Imagine if your hardware revenue dropped by 12% year over year. Ouch!
Continue imagining: what if, at the same time your hardware revenue dropped, your total revenue grew year over year?
This is exactly what happened at Apple in Q2 2019. While the cash-cow iPhone business dropped by 12%, the total revenue actually grew!
How did this happen? Apple got serious about cross selling additional products and services to its existing client base:
- Apple Watches that extend the functionality of its core product, the iPhone
- Apple Music, News, and Game subscriptions, along with third-party subscription services from which Apple gets a cut of the revenue
- iCloud-hosted content-storage solutions
- Apps and applications
In addition, Apple also continues to quietly grow its computer market share.
Two Ways to Grow Revenue
If you’re looking to increase your revenue (and who isn’t?), there are only two methods for going about it: go after prospective customers, or cross-sell additional products and services to your current customers.
Since I started as a sales rep for Lanier in 1993, our sales-focused industry has focused on landing net-new business. We pound the streets, close a deal and move on to the next one. Most clients never hear back from us until the lease is expiring or Juice flags that they’ve had too many service calls in a 30-day period. This needs to change.
If Apple became enamored by its success in the iPhone business and only focused on getting net-new market share from Samsung, its stock would be swirling down the toilet right now. As smartphones become mature products, the trend toward lower average selling prices will continue. The copier world is no different—hardware revenue and margins will continue to erode.
We can take a cue from Apple: cross-selling is the key to stemming revenue decline.
As I work with dealers helping them develop revenue-growth strategies, I notice that most dealerships focus intensely on growing net-new, while cross-selling has more of a “when-we-get-around-to-it” attitude. While net-new business will always be a critical part of our industry, it’s time to stop playing around with cross-selling and get serious about it.
Most dealerships already have a portfolio of products and services to cross-sell that are similar to Apple’s. Just as iPhones are the core product of Apple’s product line, A3 MFPs represent the majority of most copier dealership revenue.
Look at the parallels between Apple’s cross-sell opportunities and our industry.
While there are many similarities between Apple and our industry in terms of cross-sell opportunities, the differences become evident in the results.
While most copier dealerships still derive over 80% of business from office A3 copiers, Apple now gets more than 50% of its revenue from iPhones. This past quarter, iPhone accounted for 50% of Apple’s overall revenue for the first time in over a decade. Yet the company continues to grow.
What about your dealership? Can you see a world in which A4 MFPs are less than 50% of your revenue stream? If not, you’re likely going to see your revenue decline year over year.
The interesting thing about Apple’s cross-sell strategy is that it helps lock in its hardware business. As an Apple Watch owner and subscriber to Apple Music, it would be hard for me to leave the ecosystem. I’d have to buy a new watch and somehow figure out how to move my playlists to Spotify or Pandora. That’s too much work and expense. So, when my iPhone lease expires (yes, most of us lease iPhones just like copiers), I will likely renew with the latest iPhone.
What Does a Serious Cross-Selling Strategy Look Like?
Building a serious cross-selling strategy takes intention, consistency and management focus. Just like with Apple, the initial revenue boost may seem small. However, over a few years, these new revenue streams could be what saves the company from tragic decline.
This summer I’ve been writing a new book, “Revenue Growth Engine.” It explains how sales and marketing can work together to drive net-new revenue and cross-sell existing clients. As I’m writing, I’m gaining a lot of clarity on what it takes to cross-sell.
The Key: Focus on Customer Experience
“Undercover Boss” is one of my favorite TV shows. I love putting myself in the CEO’s shoes, wondering what they’re thinking when they’re being taught by one of their employees how to serve a customer.
What’s it like being your customer? If you spent $50,000 on new copiers with your dealership, how would you feel?
What happens in between the time someone gets the new MFPs and the lease renewal? For most customers, the delivery driver leaves, the rep shows them how to push the big green button and then they don’t hear from the sales rep or the dealership for 2.5 or 4.5 years, depending on the lease term.
Sure, you may provide responsive customer service when something breaks. You may proactively replenish supplies and remotely read the meter. You may even have an open bar at your annual open house. But what else are you doing?
The key to cross-selling is to evaluate the “in-between” years. What can you do during the lease term from a sales and marketing perspective?
Sales Role: Client Management
Sales reps need to manage their client base. In “Selling From the Heart,” my podcast co-host and good friend Larry Levine shares his strategy for managing copier clients in the Los Angeles market:
- He made himself a regular in the offices of his key clients.
- He developed a wide relational network inside these organizations. This became a source of referrals. It also allowed him to uncover additional opportunities in the business.
- He disciplined himself to do quarterly business reviews for which he didn’t just show the click reports. Instead, he learned about their business goals and challenges. This led to opportunities to provide additional products, services, and solutions.
- He found opportunities and creative ways to say thank you.
As Larry says, “Your network is your net-worth.” The core part of any rep’s network is his/her current customer base. Stay close to these people—not only will you find additional opportunities, you’ll also grow your business.
Marketing’s Role: Client Communication
Read any customer survey in our industry and here’s what you’ll find customers saying: “You never write, you never call unless something breaks or you want to upgrade my lease.”
Communicate with your clients. Add value to their business. Be top-of-mind with helpful ideas.
How can you do this?
- Create an onboarding strategy that thanks the CFO, IT Manager and end users for their business, welcomes them to your client base, explains how they can get support and highlights additional ways you can help.
- Send emails and direct mail pieces that explain additional business outcomes your dealership can deliver. Don’t blast the same email or drop the same postcard to everyone. Instead, segment your client base by cross-sell potential and/or vertical market and share helpful ideas.
- Host events that share ideas about helping other businesses achieve their goals and solve problems. Target these events at segments of your client base so they’re relevant. While onsite open houses and lunch-and-learns are great, consider using your subject matter experts to deliver regular educational webinars.
- Share helpful reports on how customers can add apps and applications to get more out of their MFPs.
- Serve up digital ads to your customers using retargeting.
This is just a start. There are many more things you can do to cross-sell. The key is to create a plan and execute consistently with focus from top management.
Takeaway
If you want to start applying some of the lessons you’ve learned here, ask yourself the following questions:
- What if your dealership took a cue from Apple and focused on cross-selling?
- What could your revenue look like three years from now?
- More importantly, what will your revenue look like if you don’t get serious about cross-selling?
