Upselling is one of the easiest yet most neglected tactics to instantly add hundreds, thousands, even hundreds of thousands of pure profit to any organisation.
Perhaps the best way to explain what an up-sell is, is to give you a well-known up-sell that McDonald’s use.
Let’s say you go into McDonald’s and ask for any of their standard meals, the reply from the person serving you will be, ‘Do you want to go large?’
Basically, they are using a well-rehearsed ‘Up-Sell Statement’ that makes it easy for the buyer to say ‘yes’.
With just six carefully crafted words, McDonald’s has an up-sell that 30-40% of customers say ‘yes’ to.
That’s another 30-40 people in every hundred that spend, say, a pound more than they would have done had the Up-sell Statement not been used!
And just think for a moment…
The cost to McDonald’s for providing the larger-sized meal probably adds up to about 10p, so they’ve just created another 90p of profit on the sale with virtually no effort (six words).
Let’s define up-sell more accurately…
An up-sell is when you move the customer up to a larger quantity (bigger size, etc.) of the same product or service for a perceived preferential price.
So, why does the up-sell work so well?
The reason why up-sell (and cross-sell) works so well is that the Up-sell Statement is used only after the person has made the decision to buy.
That means they are comfortable with their decision. It’s at this point they are much more open to the up -sell (or cross-sell) because they are in ‘buying mode’.
You should be aiming to convert more than of 30% of customers via the up-sell.
Good Example Of Up-Sell
Example 1: Car Model Up-Sell
Possibly one of the best exponents of the up-sell is car dealership sales reps in conjunction with the car manufacturers.
The manufacturers produce a basic model and a number of upgrade versions depending on the buyer’s needs and wants.
You know yourself, when choosing a car you may fully expect to walk out of the showroom with the basic model, only to walk out with a model two or three levels above!
Example 2: Tesco Supermarket Up-Sell
Like them or loathe them, one thing you can’t deny is that Tesco’s are very good at using up-sell.
There are many reasons for this and one of them is their ability to literally create thousands of up-sell opportunities every week in their supermarkets.
‘Buy 2 Get 1 FREE’, ‘Buy 2 For £X’ offers, and the like, ethically persuade customers to buy a second item even if they won’t run out for weeks.
The ‘offer’ of the third ‘FREE’ product, or two products for less than buying two separately, is in most cases too hard to resist.
The key here is that buying two products adds so much extra profit to the sale that Tesco’s can even afford (in some cases) to give away the third and still make more profit on the sale!
Example 3: DELL Computer Up-Sell
Most computer manufacturers are great at this but Dell stand out from the crowd.
Their low prices coupled with attractive up-sell offers make it very difficult for the buyer not to move up to a better, faster model.
Once again, although the up-sell on each model has an increase of impressive benefits, the costs to Dell for these improvements are minimal and, again, add considerable profit to their sales.
Types Of Up-Sell
As you’ve already seen, there are several different types of up-sell…
Deluxe Up-Sell
This is my favourite. Several of the examples above are based on the ‘Deluxe Up-sell’.
Remember, the deluxe version needs to be packed full of additional benefits and the net cost needs to be small in comparison to the extra price charged, leaving a healthy increase in profit. Virtually every business can create a Deluxe Up-sell with very little effort.
2 or More Items Discount Up-Sell
Just like Tesco, you can offer a discount for buying more than one of the products or services. Remember, the key here is to ensure that the profit is greater than if they are buying just one of the products or services.
Buy 2 Get 1 FREE Up-Sell
This classic up-sell offer again works well, but be careful to choose a product or service that allows you to increase the profit on the sale.
Remember, the up-sell here is to get the customer to buy two as opposed to one product or service.
The key here is that although the profit margin decreases, the actual profit on the sale increases by £10. Notice if the profit is 50% or less – you shouldn’t use this up-sell, because at 50% profit there is no increase in profit (the only reason for using an up-sell).
Time Up-Sell
If you’re selling a product or a service people subscribe to, like a magazine, you could tell them if they subscribe for two years instead of one, they can receive 50% off the cover price.
Quantity Up-Sell
This is similar to the discount up- sell. The difference here is you increase the discount by how many products they order.
If they order three, it’s a 10% discount; if they order five, it’s a 15% discount.
Package Up-Sell
You could offer similar products in a package deal.
Tell people the other products are cheaper with the package deal versus purchasing them separately.
Don’t make the mistake here of thinking that by packaging the products or services together, you’re reducing the total profit.
Remember, the key is that customers will rarely buy all the products separately so you’re increasing the actual profit per customer.
Extended Up-Sell
If your product comes with a warranty, you could ask people if they would like to extend the warranty one more year for only £30 (for example).
As you can see, there are many different types of upsell that you can apply to your business, no matter what product or service you sell.
The key is to systemise the process so no matter what product or service you are selling to a client, customer, or patient the up-sell is automatically offered to them.
The easiest way to do that is to list all your products and services in a simple spreadsheet.
Then, next to each product or service, write down the up-sell or cross-sell. Make sure you detail the up-sell or cross-sell fully.
For example, if it’s a script used by the salesperson or telephone sales operator, write it out in full ready for them to learn it (so it doesn’t sound like a script).
There are few other tactics that you can use in your business that have such an immediate and big impact when applied.
Once you’ve created your up-sell, it should be used indefinitely (but, of course, test other ones against it to see which works best).
However, if you’re in need of a quick influx of extra sales and profits, then simply adding an up-sell to your products and services will give you exactly what you need — for absolutely no extra cost.
That’s why I said earlier – every business should use up-sell!
