With upselling and cross-selling, you can increase your turnover – even when acquiring new customer projects. Combined with the right performance measurement, you'll find out which campaigns are particularly worthwhile. We show you to get both strategies to work best.
This article is the third part of our series on customer acquisition. To get to know the basics of how to acquire new customers, we recommend you read the first two parts: they deal with target groups & inbound leads and with remarketing & affiliate marketing. You can also download the series of articles as a complete e-book.
Upselling and cross-selling
So you've sold something, with the help of our two previous articles, and won an important new client project. Congratulations! For many agencies, companies and WordPress freelancers trying to increase their client base, that'll be good enough. They sit back and relax. Because what have we been talking about all this time? Converting prospects into leads and then into sales – that's why we're here.
In fact, the moment you've just made a sale is exactly the wrong time to rest. If you want to take your customer acquisition to the next level, you now have additional opportunities. We're talking about upselling and cross-selling, i.e. selling additional services per customer.
Business models and onboarding
Exploiting unused potential
The thing about selling is that you've already done the hard part. You've found someone who likes your product or services, who's already convinced by the quality – as long as your support is doing good job. And you've started to build a relationship with that person.
Do you know that feeling when you buy a new smartphone or computer? And you can't wait to get home and use it? The feeling we get when we've decided on a new service provider is pretty similar. We might just not be so aware of it.
This is the moment of ultimate satisfaction for a customer: He or she has just bought into the dream, reality has not yet set in. What's more, this person has already opened his or her wallet. Now is not the time for you to say, "Have a great day!" - and send the new customer on his or her way. Instead, it's time to ask, "Hey, what else can I do for you?"
Upselling is something we're all very familiar with. When you order a pizza, they offer you an extra ingredient, a half-price dessert or a discount if you switch from a large to an extra-large pizza. These principles are easily transferable to digital businesses. If your agency offers maintenance contracts, for example, and a client places an order for one year, you could offer a discount if they upgrade to two years.
New business models for your agency
If an interested person buys a particular package from you, offer them a higher value model by making it clear what the benefits of the enhanced solution are. For example, a security package that allows your clients to do less themselves, minimize their business risk or simply sleep better.
These techniques require that you don't just settle for a 'simple' sale, however. You must always be looking for more. And, ideally, do consultative selling. This means that you not only offer your services and products, but also ask a lot of questions. In this way, you get to know the needs of your customers in detail.
Another way to profit from customers who've already said "yes" to you is cross-selling. This is another well-known technique that you know from Amazon, for example. Customers order a product and, while you're processing the order, you offer very similar and related items that could complement the product they've already bought.
This works even for services. If you distribute your premium plugin in a kind of SaaS model, you could offer additional add-ons that complement the plugin that's just been bought for further use cases. Or you could offer discounted follow-up services, premium support, interface customization, maintenance services etc.
When you buy a smartphone, the algorithm might throw up a discount offer on a matching case. If you make an online appointment for an oil change, the system might suggest that you also do a brake check. Think about how these examples can be adapted to your business model. Include those services and ideas your customers keep asking you for.
Up-selling and cross-selling can really increase your sales. And remember: the more someone spends in a shop, the more likely they are to return. That person is probably happy to get multiple services from one source with one contact person instead of having to deal with a multitude of agencies and developers.
Another tip: Have a look at the world of premium plugins and themes for WordPress and WooCommerce. On a marketplace like ThemeForest or Envato, for example. You can learn a lot about creative business models from the agencies and freelancers who generate the highest turnover there. As a rule, these can always be scaled up via approaches to up-selling and cross-selling.
Use a newsletter
Once you've closed a sale, your new goal is to nurture that new customer relationship and keep them coming back to your website. After all, this increases the likelihood that they'll contact you again, learn about new service modules or buy another WordPress plugin or theme.
Many companies are successful here by creating a newsletter that offers useful tutorials, information about new products or even special promotions. If this newsletter is well done, i.e. has very high-quality content, the conversion is sometimes surprisingly good.
Example: The newsletter from Raidboxes
The concept of a newsletter may sound old-fashioned. But in the digital age, email newsletters are an important part of the marketing mix for a variety of reasons. Because here you yourself determine which posts are mentioned first and therefore enjoy the highest attention – unlike on social networks like Facebook, where you're dependent on external algorithms.
Using the success indicators of your newsletter (open rates, click rates, conversions, subscriptions and unsubscriptions, etc.), you can also test exactly which content is successful and which is less so. The advantage is that with WordPress, you can compile and send your newsletter very easily at the click of a mouse. Check out our comparison of newsletters plugins for WordPress for more tips. The so-called engagement rate is important here. This is the value that shows the percentage of interaction per measure or channel.
Social media is great for a few things. For people to share their approval of your products with their friends, for example. But when companies directly try to engage with people on Facebook or Instagram, it's not uncommon for the success rate to be greatly improved. Most brands see a 17 per cent engagement rate on social media, reaching just two per cent of their intended audience.
With a newsletter, you can reach only those existing customers or leads who've provided their email addresses with minimal effort. Then your click-through rate will be much higher. Not competing for attention with cute kitten pictures or the latest meme is also a bonus here. Ideally, you use both channels – newsletters and social networks and you use them to promote each other. This way you combine new prospects and target groups with existing contacts.
Affiliate marketing program for existing customers
A clever and potentially lucrative variation on the ideas for an affiliate marketing program we talked about in the last chapter is to start a similar program that's only for existing customers.
Nowadays, everyone has a blog, website or at least spends a lot of time curating their Instagram, Facebook, TikTok or Snapchat. You can reach out to happy customers and get them to promote your products or services. By writing their own short posts or stories about how they liked your performance and service, what the shopping experience was like, what their experience was like and what other products they saw on your site that they'd like to try.
And unlike professional bloggers or other websites and platforms that you could recruit as affiliates, individuals often demand less compensation. You can sometimes recruit them with just perks or token payments combined with coupons. In fact, they'll probably be happy to be considered an "influencer," even if it's a micro-target audience. The bottom line is: if you have customer:inners, you have a certain level of loyalty and likeability - don't be afraid to work with them.
If in doubt, just talk openly with your contacts about what a fair referral model looks like for them. And how much work they have to put into these recommendations. Maybe you can find a cooperation model that offers something completely different in return. Or you can recommend each other, for example on a specially created partner page.
So now you've launched your customer acquisition strategy with a diverse mix of tactics across multiple platforms. And with a variety of approaches. You can see that your customer numbers are increasing. That's all you need to know, right? Wait, not so fast!
While any increase in client numbers is a welcome development, there are some details you should pay attention to. You need to have a robust system in place to not only measure the success of your customer acquisition, but also to analyze and understand the numbers in detail: Who, why, where and when are your new customers converting? If you don't do this, you have no idea whether you're adding value to your business. Or whether your marketing measures are just burning money.
In this chapter we explain what we mean by customer acquisition costs and how they can be measured. We also explain how these numbers tell you in detail how much it costs you to acquire new clients through different methods allowing you to compare the costs with the revenue they generate.
How to measure customer acquisition costs
In the "old" days, companies had to spend money on advertising campaigns and more or less trust that a concomitant increase in sales was due to the campaign. Apart from focus groups and other inaccurate or unscientific methods, they had little way of knowing what exactly made consumers buy their product.
But with today's targeted campaigns, it's much easier to break down the journey from prospect to lead, to sale and on to a long-term customer relationship. Not to mention the opportunities we have through a whole ecosystem of tools and apps to quantify consumer behavior.
Let's start with what goes into calculating the customer acquisition cost (CAC):
- Advertising costs
- Costs of the marketing and/or creative team
- Costs for the sales team
- Costs for the publication
- Costs for technology
- Maintenance of the inventory etc.
The idea is quite simple. You add up the costs for all the above points and put this figure in relation to how many clients you have acquired since implementing your marketing strategy and divide it. So if your agency spends 1000 euros on marketing over a year and acquires 100 clients, the CAC would be 10 euros.
You would typically calculate the CAC regularly, for a fixed period of time e.g. every month. Or per channel, especially when new measures are added. Only then do you know whether new measures are worthwhile or in which channels you should allocate more budget because the costs per new customer are lower there. Such a calculation presupposes, of course, that you record how much time and budget flow into which channel.
This is, of course, a highly simplified description of how the cost of your customer acquisition works. There are many other elements that go into an accurate assessment of CAC. If you have started a new SEO campaign, for example, you should not expect to see results after a short time.
It gets even more complicated when you compare this number with your other costs and the profit you make with each sale. If you spend 10,000 euros to attract 10,000 new customers in a year, for example, you have a CAC of one euro. If each customer purchase brings in an average profit of 10 euros, that's 100,000 euros profit for an expenditure of 10,000 euros. And that's not a bad deal at all.
If your target group is likely to make several purchases per year, even if that means less profit, then your marketing strategy still has an advantage. But if you make less profit with a CAC of one euro, you need to ask yourself a few questions. Starting with where exactly that euro goes.
Understanding marketing channels
Knowing your total CAC is just a start. You can significantly optimize the success of your customer acquisition by finding out what you spend on each of your marketing channels. The basic idea is to break down your spend on each channel. For example, how much did you spend on Google Ads? How much on Facebook Ads? What about blogging and SEO? Or your newsletter? Including all the ancillary costs you have to spend on creating high-quality images, if applicable.
Separate all these marketing costs. The simple but very inaccurate way is to take the total number of customers you have acquired and distribute them across all your marketing channels. Assuming that each channel has done the same amount of work in acquiring new customers. A far better way is to use Google Analytics & Co. to find out which channel was used for the initial contact with new leads and assign the corresponding number of new customers to this channel. However, some people also use the channel with the last point of contact before the purchase. It depends on what suits your business and its evaluation better.
Now you can find out which channels have the lowest CAC. And you can direct more of your marketing budget in that direction. Check the values regularly, because the CAC of a channel can go up or down quickly.
Who clicked what and when
The data analysis of your marketing spend is much more complex than we can describe here in a nutshell. But even a simple calculation is a necessary first step for you to gain more clarity. After that, it's time to take a closer look.
Knowing which specific channels and which specific ads have directly led to sales will help you even more. Let's say you have an e-commerce business that sells physical products. In this case, the conversion tracking of the advertising platforms tells you which pay-per-click ads led to sales so you can measure your CAC directly against revenue.
But even beyond pay-per-click ads, there are a lot of customer analytics tools that allow you to track your paying customers back to their last touchpoint before purchase. If a customer made a purchase after an organic search, for example, you can be pretty sure they bought because of SEO or because of your content marketing.
You can also go much deeper down the rabbit hole and analyze your CAC per marketing channel. Think about what these numbers mean for an interplay between your different strategies. In this interconnected world, no one strategy exists in a bubble. For example, if you have a very popular podcast that relates to your business and products, it's difficult to analyze whether an SEO search was influenced by the listener there hearing about you first. Or whether they searched for you on their own via a search engine.
Nevertheless, it helps to have a solid overview of your numbers. Use the CAC analysis regularly to better calibrate and focus your marketing spend. This is the only way your team can focus on the most effective tasks.
Keywords for WordPress development
An important note: If you use keywords for your pay-per-click campaigns that are related to WordPress development and services, your marketing expenses often increase considerably. These words and phrases are often very expensive in Google Ads & Co. depending on the target market and target group. Keep a close eye on what you pay for these clicks, because they may not be worth it. For example, not if they don't result in concrete leads or sales.
In such a case, the only option is to experiment with other content topics and keywords that appeal to your target groups for your product. Take a close look at our WordPress magazine wp unboxed, for example. We write about numerous topics that are only partly related to WordPress hosting but these topics still lead to sales. In our case, from web design to online law to SEO. Don't forget, here are all the other articles in our series on customer acquisition:
- Target Groups & Inbound Lead Generation
- Remarketing & Affiliate Marketing
- Building Customer Relationships & Customer Relationship Management
- The entire series of articles as an e-book B2B Customer Acquisition Made Easy
We look forward to hearing from you: How can we help you grow your WordPress business? What are your own experiences in customer acquisition with WordPress and WooCommerce? Contact us at any time or book an appointment with our sales team. We'll be happy talk about the topics discussed here in more detail.