How to think through cross/up-sell?
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Everyone wants to upsell & cross sell. Especially in India where users perceive your product as “This product does this one thing well & I don’t want to use it for other things necessarily?” - is this the reason why we don’t have super apps, unlike say China?
But brands like TATA are able to sell a car, steel & salt at the same time and interestingly to the same customer at different points in time.
So, can it happen to your brand where you either sell more of the same product or sell a completely new product to your existing customer? This is exactly what we will go deep into today. I want you to pay attention.
Selling more of what you already are.
One way to think about it is to increase usage by adding more use cases for an existing customer. A classic example if how every telecom operator (Jio/ Airtel) tries to sell an OTT bundle (Jio + Netflix) every time a customer buys a new sim card or ports between telecom operators. The idea is simple, as explained below.
Find more “users” with “same customer”
A classic example of this would be Slack, where imagine an engineering team at a Series A company started using Slack and now this company is growing. Now as the company grows, more engineers will be added to slack so it’s penetrating into the engineering ICP while slack, by the nature of the tool will also get into the product, design, sales, and business team at the company.
There are two ways to do this.
One is related to which market you go after - say, imagine you go after only series A companies at first, and as these companies grow, they would need more user licenses. The other way to think about it is can the value of your product grows exponentially when it is used in collaboration with “multiple users of the same customer”.
Let me carry out the Slack example here. The value of Slack increases exponentially when the whole company runs its communication on Slack vs when just the engineering or product team uses it for their internal functions.
Selling a new product/feature to an existing customer.
Now the one way to sell a new product to an existing customer is go the TATA brand way, where they are selling everything from Steel to cars to even refined edible oil. Most of you aren’t selling extremely different categories to the same customer. Most Indian ecosystem consumer/ SaaS brands haven’t really evolved to that state.
I will only focus on “extension feature selling” as a core cross-sell problem statement. For example, Urban company is trying to make a new offering to all its customers who use Urban Company for hair cut & grooming.
The first mistake most product owners make is they assume what they have built as a “cross sell” product is something their existing customers “need” or “want”. You need to avoid this confirmation bias by speaking to your target existing customers and if they have these use cases.
Once you get enough validation, the next line of question should be - what will it take for them to switch from their current product to the new offering you have built? - go deeper into the switching cost; this is going to be your core marketing pitch on the product to cross-sell this new “feature”.
Think of this whole journey of cross-sell as finding the right “feature-customer-fit” (similar to product market fit). That means we will have to do three important things.
First, nail the marketing pitch. Second, pick a segment of existing customers as the core target. Third, ensure your cross-sell feature does what it says and delivers an aha moment to the customer.
Once you have figured out the “feature-customer-fit”, the next step is to be able to monetise. Now the foundations of value creation → communication → experience → capture remain the same, and the classic framework of monetisation as discussed in the full deep dive needs to be applied.
Closing note.
This also means you will apply the 5-step framework we speak about in the monetisation deep dive at GrowthX of who to charge for this feature, when to charge, what to charge for, how much to charge and how to show this feature upgrade pricing.
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