Most Businesses Miss This Critical Revenue-Driver. Here's How to Avoid That Mistake.

Comprehensive knowledge of how customers use your product makes possible a variety of improvement pathways, including more effective upselling.

Key Takeaways

• An indispensable part of effective selling is a multidimensional awareness of product users’ experience, including orientation, use milestones and renewal hesitancy.
• A firm grasp on this data boosts revenue, and also offers insight into what features and products are wanted the most — fueling improvements in output, relationship-building and upselling.

Running and growing a business demands much attention and effort. Raising capital, maintaining employees, developing products, streamlining operational efficiency and setting budgets are all necessary parts of keeping one up and running.

Owners and other execs believe, understandably, that selling products or services is paramount, with the final transaction being the ultimate goal. But tracking how customers use and feel about products can provide broader and arguably more vital insights into improving them, along with associated marketing efforts. Handled well, it guides product development, reduces churn and increases customer loyalty.

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Analyzation methods

A broad understanding of usage can only be had, of course, via direct engagement with a customer base, and companies can collect and analyze resulting responses/data in several ways. Online services, for example, make its collection simple and quick. Customer relationship management (CRM) software is also recommended for both online and brick-and-mortar enterprises: It tracks customer patterns and interactions, as well as other detailed information about their user experiences.

More traditional methods of research are also still in use. Focus groups, customer surveys and interviews, and product analytics generate direct feedback on how products work in customers' lives. A combination of direct and automated analytics can give a business a complete overview of customer trends and preferences — information that's simply critical, as it provides insight into their behavior and segmentation, as well as how popular and effective a given product is.

The power of upselling

Upselling is the art of motivating people to buy an upgraded or more expensive product or service, and a firm grasp of customer usage is instrumental in its success. Upselling increases gross revenue, certainly, but can also result in higher customer satisfaction, which fuels company sustainability. Its process is all about awareness and timing: Finding the right entry point for attempting it can make all the difference in improving a customer's journey. This involves three components:

Orientation: When a customer first purchases a product, they need to get familiar with how it works. This may be a great time for salespersons to offer a more expensive or premium option that may better suit their needs.

Milestones: When a client repeatedly uses a product successfully over time, you might consider a next-level offer that further improves their output.

Renewal: If your business uses a subscription model, try upselling when a customer's term expires (perhaps higher-tier products, but at a discount).

Feedback: Listen to the problems or pain points customers experience. They may be better served by a higher-priced product or service.

The takeaway is that the more familiar you and your teams are with a customer base (and the easier you make it for them to upgrade), the more effective you'll be. Just don't forget to monitor and track results.

Upselling sectors and methods

There are a variety of strategies applied by businesses to provide additional value, and generate additional revenue.

Online retail: Services like Amazon track customer usage to give personal recommendations for additional purchases (its "Frequently Bought Together" prompts, for example).

Supermarkets: In this sector, strategic display positioning is key for moving both premium and sales items, encouraging people to consider buying something they weren't looking for when they arrived.

Fast food restaurants: McDonald's, Taco Bell and other franchises offer "value meals" or "supersize" options to encourage order upgrades.

Streaming services: Algorithms fuel viewing recommendations on Netflix, Hulu, Apple TV+ and other streaming providers, which increases customer engagement, a pivotal factor in revenue generation.

Leveraging technology and tools

Recent advances have made collecting customer data/behavior geometrically easier. For online businesses, analytics tools can track site interactions to help understand visitors' habits, and then market accordingly.

Product analytics and customer relationship management software, meanwhile, help foster an understanding of what product types and features are in demand, as well as the efficiency and effectiveness of communication strategies. Automated surveys are an additionally vital tool — generating instant feedback about buying patterns and preferences.

Google Analytics is one of the most popular online tools for managing these types of data, but other useful options include:

? Salesforce

? Typeform

? Mixpanel

? SurveyMonkey

? Segment

? Hotjar

? Qualaroo

? FullStory

? Heap

Measuring success

Various metrics can help businesses analyze efforts to attract and retain customers. That said, it's important to set measurable goals before tracking results. Most businesses use overall revenue as a vital benchmark, which is understandable, but it's also crucial to break results down to reflect upselling specifically.

Here are some key customer usage performance indicators:

Upsell conversion rate: The percentage of current customers that purchase upgrades or premium services.

Revenue: How much earnings have grown from period to period.

Order value: The average amount customers spend.

Customer lifetime value: How much time a customer spends in total throughout their relationship with your company.

Satisfaction: How happy people are with a product or service.

No matter what kind of business you run, it can't succeed in a vacuum. Knowing how your customers use products and services in real life does more than just boost revenue, it offers insight into what features and products are wanted the most — simultaneously fueling improvements in output, relationship-building and upselling.

John Boitnott is a journalist and digital consultant who has worked at media companies for 25 years. He writes about startups, marketing and leadership at Entrepreneur, the Motley Fool, Readwrite.com, Jotform.com, and his blog.

This post appeared on entrepreneur.com.