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How to use customer data to upsell more: A definitive guide for business owners

How to use customer data to sell more

The goal of any retail business or eCommerce site is to sell as many of its products as possible. However, this is sometimes easier said than done. With so much competition in almost every industry, it can be difficult to wrangle customers. 

The good news is that you don’t need a constant stream of new customers visiting your retail store or website in order to sell your products and make money. In fact on average, for most businesses, between 70-95% of revenue comes from upselling

Why? Because current customers are the easiest and most valuable people to sell to. 

Although upselling sounds complicated, when you use customer data that you have already obtained it is a simple and natural process.

Using customer data to upsell more is essentially about understanding who your customer is, and presenting the most appropriate product for them at that time. 


Understanding customer data

Customer data refers to the information a business or organization collects from its customers. The most common and easily obtainable data includes personal details such as contact information, age, and location. However, it is also possible to gather other insights like individual preferences and spending habits. 

Whilst gathering data might sound like a complicated and daunting task, there are a variety of ways in which it can be achieved incredibly easily. 

An excellent way of getting both personal and demographic details from your customers is by using online forms on your website. Form builders make this process really simple and allow you to have control over every aspect of your form, from the types and amounts of fields you require to the design. 

Spending habits and individual preferences can be slightly tricker to obtain, although loyalty cards and programs are useful when it comes to gathering this type of data. Loyalty cards are particularly useful for retail businesses because they can be used to track customer preferences when shopping in-store as well as online. 

Customer data is incredibly important for your business, as it will help you to further understand your customers and what they want. Gaining insight into your consumers’ needs enables you to improve your overall customer experience. 

One of the best ways of using data to improve customer experience is by integrating upselling and cross-selling through “recommended products”. Techniques such as this are beneficial for both the consumer and the business. 


Understanding upselling

Upselling and cross-selling are traditional merchandising strategies that are used by retailers. Whilst the two terms are often used interchangeably, these techniques do differ slightly and can be used either separately or alongside one another. 

The term upselling refers to the practice of encouraging a customer to purchase a similar, but more expensive item than the one they are considering. Cross-selling, however, focuses on motivating a consumer to buy complementary items. 

What are the benefits of upselling in comparison to acquiring new customers? Essentially, upselling is easier. Marketing Metrics (cited in Forbes) claims that “the probability of selling to a new prospect is 5-20%. The probability of selling to an existing customer is 60-70%”. Furthermore, it is between 5-25 times more expensive to obtain new customers than it is to retain current ones. 

Interestingly, when you retain an existing customer, they are more likely to spend more and purchase from you again. 

Upselling has a huge ROI and failing to upsell could be losing your business money. 

There are a variety of ways in which you can implement upselling strategies; keep reading for a deep dive into using customer data to upsell more. 


Behavioral segmentation

An integral part of upselling involves understanding your customers and their needs; one way of using data to understand your customers better is through market segmentation. 

Traditional methods of market segmentation focus on geographic and demographic factors. This is essentially helping you know who your customers are, where they are from and what age range they fall into. Knowledge of who you are selling to is crucial, but customer segmentation can be taken further to give you deeper, and even more useful insights. 

While traditional segmentation methods place focus on who your consumers are, behavioral segmentation looks at how they behave. Behavioral patterns consider how different people interact with your brand and make purchasing decisions. Furthermore, knowing how a particular customer’s product usage has evolved over time and what different products they have bought are useful when it comes to suggesting alternatives. 

The data obtained through behavioral segmentation can help with upselling for two main reasons: placing priority and personalization. 

It is important to put your energy into the areas of your business that are generating revenue, and therefore the customers that are spending the most money or returning regularly. Segmenting your customers allows you to put your time, money, and energy into upselling to the key segments rather than the occasional customers. 

Customers love a personalized experience! It has become so popular that it is almost expected on any website. However, a personalized experience is not restricted to websites; it is also possible to create a similar feeling in store. A great way of doing this is by using a booking software with inbuilt CRM to keep track of relevant customer information. Behavioral segmentation helps to give each customer segment exactly what they want, meaning your upselling options are more relevant and more likely to entice your consumer to upgrade. 


Predictive analysis

Understanding your customers’ previous buying behavior can be incredibly helpful, but it can also be useful to consider what their future behavior will be. Previous behavior and future behavior are two sides of the same coin; in order to forecast what your consumers may buy next, you will first need to take into account what they have bought, or looked at previously. 

In order to make use of predictive analysis techniques, you will need to look at a range of customer data, such as: 

  • Shopping behavior
  • Past purchase history
  • Shopping frequency
  • Demographics

Essentially, you are looking at how your customers have shopped in the past, in order to determine how they are likely to shop in the future. 

But how is predictive analysis relevant to upselling? If used correctly, predictive analysis can anticipate which customers are most susceptible to upselling. As with behavioral segmentation, the more you know about your customers, the easier it is to market to them and encourage them to upsell. 

Although predictive analysis can be beneficial for upselling, you need to be precise. It is important to be aware of exactly what you want to know about your customers and then look for the information that answers those questions. Narrowing down all the data can be challenging, but it is information you already have access to; take note of the way your customers respond to email marketing campaigns, how they engage in advertising if they have a loyalty card that they use in-store, and their social media activity. 


Upsell in real-time

Relevancy is crucial for upselling. If you aren’t suggesting items that a specific customer would be interested in, they are not going to buy it, making your upselling efforts pointless. This is where upselling in real-time comes in. 

Upselling in real-time is a really effective strategy that allows websites to present personalized and relevant suggestions to specific customers. 

In order to achieve this, you will need to utilize real-time clickstream data from your customer data platform. This will tell you what items a customer has clicked on, as well as relevant information such as price range, ratings, and categories. 

If you are running a retail store, this approach can be adapted and implemented, however, it will need to be altered slightly.  In some ways, upselling in real-time is simpler when a customer is standing in front of you because you are able to ask them about what they are looking for, see what they are purchasing and recommend products you know are similar or perhaps a better alternative. 

This tactic is all about using the customer data you have collected previously to suggest the most appropriate product or offer to the person most likely to purchase it. Upselling in real-time focuses on ensuring the right person comes across the right product for them, at the right time.


Conclusion

If you want your business to not only survive but to thrive in the competitive retail market, it is essential that you make the most of every single opportunity. Upselling does exactly this as it increases an individual customer’s value, and is therefore one of the most profitable techniques for selling to your current consumer base. 

Utilizing customer data is the perfect way to form an upselling strategy, as it takes advantage of the information you have already gathered about your customers. If you are able to harness this information and turn it into relevant upselling suggestions for your customers, you are likely to see an increase in profit.


About Appointy

We at Appointy, help business owners grow and run their businesses with our online scheduling software. This blog was a part of our ‘Manage your Business’ category, where we provide expert tips, resources, or simply talk about the challenges that small and medium businesses face every day. 

If you have any thoughts on this blog, or would like to chat about your business struggles and achievements, let us know in the comments below. 

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