How To Leverage Existing Customers

When Dave Condensa, CEO of Sunnyvale, Calif.-based Helio Solutions, calls on his customers, he always does his homework beforehand. For example, he'll check to see when their maintenance contracts are up for renewal or when their systems are running out of horsepower and need a refresh. It's all part of the art of up- selling and cross-selling, in which you know your clients' "likes and dislikes, then make recommendations that are good for them," Condensa says. "It's like being their personal shopper."

Upselling, defined for this article as enhancing a customer's existing product suite with additional functionality and/or adding to a service you already provide, and cross-selling, or selling a new service, software or hardware to an existing customer, are arguably the two more important sources of revenue for solution providers. The opportunities they represent are often like low-hanging fruit, yet some solution providers fail to pick the trees bare.

So what's the key to the successful upsell and cross-sell? Like Condensa of Helio (No. 325 on the VARBusiness 500) says, it's all about knowing your customer. Similarly, when 500 global senior executives were asked by The Economist what the most important strategy was to drive worldwide growth in the next three years, their No. 1 answer was "building closer relations with existing customers."

The worst thing your sales staff can do is march into a call touting the latest-and-greatest offering from your vendors. It's much better to take the time to speak with your customer's executives to find out where their pain points reside and what you, as a solution provider, can do to remedy the situation with an upsell or cross-sell.

"You have to make sure you understand your customers' infrastructures," advises Bob Venero, CEO of Holbrook, N.Y.-based Future Tech Enterprise (VB500 No. 355). "Even more important than that, make sure you understand their goals."

Once you do, he says, you can suggest upgrades; if you don't, you're just working from transaction to transaction. "For some of these guys, asking them about their goals is like a breath of fresh air," Venero continues, noting that, with 400 active customers, Future Tech has only lost one customer in the past eight years. "Tell them you're not there about technology; tell them you've called because you want to know about them from a business perspective."

Another bad idea: sitting back and waiting for your existing customers to come to you for an upsell or cross-sell. You'll quickly find the discussion driven by "a price initiative that generally comes from purchasing," Venero warns. As a solution provider, you always want to be in control of the pricing conversation.

Cosseting the Customer

In addition to making the effort to know the customer's operation, upselling and cross-selling require savvy solution providers to let their customers know they genuinely care about the success of implemented solutions so that they will come back for more. That may sound a little touchy-feely, but a little cosseting can go a long way.

JoAnna Brandi, president of her own consulting firm, Customer Care Coach, as well as an author and publisher of a training course about maximizing customer care (www.customercarecoach.com), tells VARBusiness that "a solution provider must constantly be calibrating to see if the customer...feels important, comfortable, confident, empowered, smart, secure, relaxed, respected, trusted, capable, appreciated and [a] host of other feelings that are critical to long-term relationship success."

To master the relationship, Brandi believes solution providers need to anticipate customer needs. "The solutions business is a deep learning environment. You must understand the intricacies of the client's business and culture," Brandi suggests. "Your success will be determined by how well your solution is integrated into both the physical and cultural aspects of the company."

It's also important to know your customers' schedules so you can plan your upsells and cross-sells in a timely manner, not just for your customers, but for your own company as well. After all, careful planning--such as allocating your personnel ahead of time--always saves money.

Different Strokes

Another important point to keep in mind: Always remember that existing and potential customers will relate to you, and your sales staff, differently. In fact, Dan Duffy, CEO of Irving, Texas-based ePartners (VB500 No. 296), believes generating additional revenue from existing customers is so important that he has gone so far as to divide his sales staff into two distinct groups: one that sells to new customers and one that sells to existing customers.

Each group comprises 17 salespeople. Duffy says that the staff for each has a different personality profile (so assessing who belongs where is essential). Those on the staff for new customers are "extremely aggressive, quick on their feet and motivated by variable compensation," Duffy says. "It's a different state of mind."

In comparison, the ePartners sales staff for installed customers prefer, as personality types, longer-term relationships and don't want to hard-sell, Duffy continues. They also prefer their compensation to be less variable.

Meanwhile, Sean Burke, CEO of Govplace (VB500 No. 442), advocates digging deeper into the relationship with an existing customer by aggressively creating new potential engagements. The best way to do that, he believes, is by educating existing customers on technology advancements that are relevant to their businesses.

For example, Burke says that if an existing customer network has been hacked, he'd be quick to advocate intrusion-prevention security. He also strives to show customers where they can reduce known costs by implementing new solutions. Two cases in point: multicore processing, which will lead to a change of charging per socket instead of cost per CPU, and visual-array technology, which can allow for reduced costs through server consolidation, he notes.

Of course, it's always important to know your limitations. It's great if you represent a full-service solution provider and can provide the critical mass to service all your existing customers' upsell and cross-sell needs. But if you can't, don't let pride get in the way, because it will just come back to haunt you. Better, says Stephen Pace, senior vice president of sales for Andover, Mass.-based NaviSite (VB500 No. 282), is to send your customers to a partner who is able to help them.

"If a customer needs a solution we don't have, we might point them in, say, the direction of Salesforce.com," Pace says. "That way, you become a trusted adviser, and when the time comes, there will be added opportunity to work with existing customers."

5 Tips From The VARBusiness 500

Know customers' likes and dislikes, then make recommendations that are good for their businesses.
--Dave Condensa, CEO of Helio Solutions

Divide your sales staff into two distinct groups—one that sells to new customers and one that sells to existing customers.
--Dan Duffy, CEO of ePartners

Educate existing customers on technology advancements that are relevant to their businesses.
--Sean Burke, CEO of Govplace

If you don't have the solution in-house, point customers elsewhere. When the time comes, your trusted adviser status will be rewarded.
--Stephen Pace, Senior vice president of sales for NaviSite

Make sure you understand your customers' infrastructures. Even more important, make sure you understand their goals.
--Bob Venero, CEO of Future Tech Enterprises