How to reduce marketing costs without sacrificing revenue is one of the big challenges businesses face. Every business needs a repeatable process to bring in sales. Marketing is essential to find new customers and more importantly stay engaged with your existing customers. However, most small business owners spend too much money on marketing with little to show for it.
Based on my years of experience, I’m going to show you how to reduce marketing costs in three simple steps without losing sales.
Step #1. Upsell
Acquiring new customers is expensive and even existing customers require an investment to stay engaged. The best way to reduce marketing costs is to add the most value for every customer with an upsell process.
When a customer buys your product or service, have something to upsell them. This can be as simple as offering more of your product at a discounted rate. A great example of this is when you buy printed flyers online. Many online printers will offer to send you 500 instead of 250 flyers for only 50% more. This upsell is a win-win because it’s more cost-effective for the printer to print larger jobs and the customer gets a great discount.
If you offer numerous products or services cross-selling can be effective too! Cross-selling is when you offer another one of your products at a discount based on what they are already purchasing. Going back to the printed flyer example, if a customer is buying flyers there’s a good chance they’ll also be interested in printed postcards. A discount as small as 10% may be enough to tip them towards this extra purchase.
Won’t upselling or cross-selling annoy my customers? No, not if it’s done right. You want to offer upsells and cross-sells that add value for your customers and create a win-win situation for both you and the customers.
The upsell process helps reduce marketing costs by increasing your AOV (Average Order Value) which means you need to bring in fewer customers to achieve the same amount of revenue. Here’s a great resource to help you calculate your AOV.
Step #2. Downsell
In step one, I showed you how to upsell and cross-sell when your customers do buy. What about when a customer doesn’t buy?
This is where down-selling comes in. This is especially important for new customers. Many times the reason they don’t purchase is because they don’t know or trust your brand.
What’s the best way to overcome this obstacle? Downsell them an item that reduces their “risk.” A great example of this are products offered in sample sizes. They are significantly lower-priced than the regular size and offer an opportunity for customers to try the product.
As an additional benefit, once a customer has spent money on your product or service they are much more likely to purchase from you again in the future. This holds true even if their initial purchase is only a few dollars.
A good down-selling process allows you to move more leads to paying customers. These paying customers are much more likely to purchase from you in the future. The net result is that you are able to reduce your marketing costs because you have a bigger existing customer base.
Step #3. Focus more on existing customers
This is where the real money is made in most businesses. Customers who have bought an item from you in the past are ten times more likely to purchase from you again. When you’re looking at how to reduce marketing costs, this is the best return on investment.
There are two main ways to drive more revenue with your existing customers. The first is to sell more items to past customers. The upsell and cross-sell processes outlined in step one show you how to do this. The second way is to sell customers items more frequently. This is much easier to do if you offer a consumable item like food or a variety of items that complement each other.
Of course, this process works best if you provide quality products, good customer service, and stay engaged with your existing customers.
Marketing for your business doesn’t need to be complicated or expensive. If you’re wondering how to reduce marketing costs, the three steps above will have you well on your way increasing your profits without overspending on marketing.
Looking for an expert to help you implement these three steps and more? I’m here to help you. You can contact me here.