When organizations bring me in to train employees on how to increase revenues from current customers, I often find that not enough attention is paid to upselling.
Upselling refers to when you help a customer decide to buy a little extra or slightly “up-grade” the final purchase. A car dealer, for example, might inform customers at the time of ordering about upholstery protection and undercoating. A shoe salesperson might suggest that when you buy a pair of shoes that you also use some weather protectant spray. These are usually small purchases that the buyer doesn’t have to put a lot of thought into. The bonus is they can be extremely profitable for you as the sales person and for your organization.
Why upselling is so profitable.
Consider this example. A customer buys a car with monthly payments of $395. With that size of investment, there’s very little resistance to adding $2 to the monthly payments for upholstery protection. For you, however, that additional sale is significant, as over 48 months it adds up to a $98 sale, with a huge profit margin.
Some would say that a $98 sale on a $25,000 vehicle is only a minimal increase in the overall sale. Why waste your time? My argument is that if it only takes 30 seconds to make that extra $98 sale, then you’re making more money for the company than with any other activity you do. If your salary is $20 per hour then doing the math, the 30 seconds you take to upsell costs the company about 17 cents. If it only costs the company 17 cents to make $98, that’s a huge return on investment. The fact that it’s attached to a $25,000 sale is completely irrelevant. So, upselling is one of the highest and best uses of your time.
Upselling should be easy.
The best part of upselling is that it’s practically effortless. Since it’s done after the customer has decided to go ahead with a major purchase, the hard part of the sales conversation has already been done. You’ve already established rapport, identified needs, summarized, presented benefits, asked for the order and handled objections. Upselling is just presenting the information in a “by-the-way” assumptive manner.
Effective upselling strategies.
Assumptive is the key. You’ve got to assume that the customer will naturally want this. Begin the upsell with a brief benefit, then if possible, add something unique about what you’re selling. To avoid sounding pushy, particularly if the upsell requires some elaboration, ask for the customer’s permission to describe it.
Here’s an example of the wrong way to upsell. Imagine dining at a restaurant where you’ve just finished a big meal. The server asks, “Would you care for dessert? If you say “Yes,” you might give the impression of overindulging. So many customers refuse out of politeness. Result – no sale.
So the savvy server doesn’t ask if the customer wants dessert. The professional just assumes that when people go out for a meal they are treating themselves. So of course they’ll want to treat themselves to dessert. In this case, the server pulls up the dessert tray and says, “To finish off your meal with a little something sweet (that’s the benefit,) I brought the dessert tray over for you. Would you like to hear about the most popular ones?” (asks permission to proceed)
When the customer agrees to hear about the desserts the server doesn’t just list them by name; he describes their benefits. So rather than saying, “This is chocolate mousse.” Instead he’d say something like, “If you like chocolate you’ll love this. We’ve got a chocolate mousse that melts in your mouth and makes you wonder what the ordinary people are doing today.”
Focus on customer needs – not yours. Don’t try to sell the customer something you wouldn’t buy if you were in their shoes. It is totally irrelevant whether or not this purchase suits your needs; what is relevant is whether it suits the customer’s. That perspective empowers you to upsell effectively and with integrity.
Hands on demonstration. One of the most effective upselling techniques is getting the customer to use the product in your location. A hairdresser, for example, might put hair gel in the customer’s hand and show them how to apply it themselves. By showing the client how to get the salon look at home, they create a value-added upsell.
Group related products. It’s a good idea to group similar add-ons and offer them as an upsell at a package price. If someone is getting a haircut and you talk to them about shampoo, it only makes sense to show them a package deal that groups conditioner and shampoo at a package price.
To master this tactic, it’s important to understand the do’s and don’ts of up selling.
Up Selling Do’s
To maximize your conversion rate, have a basic script planned out ahead of time and know how each product or service can be up sold. A sales rep from an electronics store might suggest purchasing additional RAM when someone is buying a computer or an extended warranty. Knowing ahead of time which upgrades or add-ons are logical for a product or service will streamline the process and show customers you are knowledgeable.
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Another integral part of this technique is offering the up sell at the perfect time. The best time is typically as soon as the customer decides to purchase, but before checking out. This is when they are ready to buy and are most open to suggestions for product or service enhancements. The exception is when someone is looking for a product and you point them to a higher-end model that’s better quality but more expensive. Asking a few questions to assess their needs should help you decide the ideal time to up sell.
Tangibly demonstrate how a customer will benefit from the up sell you offer. In the instance of additional computer RAM, they would benefit from faster web browsing and more network capabilities. Clearly explain the problems that the up sell will solve or how a customer’s life should increase the likelihood of converting.
Up Selling Don’ts
A common mistake sales reps make is trying to up sell to the point where customers would be making another big purchase. Being too greedy and trying to drain customers for everything they’re worth is counterproductive and can even create resentment. That’s why a suggested up sell should increase the original sale by a maximum of 25 percent.
Another mistake is trying to up sell by asking yes or no questions like, “Is that all for you today?” or “Would you like anything else?” Instead, guide the conversation and make sure a customer is aware of the possibilities they have. You might say something like, “Let me show you (product x) that will perfectly complement the product you are about to buy.”
Being Overly Aggressive
While a reasonable number of customers are receptive to up selling, some aren’t. For this reason, use discretion when making suggestions and recommendations. If a customer is in a noticeably bad mood, it’s probably not smart to push your luck and pound them over the head with upgrades and add-ons. Just be respectful and understand when no means no.
Mastering the art of the up sell takes time, practice, and intuition. Although your conversion rate might not be outstanding initially, some diligence and perseverance should optimize your ability and increase your odds for success. Once you get the hang of it, you can expect to increase the average sales from each customer considerably. Besides this, the added value customers receive from up sells can build rapport and lead to repeat sales.
The Bottom Line
Every business owner should realistically look at whether or not employees could improve the way they up-sell. For most businesses, a little professional training can make a world of difference. SSA