Your customers may be few or many. But you never want to let one leave without making the best sale you can. So you need to learn the art of the upsell. And, for that matter, of the cross-sell and the down-sell.
All of them take place after your customer has made their first decision to buy. So, you have done the hard work. Now you can use upselling and cross-selling to increase your revenue. And, if your customer changes their mind, there’s always the down-sell.
If you want to optimise every sales opportunity, you need to know how to apply the ideas of the upsell, cross-sell, and down-sell.
Why Do We Upsell?
A large part of the cost of sales is fixed for every sale:
- the materials and manufacture cost of your product
- storage, packaging, and transportation of your product
- labour costs for a service you provide
But one aspect is variable. The customer acquisition cost. If you can spread that cost over more sales, the cost of each sale goes down. Not only do you increase your revenue, but you do so at a better margin.
What is an Upsell?
An upsell is when you can persuade your customer to buy a more expensive product or service than they had already planned.
- Premium version of the same product or service
- Or an alternative premium brand
- Larger pack size or service offering: ‘would you like to supersize that?’
- Additional, bundled items, like accessories or an extended warranty
But Don’t Confuse Upsell with Cross-sell
Well, actually, it’s okay to confuse the two. Lots of people do. And the difference, while pretty clear, doesn’t have a huge commercial impact.
But, a cross-sell is when you can persuade your customer to buy an additional product or service that is related to the one they have already committed to buy.
- New shirts when I decide to buy a suit
- Car insurance, once I’ve insured my house
- Accessories to go with my new computer or tablet device
- Why not get another one, for your wife, husband, daughter, or son?
Okay. So, if There’s an Upsell and a Cross-sell, there must be a Down-sell…
There certainly is. What if I seemed all set to buy the laptop you have offered me. And then I change my mind.
- Maybe I’m worried about the cost:
‘We do have less powerful models at a lower price…’
- Perhaps I’m not sure about replacing it:
‘Why not look at replacing the battery pack and putting in a new hard drive?’
A down-sell is where someone has declined to buy your product or service offer. So, you offer them an alternative product or service, at a lower price.
You have sunk the cost of customer acquisition. Now, you are trying to recoup some of that, before your customer walks out of the door.
…or the Metaphorical Door
Upsell, Cross-sell, and Down-sell have all been around for as long as trade. Maybe each generation of marketers and salespeople thinks they’ve invented them, but I bet stallholders in ancient Mesopotamia got there first on all of them.
But they have taken on a new vigour in the internet realm. Here, 6 factors combine to make upsells, cross-sells, and down sells particularly easy and therefore effective:
- User tracking and big data give unrivaled intelligence to help pitch products or services the user may find attractive
- Marginal costs of sale are low, so merchants can cut the up-sell, cross-sell, and down-sell prices to make the sale more appealing, yet still turn a profit
- Automation can add an upsell or cross-sell onto any transaction easily and without fail
- Indeed, it can add multiple tiers of upselling and cross-selling
- and, if a buyer abandons a sales cart, the automation software can easily offer one or a series of down-sell offers
- Once hooked by a down-sell, the upselling and cross-selling can resume
So, online marketers love the cross-sell. They even have a name for a particular version. Meet the…
An order bump is an add-on product (a cross-sell) that your customer can add from directly within the order page. So, when they have confirmed a purchase, before the website processes payment, you can offer an additional product or service before your customer hits the pay button. Crafty.
Let’s see why this works so well…
Back to the Upsell: Weber’s Law
Why do upsells and cross-sells work so well?
A part of the answer must be in what Professor Robert Cialdini calls ‘Commitment and Consistency’.
Commitment and Consistency
If I’m committed to buying Product A, and you say, ‘how about Product B?’, then my commitment to your product makes it more likely that I’ll act in a consistent way and also value Product B. But, you’re unlikely to sneak a big extra cost by me without some friction. I’m bound to also think: ‘wait a moment… That’s a load more money. I’m not so sure.’
The worst case, by the way, is when you ‘buy back the sale’ and my doubt about your upsell or cross-sell leads me to doubt my original purchase decision. That’s why salespeople are largely taught: ‘when you’ve closed the sale… SHUT UP’.
But what if you could slip an extra cost past me without me noticing? Or, more likely, without me really minding?
Sometimes, you can…
You can look up the detail of Weber’s Law for yourself. You’ll need some maths. But the essence is simple. We rarely notice a small marginal increase (or decrease) in anything: size, time, or cost. And the key to Weber’s Law is that the margin that gets in under our radar is related to the base size or cost. So:
- You may not haggle over a thousand pounds on the price of a £400,000 house
- …but you would on the price of a £20,000 car.
- You wouldn’t haggle over £20 on the price of that car
- …but you would on the price of £200 camera
- You wouldn’t be put off by £5 for an extra accessory
- …but £5 extra to upgrade a £6 bottle of wine would make you think
I once heard of a committee that spent longer discussing the repainting of a bicycle shed than a million-pound slippage on a multi-million pound technology programme.
Weber’s law is how marketers and salespeople make their sales bump, and get that upsell or cross-sell, without much friction.
Finally, Never Bait and Switch
Upsells, Cross-sells, and down-sells are all legitimate sales and marketing tactics. Bait and Switch is not. This is where you offer a product or service to customers. But, at the point where they say ‘yes please’, you withdraw the bait and switch it for something else:
‘Sorry, we’ve sold out. But we do have this better/alternative/lower-price version instead’
What is Your experience of the Upsell?
We’d love to hear your experiences, ideas, and questions. Please leave them in the comments below.
To learn more about sales and selling…
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The Sales Excellence Pocketbook is full of tips, techniques, and tools to make the difference between a ‘no’ and a ‘yes’ response to your selling.