We all know that temptation is a powerful force in our personal lives. It’s also a powerful force in our professional marketing lives, particularly when one begins to look at distributions of the number of services per household, the number of individual sales per customer, or the number of sales dollars per customer. In Financial Services and many retail services sectors, the number of single service households is far greater than the number of two service households which, in turn, is far greater than the number of three service households, etc. And that’s where temptation rears its insidious head.
As marketers and as managers we focus on that great big, juicy opportunity of selling a second service to all those single service households. And why wouldn’t we? The number and percentage are typically much larger than any other segment so the opportunity is a huge, ripe plum just waiting to be eaten. By definition they are customers who somehow chose to do business with you, so while they might not be advocates, they’re still customers who must have additional service needs that marketers just haven’t yet satisfied. And then the “numbers” temptation…if we could just get ⅓ or even ¼ of those single service households to use a second service, look at the positive impact on our customer retention rates, our retail asset base, and our bottom line.
The problem is that the cost to sell these single service customers a second service is generally pretty steep (you can quantify exactly how steep it is in any number of ways). What we all know to be true is that the cost to do so is comparatively steep especially when compared to the cost of selling an eight-service household a ninth service.
And that’s exactly where we should begin the up-selling effort; namely where it is most cost effective — and that’s not at the single-service level but rather at the eight-service household or the highest level within your organization. Almost no one has all the services or products you offer, so begin from the top down. Eventually if you follow this process, you’ll get to the single service household, which is what everyone wanted at the outset.
By avoiding the temptation to begin with that juicy single service plum, you’ll have done so with not only an eye toward efficiency but also with the knowledge that we can get to them largely because your cost per service sold was well below what you were willing to pay at the single service household level. You’ll have spent your marketing dollars where the cost per new service sold is lowest first, followed by the next lowest and so on until your cumulative cost per new service/product sold is where you want it to be. In effect you’ll be able to go deeper into the customer file, ultimately down to the single-service customer level because you were so successful at the higher services per customer tiers, because the cost per new service sold at the highest number of services per customer was so low.
But temptation is what it is…tempting.