Here are the four best times for businesses to use an up-sell / cross-sell strategy:
#1 – Offer customers a greater quantity
Sweeten the deal when they purchase a greater quantity. Think in terms of McDonald’s and their classic closing line… would you like that “super sized?” Most restaurants and convenience stores train their servers and clerks to offer each customer a larger size or portion for a slightly higher price.
Next time you fill up your car at the convenience store, look at the prices for their beverages. A 20 ounce cup is $.79 but the 64 ounce cup is $.99. More than 300% more beverage for only 25% more in price.
(Note: when working with restaurants, use two additional strategies when applicable. Remove the $ signs from the prices on the menu (use 20 instead of $20). The latest research confirms the typical customer spends 8% more per person when the dollar sign is removed.
Second, ask the restaurant owner to position their most expensive (and highest profit margin) meal in the top right hand corner of their menu. The average customer’s eye goes there first.
#2 – Offer a complementary product or service
Make the additional item a part of the purchase. For example, a hair salon that offers a discount on supplies (if the customer doesn’t ask for these items at the point of purchase).
Example: At Great Clips, their stylists ask customers as they’re paying whether they need any supplies today. If they say no, they respond by saying, “We’re running a special promotion today. You get to grab a discount coupon from our fishbowl and win a 10% – 50% discount on “XYZ” products, which is good for today only.”
This promotion produced amazing results. 75% of their customers grabbed a coupon and 50% of them purchased supplies on the spot. This translated to 37.5% of their customers that bought something additional, and they spent an average of $12 they would not have spent originally… since they had already said they didn’t need supplies today.
At a 50% margin, this equaled a $6 increase in profits. Their average customer spends $30 per visit, so they typically make $15 in profit per customer. Now when you add in the cross-sell, it increases their profits by 40%! And best of all, there is NO additional cost, time or risk to implement this strategy. (See “Fishbowl Discount Strategy” for implementation details inside of Jimbere Business Academy when you become a paid member).
#3 – Offer a related product or service
An auto repair shop could offer to change a customer’s oil for a discount when they come in for a repair or to have their brakes serviced. (Other services to offer might include air conditioner recharging, changing out their transmission fluid or washing and waxing their car).
#4 – Offer a higher level product or service
Offer your customers a premium service or a superior product based on their specific needs. When appropriate, determine their needs and direct them to the highest level item that meets those needs.
NEVER use this strategy to manipulate a customer into buying something that they don’t need. Instead, educate them on the proper quality item that will benefit them.
For example, a young woman comes into your store looking to buy a “power suit” for a new sales job she’s just landed. After speaking with her about her new position, you discover she really needs a higher caliber of suit. You can up-sell her by simply showing her the better suits you have in stock and educating her on the advantages of purchasing it over a lesser priced suit. Some of the benefits to point out might include the powerful appearance it immediately conveys, the fact that it makes her look more professional so she will be taken more seriously and the fact that it will last twice, will remain wrinkle-free and last three times longer than a moderately priced suit.
As the salesperson prepares to collect payment, now is the perfect time to ask about adding a new pair of shoes, a matching blouse or a waist belt to complement her new suit. Or if she purchases a new shirt to go with her suit, tell her that if she buys two shirts, she gets a third shirt free.
Good up-selling and cross-selling works. It’s in the best interest of your customers. It makes sense. It’s natural. And everyone walks away a winner.
The philosophy behind up-selling and cross-selling is simple—your present customers trust you enough to enter into a buying relationship with you. You have already gained their trust and now you have the opportunity to present to them another level of products or services that you have created that are in their best interests.
In a nutshell, up-selling means offering a higher grade or quality or size of the item that the customer may be interested in at the point when the customer is ready to buy.
Cross-selling, on the other hand, means offering other products or services which complement the item the customer is interested in, at the point when the customer is ready to buy. We bought the extended warranty and those nice car seat covers and mats. Think about the examples above and consider how you can leverage the ideas for your business. Want help? That is what I am here for!
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Up-selling and cross-selling are essential elements that can lead to immediate increases in profitability. Unfortunately, most businesses waste this valuable opportunity because they don’t think of these strategies as tactics that belong in the marketing plan and should be a part of the policies and procedures of every company. They must be strategically thought through and systematically incorporated so that your marketing efforts have the greatest leverage. Let’s work on all 5 areas that are key to your business growth in 2020. More leads, more conversions, more transactions, higher pricing and more profits.
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Until next time, maintain momentum and make it a great day:)