Customer acquisition is expensive. And difficult. What if, instead of putting your resources into building your customers base, you concentrate on increasing the amount your existing customers – who already know and love you – spend?
Let’s talk…
Mark Brown, general manager – marketing, Konica Minolta Australia
“From a business perspective, particularly for suppliers, it’s about looking at this from a share-of-wallet point of view to understand how and where you can get more investment. Ultimately, it’s about providing value to help your customer grow.
“There are three key steps to entice customer spending:
- Awareness. This is an important place to start and make sure that your customers are aware of the breadth of solutions your business provides.
- Trust and credibility. Establishing a good, primary, commercial relationship based on trust will build your business credibility, and in turn this will provide you with opportunities to grow customer investment.
- Find the opportunities. Consider the needs of the customer and provide a valuable solution that will help them to be more productive, efficient, and agile.”
William Zhang, Senior Account Executive, Validity Inc.
“Businesses can entice existing customers to spend more by tailoring the shopping experience to them. Consumers are exposed to more brand communications than ever before, and successful businesses know how to cut through this noise by serving their customers content like trends, tips and advice, discounts and offers that they know will resonate, increasing the likelihood of customers engaging and purchasing.
“To do this, businesses must first ask customers for information about themselves – demographic data, but also their interests and preferences, so they can segment their customer base, then personalise communications accordingly. ‘Zero-party data’ is particularly valuable – this is data customers intentionally share and includes preference centre data, purchase intentions, personal context, and how they want your brand to recognise them.
“Care must be taken, however, as trust is built over time. Zero party data can be an asset but asking customers for everything up front can feel intrusive. Allow customers to build their profiles gradually, and you’ll slowly gain their trust by providing increased personalisation.
“The better you understand your customers, the better you can give them what they want – ultimately making them more engaged, loyal and willing to spend.
Paul Hadida, General Manager, Australia, SevenRooms
“Driving incremental revenue amongst existing customers can make a huge difference to a restaurant’s bottom line, especially when considering that customer retention is up to seven times more cost-effective than acquisition.
“To upsell and provide ‘wow-worthy’ experiences on-premise, hospitality businesses can offer upgrades and add-ons like cake or champagne for special occasions, wine pairings, tasting menus or exclusive access to themed menus and events. The same engagement can happen off-premise as well by providing at-home experiences like make-at-home meal kits or chef-led online cooking classes.
“Marketing automation is crucial to drive not only incremental revenue but customer retention. Leveraging approved data that recognises every customer’s unique spending habits and preferences, operators can provide hyper-personalised marketing and tailored offers. For example, a complimentary dessert when a guest hits a spend threshold or a handwritten note from the general manager after they’ve completed three bookings. By doing so you’re not only enticing additional revenue from them but providing a level of service that drives loyalty.”
Matthew Sek, Director, Commercial & Product Strategy, Airwallex
“Getting your customers to spend more comes down to mastering two key areas; the upsell (getting customers to spend more in their immediate basket) and driving loyalty (getting customers to return and spend more frequently).
“For upselling, how a discount or offer is positioned plays a critical role in shaping consumer behaviour. For example, both a 50% discount and a ‘buy 1 get 1 free’ achieve the same profit margins. However, the latter offer sets the customer’s mindset to purchasing double, which in turn increases sales value for the business.
“To drive loyalty, businesses should consider a subscription or commitment-based pricing model. The simplest form of this is a membership (think your gym membership or Netflix account). However, more advanced versions include:
- Paying an annual subscription for access (e.g. a Costco membership)
- Paying an annual subscription for a loyalty program (e.g. $10 per year for perks and extras)
“After customers pay for a subscription, they are psychologically motivated to ‘keep returning’, hence driving more repeat purchases.”
Andrew Griffiths, business strategist, author of Somebody Has to be the Most Expensive, Why Not Make It You?
“One of the best ways that I’ve found to encourage customers to spend more is with smart packaging. This means thinking about how to best combine your products or services, to make the overall package incredible value and far more attractive than if the individual components were purchased.
“To really be successful with this kind of pricing we need to know which of our products and services are valued the most by our clients and which of our products and services are the most profitable. With some smart package engineering, you can sell more, increase profit margins and have happier customers.”
Andrew Cornale, Co-Founder and Technical Director, UnDigital
“Enticing existing customers to spend more comes down to one thing; building relationships that allow you to understand their business and know where you can add real value. An attempt at upselling can work sometimes, and there’s no issue with trying this, but it is a reactive approach that results in short-term success. Proactive approaches will benefit your business and your client while equipping you both for long term success. Building purposeful relationships with your clients allow you to achieve the following:
- Stay top of mind: when they’ve got a new project coming up or extra budget to spend, it’ll be you they think of
- Understand what they need, what they can realistically afford when they need it, and the stakeholders involved
- Know the challenges they’re facing and navigate a way around them
“Having all this information equips you to best serve your client, all while enticing them to spend more.”
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