepens the relationship and increases customer loyalty to your brand.


5. Establish early-cycle purchase behavior. DMers often make the mistake of continuously increasing their offers during the course of a campaign. Valid arguments exist for that philosophy, but the result is typically a lengthened sales cycle. If you regularly provide increasingly lucrative offers throughout the program cycle, your customers will pick up on this pattern and withhold purchase until the final, best offer comes.


If you take the reverse approach and decrease the value of your offers as you progress through your campaign, you train customers to buy earlier in the sales cycle and increase the revenue you get upfront.


Cross-selling, upselling and upgrading current customers have inherent risks. A delicate balance exists between aggressively trying to maximize customer lifetime value and increasing attrition risk. Unlike pure prospecting, it is critical to keep the context of the current relationship while promoting its advancement.


Though all tenets of direct marketing best practices apply, you must go the extra steps to ensure the loyalty aspects of the relationship remain uncompromised. Target your list, focus your message and leverage your data. Understand your buying cycles and factor in the entire relationship. By doing so, you will raise your response rates while increasing customer loyalty levels.


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