My business coaching gives me insight into local clients in Tunbridge Wells, and across Kent, London, the UK; and in a variety of sectors from accountancy to zero waste initiatives. No matter the location or sector, one of the things that appears to instil dread into my clients and prospective clients is the concept of up-selling.
I understand where this comes from, however, up-selling and it’s sister cross-selling don’t need to be scary. Anyone can do it, if they know how.
Up-selling and cross-selling are two powerful business growth strategies that go hand in hand. They are easy to do and can make a huge difference to your profit, so worthwhile implementing. The key thing to note is the timing: both happen at the point of sale where the customer has already said yes and is in buying mode, and feeling good about their purchase. That is essential.
Up-Sell and Cross-Sell - What Are They?
These principles are best illustrated by the classic example of MacDonalds. The upsell example is when you buy any of their standard meals and the person serving you asks - “Would you like to go large:”? It’s a simple, rehearsed upsell statement that any employee can perfect. Most importantly, that simple 6 word question is probably responsible for millions of dollars in profit each year. It is simply asking the customer or client, if they would like to buy a larger volume, or an upgraded version of the product for a perceived better price.
When planning your up-sell offer, consider firstly the value add to the client because they need to see the upsell as better value. Secondly, consider the extra profit added. 40p extra to go large isn’t a huge amount for the customer to pay for a larger size, but for MacDonalds, most of it is profit as the added costs are minimal. This results in a huge increase in their global profit - and it’s a win-win for both the customer, and the business.
Similarly, at Macdonalds the cross sell is illustrated when you order a burger and the server asks “Would you like fries with that”? A further 6 words that are simple to learn and can add huge profit to the business. An extra £1 or so per order, and at least 80p of that will be profit. Cross-selling is simply an ask to buy an additional product which is complementary to the first, i.e. a cake with your cup of coffee or socks with a new pair of trainers. Any product that adds value to the initial purchase is a contender, though arguably, you may get more sales with a cheaper product. Like any new business strategy, you should test and measure to see what works best.
Timing is Key
There’s a lot of overlap in up-selling and cross-selling. It doesn’t really matter which is which, but the key thing is to get the timing right, and up/cross sell when people are in buying mode. For example, say you order a watch online, and at the checkout there is a discounted cleaning cloth, all you need to do is check a box to add it to the sale. You’re much more likely to buy it here than if you were separately sold one. Once someone is in buying mindset, they are ready to buy multiple things. I myself am a classic example of this and I suspect several others on reading this, or someone close to them, may be too.
Sometimes the upsell is as simple as ticking a box to get the deluxe model rather than the standard model on a form. It can be subtle and doesn’t need to be awkward, or complicated.
Amazon does cross selling brilliantly showing “Customers also bought” items that complement the item you are looking at - apparently it is responsible for around 35% of their revenue.
Let’s Look at Some Examples of Up-Sells
There are a few up-sells that we all see, frequently.
The best known is the supermarket upsell - buy two get one free (or 342). It means that the supermarket makes a second sale and they still make sufficient extra profit that it makes sense to give the third item for free. Win for them and win for the customers. Though it only works if the profit margin is more than 50% so please do check the numbers to ensure your up-sell ideas add profit.
Another one we have all experienced is the car model upsell. It is a type of delux upsell that adds additional attractive benefits which cost very little to manufacture but add significant value to the customer. It’s rare that you leave a car showroom having purchased the model that you came in for. Adding features to the basic model can result in £10k+ in upsell when a client purchases a model several levels up but results in a far superior experience for the customer. Another win, win situation.
In service based businesses, you often see an up-sell like a reduction in price for additional hours, or bundling whereby complimentary products are packaged together at a better value offer than if they were to be bought individually. This can be very effective as clients would rarely buy every product so the business increases their profit, whilst the client gets amazing value.
Cross-Sell Examples and Scripting
Scripting is essential so anyone in your team can practise and say the cross-sell or up-sell ‘naturally’. It can be extremely awkward at first but the more you do it, the easier it becomes and it starts to become a natural part of your sales process. The cross-sell example below shows a simple cross-sell scripting that can be adapted for many businesses.
A salesman suggesting to purchase a digital memory card or a case with a digital camera might say:
“Because you are purchasing this Nikon Coolpix today, would you like to choose one of these 64gb memory cards and I’ll just add £9.99 to your order”
The customer is already in buying mode and spending £199 on this particular camera, so an upsell of a digital memory card, at £9.99 is a no brainer. The up-sell is a simple few words that can add a significant amount of profit to a sale. It is so important that the staff are trained, rehearsed and incentivized to use the upsell statement. Failure to do so may be losing significant profit from your business.