So we are all working with common definitions, installed-base marketing can be defined as any marketing or communications event targeted to specifically to your existing family of customers; the cross-selling effort, which is an installed-base marketing event, can be defined as a marketing activity whose purpose is to sell current customers additional products produced by your company. An edutainment company can cross-sell other educational titles within their product family; a software utility publisher can sell other types of utility products, etc.

You have probably heard the phrase mentioned many times -- there is no better person to sell to than your own customers. Why is this statement true? Customers who have purchased your products are familiar with your company, have made a commitment to your company and its products, and are (hopefully) very satisfied with their past purchases. There is a tremendous amount of goodwill built into your customer base. On-going product cross-selling efforts allow you to leverage that goodwill and turn it into real profits. Overall, product cross-sell efforts to your installed base certainly makes sense, and should be one of the first activities performed with the release of a new product.

Of course, any type of installed-base marketing activity, whether it be product upgrades, cross-sells, up-sells (the selling of plug-ins/enhancements), or even the sale of consumables (printed forms, media, etc.) requires a functional customer database. And a word to the wise -- if you haven't built a customer database, make sure you have a plan of action (approved and budgeted installed-base marketing activities) before spending the dollars and effort in building one. If you are going to make the investment in building a customer database, make sure that you have a use for it.

What are the core components for a functional customer database? Well, for installed-base marketing efforts, the name and address is, of course, priority, followed by the acquisition date of the customer (so you can calculate total revenue generated over time), the last activity date of that customer (for the stratification of names based on Recency, Frequency, and Monetary Value), and the products (and versions) purchased.

If you are looking at future installed-base marketing activities, it might be a good idea to collect the name of your customer's primary on-line service (i.e. Compuserve, Prodigy, AOL, Delphi etc.) and their E-mail address. Having these two components will allow the assembly of an Internet address (for example JoeG on AOL would have an Internet address of joeg@aol.com) which will facilitate future electronic marketing activities to your installed customer base.

Since CD-ROM ownership is rapidly moving from 'technophile' to 'mainstream', identification of CD-ROM ownership within your own customer base can be of value. A 'special CD-ROM edition' of a product could be offered as an up-sell strategy, bundled with additional add-on modules. You might consider asking your customers if they own a CD-ROM drive for such up-sell activities. It will also enhance your list rental program (if one is in place) since CD-ROM names command a high price in the list rental market.

There are several different implementations of a cross-selling program. As with any marketing activity, the different programs

I have seen many software publishers with highly successful newsletters and magalogs that are circulated to their installed customer base. Such publications will typically answer frequently asked questions, reprint positive letters from their customers, and also talk about both current and new products. Order forms are either bound into the publication or are composed on the last page. Discounted, direct pricing is offered, with 'reserved' copies of hot new releases allocated for current customers to order. Some of the newsletters have evolved into newsstand quality magazines, generating paid subscribers and securing paid, non-competitive advertisers -- two more profit centers from the overall effort.

You can maximize your investment in publishing the newsletter, magalog, or magazine by offering it as a free premium to those who return their registration cards. The premium can be offered as a six month or yearly subscription, renewable with a discounted paid subscription or the purchase of additional products.

To enhance your cross-sell mailing, you might partner with another non-competitive software company to offer a free premium. A utility might be given with the purchase of a business related product; a game might be given with the purchase of a multimedia edutainment product. The strategic partner offering the premium benefits with the capture of new customers who they, in turn, can offer upgrades and cross-sell offers.

Product codes within the internal database must be examined so as not to send the offer to customers who have already purchased the product being cross-sold. Suppressing such names will save money associated with printing and postage while eliminating customer frustration.

House file inquiry names should also be sent the special offer, under a different key code so the results can be measured. If someone took the time and trouble to make an inquiry on your family of products, your cross-sell mailing might be the final chip needed to actually convert them into a paid customer.

Telemarketing can also be used for the installed-base cross-sales efforts. There are many software companies that have developed profitable sales units based upon outbound telemarketing activities to their existing customers.

In some cases, the telephone calls are made as a follow-up to a solo cross-sell mailing piece. If your customer file doesn't currently contain telephone numbers, services are available to append them. A random, Nth name sampling of your customers can be taken to test the effectiveness of your outbound telemarketing efforts, analyzing the profitability with and without the support of the solo mailing.

Common to all your cross-sell activities, make sure you provide your customers with an easy way to order -- either by fax, 800 number, e-mail (with proper encryption technologies in place), postage-paid response mechanism, etc.

With the completion of this article, allow me to emphasize one last thought - plan for future activities. This includes the collection of E-mail addresses and identification of CD-ROM ownership. This will give you an added edge for your future installed-base marketing efforts.