Hybrid Messaging Key to Upselling Success: Report

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Companies that aim to upsell their existing customers should develop a hybrid message that reinforces their existing relationships while providing an incentive to break the status quo, suggests a new study commissioned by Corporate Visions.

The study was conducted by Nick Lee, a professor at Warwick Business School, in partnership with the International Journal of Sales Transformation.

Corporate Visions previously has commissioned studies on how to shake prospective customers’ status quo bias to persuade them to consider your products or services, noted Tim Riesterer, chief strategy and research officer at the company.

The firm also has explored how to encourage existing customers to renew their relationships, which requires reinforcement of their bias toward the status quo, he noted.

“The latest round of research shows that the upsell dialogue is different, yet requires some of each from these two message types,” Riesterer told CRM Buyer. “There’s most importantly a relationship or partnership reinforcement aspect to the message, but there’s also some provocation involved with getting existing customers to make the change to upgraded solutions.”

Not Quite There

Upselling to existing customers was “important” or “very important” to their ability generate more revenue, said 87 percent of the participants in a recent Corporate Visions survey. Only 60 percent were satisfied with how many customers they were able to sway and how fast they could convert them.

A winning message, according to the report, centers around five pillars:

  • Document results
  • Highlight evolving pressures
  • Share hard truths
  • Explain risks of no change
  • Showcase upside opportunities

“The best upsell message — as validated by our research — employs some components of a customer retention story, that it looks to affirm and solidify the partnership by documenting the success to date, and identifying the deep relationships that have been estalished,” Riesterer said.

“This provides the positive, relational foundation for sharing evolving pressures and hard truths that are creating the need to evolve, as well as identifying the risks associated with not making a change,” he explained.

These types of messages are environment neutral and would be effective both in a traditional people-to-people selling environment and an e-commerce transactional environment, noted Riesterer.

The study did not involve live salespeople, he pointed out. The participants simply responded to a variety of messages. The study participants included 426 individuals placed in hypothetical business-to-business decision-making scenarios.

Relationship Building

The ability to drive sales to existing customers is critical, because of the difficulty in constantly having to build relationships with new prospects.

“It’s always less expensive to serve existing customers than acquire new ones,” noted Paula Rosenblum, manager partner at RSR Research.

“That’s a pretty standard rule of thumb in just about any industry,” she told CRM Buyer.

It can be up to 25 times more costly for a company to acquire a new customer than to sell to an existing one, based on earlier research from Harvard and Bain, noted Cindy Zhou, principal analyst for digital marketing transformation at Constellation Research.

“Existing customers are familiar with the company’s brand, [have built] relationships, and have the process in place to continue to do business,” she told CRM Buyer.

“The key is to build and demonstrate value to the customer, providing them with a reason to continue to work with the company,” Zhou said, adding that upselling a product has to fit the customer’s need.

David Jones has been an ECT News Network reporter since 2015. His areas of focus include cybersecurity, e-commerce, open source, gaming, artificial intelligence and autonomous vehicles. He has written for numerous media outlets, including Reuters, Bloomberg, Crain’s New York Business and The New York Times. Email David.

WHO Urges Everyone: Make Vaccines a Priority

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Tuesday marks the start of World Immunization Week, set aside by the U.N. to remind parents with children, and even adults, to get immunized against deadly diseases. The World Health Organization, which is hosting the event is encouraging governments to invest in immunization efforts, urging advocates to make vaccines a priority, and asking people to get themselves and their families vaccinated. VOA’s Carol Pearson reports.

Plastic: If It’s Not Keeping Food Fresh, Why Use It?

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The food industry uses plastic to wrap its products in many places around the world. Plastic manufacturers say that keeps produce and meat fresh longer, so less goes bad and is thrown away. But, according to a new European study, while the annual use of plastic packaging has grown since the 1950s, so has food waste. Faiza Elmasry has the story. Faith Lapidus narrates.

Federal Programs to Spur Private Sector IT Engagement

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By John K. Higgins
Apr 20, 2018 5:00 AM PT

The U.S. government has launched two new programs designed to modernize and upgrade IT performance at federal agencies. Each program will involve significant participation of private sector providers as both advisors and contractors for IT equipment and services.

The first program involves the creation of a federal Information Technology Modernization Fund to facilitate investments in efficient and advanced IT operations. Congress finally approved an actual budget for the modernization fund in last month’s Consolidated Appropriations Act of 2018, otherwise known as the “Omnibus” budget act.

As a result, agencies will be able to tap into a US$100 million revolving fund to make initial investments in IT modernization.

Program Alleviates IT Spending Gap

The ITMF was authorized in the Modernizing Government Technology Act (MGT Act), which became law late last year after several versions of the funding plan had been proposed in Congress and by the Trump administration.

Since federal agencies spend more than 80 percent of their budgets simply to maintain existing — aka “legacy” — IT systems, there is not a lot left over for investments in modernization. The ITMF will allow agencies to access funds for IT upgrades and then return savings from such investments to the fund to provide a revolving resource for additional IT investments government-wide.

Not surprisingly, the technology sector expressed strong support for the program. Funding the MGT Act through the ITMF “is a critical step in protecting our nation’s IT systems from cyberattacks and ensuring the government is using state-of-the-art technologies to better serve our people,” said TechNet CEO Linda Moore. TechNet, an association of IT companies, has published open letters to congressional leaders in support of the program, most recently last month.

White House Seeks Commercial Technology

The program should enhance opportunities for private sector involvement in federal IT operations.

Projects undertaken through the ITMF should “ultimately be executed according to a strong project management approach that aligns to industry best practices and incorporates, to the greatest extent practicable, commercial technology solutions,” wrote Office of Management and Budget Director Mark Mulvaney in a memorandum sent to federal agencies earlier this year.

Agencies will apply for ITMF funding by submitting proposals to a seven-member board of federal IT managers, chaired by Federal Chief Information Officer Suzette Kent. However, financial support for the fund provided by the Omnibus budget act will be available only through fiscal 2018, ending on Sept. 30. The support level of $100 million was far less than the two-year funding allocation of $500 million envisioned by the Trump administration.

The initial 2018 funding level is a “good first step to get this IT modernization effort off the ground,” said Alex Burgos, TechNet’s vice president of federal policy and government relations.

“Going forward, this needs to be a sustained, multiyear commitment to fully fund and implement the law to achieve its ultimate goal of modernizing the federal government’s IT systems with more secure technologies,” he told the E-Commerce Times. “As we look ahead to the next appropriations bill due by Sept. 30, TechNet is urging Congress to provide the full funding necessary to ensure we are doing everything we can to modernize our federal government’s IT systems.”

The MGT Act also empowers agencies to set up their own internal working capital funds for investment in IT modernization.

Centers of Excellence Focus on IT Upgrades

The second program involves the creation of IT Modernization Centers of Excellence, or CoEs, which collectively will provide federal agencies with consulting and IT engineering services to make radical improvements in the way agencies design services and interact with their customers, according to the federal General Services Administration, which will manage the program.

GSA launched the program last month by selecting four providers of IT-related capabilities to implement the first phase in five specific IT categories. All of the initially selected providers will assist the U.S. Department of Agriculture in modernizing the department’s IT operations. USDA is serving as the pilot agency for implementing the program.

Each of the companies receiving a contract award in the first round of provider selection will concentrate on providing assistance to USDA in each of the five IT categories. Among the selected companies and area of concentration: SIE Consulting Group, for cloud adoption; McKinsey & Company, for IT infrastructure optimization; and Kaiser Associates, for contact center operations. One company, ICF, was selected to provide assistance in two areas: customer service and service delivery analytics.

The initial contract awards “mark a major milestone in implementing the administration’s far-reaching federal IT modernization effort,” said Joanne Collins Smee, GSA’s acting director of technology transformation.

GSA appointed a person outside the agency to implement the program.

Robert DeLuca, formerly chief information officer at the Overseas Private Investment Corporation will implement day-to-day operations of the CoE initiative, GSA said.

GSA did not reveal the specific value of the contracts. However, ICF said that its two contracts have a combined multimillion dollar value with terms of up to three years.

For each CoE, the company initially will work with the USDA to assess the current landscape and develop a road map for implementation and management of centralized functions, ICF said. Once those goals are achieved, ICF will recommend scalable best practices for adoption government-wide.

“These awards represent the accumulation of what ICF can bring to federal IT,” said Senior Vice President Kris Tremaine.

“We’re not just deep subject matter experts. We have a contextual understanding of each agency’s mission, how the work is completed, and how the data can inform and transform the customer journey,” she said.

The goals of the CoE program include the following:

  • Establish and grow identity and authentication services that integrate with agency operations;
  • Provide a portfolio of cloud services across multiple provider offerings, and implement flexible solutions for the delivery of cloud capabilities;
  • Use consolidated contact center services to make it easier and more cost effective for the public to access federal services;
  • Improve access to data so that government leaders better manage agency missions and improve public transparency.

GSA emphasized the importance of reaching out to providers. Desired industry support includes a wide range of activities such as project management guidance, acting as a catalyst for completing activities, creating a centralized approach to track progress, and Agile project management support.

“Federal agencies serve many audiences through complex missions. The type and kind of technology that deliver compelling citizen experiences is equally complex,” ICF’s Tremaine told the E-Commerce Times. “Putting these together isn’t easy. The CoEs signal that GSA is going to take aggressive and informed steps to address these challenges in a data- and user-driven manner.”

The CoE initiative was launched to support the agenda of the White House American Technology Office created by President Donald Trump last year.

John K. Higgins has been an ECT News Network reporter since 2009. His main areas of focus are U.S. government technology issues such as IT contracting, cybersecurity, privacy, cloud technology, big data and e-commerce regulation. As a freelance journalist and career business writer, he has written for numerous publications, including
The Corps Report and Business Week.
Email John.