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How to Increase Profits From Your Existing Clients

upsell

As an account manager, your most important priority is developing a trusted advisor relationship with your client. Although some of that will come from genuinely empathizing with her, when you achieve the goals you both agreed to, listen to her, co-collaborate, and educate her, you earn her trust, gratitude, and respect. If you own a small agency, we’re betting that you (or your principals) wear this hat as well.

Your next priority is to improve each client account’s profitability. Why? Because it’s far easier and less expensive to get more business from a loyal client than to find and close a new one. Acquiring a new client can cost four to 10 times as much what it costs to retain an existing one. (This is a major reason why strong and strategic account management is so crucial to an agency’s success.)

Over time, as agency teams become more efficient, honing workflows with a client, profits typically improve marginally. The greatest profits come from expanding the work you’re already doing for a client -- whether you upsell her on a new campaign for a different persona or cross-sell your services to another division in the same company.

These opportunities are all around you, every day. It’s why the best account managers become experts on their clients’ businesses and industries. This makes it easy for them to have informed conversations where they add value, having earned the right to ask clients what could be otherwise perceived as intrusive questions. Bigger companies will obviously have more opportunities, especially for cross-selling across divisions, but even with the smallest of clients, opportunities are just waiting to be discovered.

Consider Your Timing

One of the very best times to upsell is that moment when your new client has agreed to the contract but hasn’t signed it yet. The principle behind McDonald’s “Do you want fries with that?” can be applied in a B2B scenario fairly easily. If you’ve done your homework and researched the company for all the challenges and opportunities your client faces, along with his resources and alternatives, then coming up with add-ons is pretty straightforward.

For instance, many agencies are hired to improve lead generation for their B2B client with the assumption that if there are enough leads, the sales will follow. Meeting that goal (leads) is the basis of your contract. But what if sales don’t happen? How will that impact your relationship with your client? Do you think she’ll renew the contract? Do you want to take that chance? 

What if you discovered during your investigation and analysis of this company that the marketing and sales departments barely speak to one another? What if you find out that the sales department hasn’t defined what a “great” lead is? There’s your first upsell opportunity: Facilitate creating a sales and marketing service-level agreement.

What if you also find out after a few weeks that there is no disciplined sales process or that the one the sales team is using isn’t really working all that well? There’s opportunity No. 2: Bring in your sales partner to develop and tweak the right process and train the sales team.

Six months later you see that this company has been getting a lot of negative press. And that half of the press comes from the CEO who is obviously flustered by the media and mouths off defensively. Opportunity No. 3: Bring in your media relations consultant to work with the CEO.

Be Your Client’s Key Resource

You don’t have to have all the services in-house. That’s irrelevant. Your client wants a relationship with someone she can trust, who looks out for her business, and who works hard to make her business successful. She doesn’t care if your solutions involve employees, contractors, or alliances. She only cares that her headaches will be gone when she turns to the one person who always hands her the aspirin -- and hopefully, a solution. She won’t need to bring in other vendors because you’ve had the foresight to anticipate what she needs and present her with solutions just when she needs them. 

Consider these sales triggers that signal it is a good time to upsell your client:

  1. Sales are up -- do more of what’s working while it’s working
  2. Sales are down  -- overall, division, or specific product or service
  3. Stock price is down
  4. Customer transaction value or lifetime value is down
  5. Product, service, or support issues are increasing
  6. Channel churn is high
  7. Customer churn is high
  8. Inventory turn rate is getting longer
  9. Company is expanding, changing, or reducing its distribution channels
  10. Company is repositioning itself 
  11. Company is opening or closing its facilities
  12. Company is adding or reducing products or services
  13. Company is expanding or reducing its geographic reach
  14. Company acquired new technology or firm
  15. Sales complains about lead quality
  16. Sales rep turnover is growing
  17. Sales is implementing a CRM
  18. Marketing and sales aren’t working well together
  19. Marketing and IT aren’t working well together

Depending upon what services your agency offers, develop your list of the signs to look for that match the solutions you offer. Your list should be more specific and unique to each client. You may discover as you do this more intentionally, that you may need to expand the solutions you offer to grow your agency and its profits.

Don’t Forget About “Down Selling”

Sometimes a client wants what you’re offering, but he can’t afford your add-ons. What do you do then? Here are some options:

  • How about different payment terms? (e.g., monthly instead of quarterly, discounts for early payments, or cash payments, etc.)
  • Referral fees (or discounts) for endorsed introductions to other clients who sign with you
  • Can you reduce goals?
  • Can you extend goal dates?
  • Can you reduce the scope?

Your client can always increase her investment as your work begins to deliver the results she needs, which will hopefully improve her company’s cash flow.

Make Upselling a Part of Business

Identify which accounts have enough resources to afford an upsell (e.g., money, internal labor, data). Up- or cross-selling needs to be done responsibly and with respect; otherwise, it could backfire.

In those accounts, make a list of what upsells you see they need and note which ones your clients are aware of and have expressed anxiety, urgency, or both.

Prioritize those accounts and evaluate each upsell or cross-sell based on:

  • Results value to client (e.g., $X sales, $X in hiring costs, etc.)
  • Degree of urgency
  • What you’d charge for your solution

If the value to the client isn’t far more than what you’d charge, you need to either adjust the solution to make it worth it or ignore it unless there are intangible benefits your client values even more highly.

Make looking for opportunities and time spent actually selling to upsell or cross-sell every week. This should be a priority. 

Add Value -- First

Upselling and cross-selling are two of the most effective ways to increase your agency’s profitability.

Most experts agree that the two should represent about 30% of your company’s revenue, with 70% coming from new business every year. But use both with caution. Just because there’s an opportunity to upsell doesn’t mean it’s going to add value for your client or profit for your agency. Use those opportunities strategically, so they result in big wins for your client and you. Pursue them tactically, and you could get mired down in work that takes all the profit -- and the joy -- out of your business.

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