Many businesses are missing a trick, and it’s a simple trick.
A light bulb moment
I recently spoke with the owner of a small company who sold hardware products (B2B). They recently introduced a new range of cleaning and janitorial products but had failed to gain any traction.
I posed a simple question: “how many of your existing customers have bought your new range”. There was an instant light bulb moment because, in fact, none of the existing customers had. The company had simply failed to address their easiest opportunity.
In fact, if after trying to sell to those customers they had failed, they could ask their loyal customers why they weren’t attracted to the new products. You could try using an online survey for this.
Take a structured approach
All strategies and tactical plans need both structure and a way to measure their success. Here is something you can use, called Attach Rate analysis.
The Attach Rate
Usually, this measures the proportion of customers who buy Product B because they bought Product A. I am not talking about an up-sell product (like selling a pack of bolts with a set of spanners), but a distinct ‘other’ product in a different sales cycle (like selling workshop cleaning products to a customer who had previously bought spanners).
The attach rate is usually expressed as a proportion like 1:5 (i.e. you sold 1 secondary product to every 5 customers who bought a primary product). Sadly, many small businesses have a poor attach rate. The result is that most customers buy 1 product only, or only buy from one category of products only.
You can more visually show the same attach rate in a simple chart (see example below).
It is undoubtedly easier (5 times easier, most say) to sell to an existing customer than to a new one. But many businesses fail to do that. Oh dear.
What to do
If you are supplying everything you possibly can to every customer, don’t bother reading the next bit. But for most SMBs, you’ll be reading on…
A simple approach using an Attach Rate analysis:
- Categorise your products and count how many products/categories are bought by how many customers.
- On a per-customer basis (or per segment, if you’re a large company), map out what other products or categories would best fit that customer/segment.
- Develop an up-sell strategy for those that only buy 1 product (as this is probably your biggest potential upside), and go sell!
- If the customer fails to buy, just ask them why. Or you could use an online survey for this – because you will tend to get more honest feedback.
- Try to maintain the same number of customers but strive to equalise the height of the bars, which should represent a significant revenue gain.
How you approach item 3 (go sell) is up to you. It might be a 1:1 sales call, or it might be a flyer in the box, free offer, discount promo, etc. Whatever works for you. But just try it.
An Attach Rate can be shown is a simple spreadsheet and chart. The example shows that 50 customers buy 1 product, but only 5 customers buy more than 3 products.
In summary, unless you only sell one product, you should design a sales plan whereby every customer buys multiple products.
It’s common sense really, but an “Attach Rate” analysis is a simple way to manage and measure your success. Although increasing revenue is really the important indicator that you are succeeding.