How to improve your marketing ROI by upselling
In order to get the best return on your marketing, stop for a moment to consider how up-selling on the products you are promoting can grow your business. Encouraging your customer to buy more of the product, or an ancillary product, will increase the size of the transaction; you’ll get more profit from the same effort.
If packaged and offered correctly 20-25% of your customers will take up the offer.
Up-selling is generally defined as selling a higher/better version of the same product or cross-selling an item that is related to the main product.
The beauty of up-selling is that the difficult part of the conversation has already happened. You know the customer has made a decision to buy. There is now a short window of opportunity to capitalise on this. It shouldn’t be a pressurised, pushy or uncomfortable situation for the client. The easiest way to do it is to assume the customer will want to buy the item. This works well both face-to-face and online.
This lucrative approach will not happen without proper training of your frontline staff as it requires consistency. Investing in this training will reap excellent returns.
To put an effective up-selling system in place, you need to consider the following seven techniques:
1) Create a brief benefit statement - something catchy and distinctive about your up-sell product – that you can tell the customer after they have made the initial decision to buy. If this is a live situation (i.e. not online) then put in a short pause in the sales process by asking the customer whether they would like to hear more about the product. And then just like before, describe benefits, not simply features.
2) Help your salespeople or online customers by pre-packaging and pre-bundling. What else would you need to buy if you were a customer? For example; a case to carry your smart phone; a filter for the camera lens; ink for the printer; or headed note paper with your business card order. It’s well worth spending some time thinking about your customers’ use of your product and what else could be sold around it.
Then use the list you created to prioritise products that are both highest-margin and fastest to sell. Can you demonstrate that the more expensive bundle offers much more value at a slightly higher price?
3) When bundling or pre-combining items make it easy for your customers and salespeople. The pricing levels of each suggested combination should be within 20-25% of each other. A bigger price difference and the client will decline. The choice of the extra product is up to you but it should be a familiar one without the need to explain features, rather than a newly launched item.
4) Is there a way to track what customers usually buy together? Amazon is successfully using the information they generate from their ordering system to suggest: “Customers who bought this also bought...”
The up-selling process should be organised in a way that does not leave bundling and upgrades to the salesperson’s interpretation. Up-sells are offered and the customers themselves decide how things fit and whether the price level is right for them. That’s their decision.
5) If possible, let the customer handle the extra items and not just look at them. This will significantly lower the resistance to buying. If it is a business buyer, demonstrate how each extra feature saves time, adds productivity, directly saves money, etc.
6) Ensure you reinforce the customer’s decision at the last stage when they are paying; “That’s a really good choice” or “This bundle is really good value” etc. This builds a better bond and also prevents buyer’s remorse. If your product is sold remotely, send a follow-up email congratulating the customer on making a good choice.
7) There is practically no time for the salesperson’s initiative or extensive extra pages online so the up-sell action needs to be planned meticulously and turned into a process. Then your people need to be trained how to apply the process. For example, several firms pay particular attention to training their frontline people to sell extended warranties as an up-sell. Try it out with a few of your sales people first, refine it and then roll it out.
As with all other areas of your company, it is important to have measures in place to track whether you are moving in the right direction. Be sure to assess the increase in profit that the up-selling process is delivering. You should see results quite quickly – if you don’t, then look back through the process to see where the problem lies. If necessary try out a different bundle combination or shift the price point. If done correctly up-selling can significantly increase your bottom line – so be sure you refine it until its working effectively for you.
About Roderic Michelson
Roderic Michelson is a growth expert for Aralex Consulting Ltd. Roderic’s expertise is in being able to assess quickly a company’s growth potential, as well as areas for improvement. Working closely with his clients, he helps them prepare and implement a project plan to position them for sustained growth. Roderic holds an MBA from London Business School. He is author of “The Recession-Fighting Guide” and publishes the Business Growth Blog. Roderic is also frequent speaker to professional groups across London. He can be contacted at: firstname.lastname@example.org / www.aralex.co.uk.