Don't worry if you don't know what those terms mean. That's why I'm
here. And if you do know what they mean, I bet you're not using them all
in your business, so consider this ‘slapped wrists' time.
Up-selling,
cross-selling, and bumping are all terms that describe different ways
of extracting MORE money from a customer AFTER they've already committed
to buy a basic item.
You see, it's important to understand that
when people are in the mode of buying, they are highly open to
suggestions to buy more! This is particularly the case when the offer is
in some way related to the original purchase, AND even more so if the
offer appears irresistible.
The best way of illustrating these
marketing techniques for you is to refer you to McDonalds, the most
ubiquitous fast food restaurant in the world. They've had plenty of time
to perfect their sales process, and they sometimes manage to get all
three techniques into a single transaction, which is very impressive.
Learning from ‘The Ronald'
So
let's say you order a McDonalds meal. The aim of an upsell is to get
you to expand your current purchase, to spend more money, so the server
might suggest that you ‘upgrade' to the large size, ‘the biggie', or the
‘supersize,' for “just 50 cents more”. The upgrade fee seems small in
comparison to the initial price, so it's a very persuasive offer. In
other industries, anytime you're offered a choice of ‘bronze, silver, or
gold' options, or any named packages, that's an upsell.
Starbucks
has ‘Tall, Grande, and Venti' sizes of drinks. They've done a good job
of positioning the ‘grande' as the ‘standard' option, which is actually
an upsell from the ‘tall'.
A common trick with naming options is
to refer to the lowest price package as ‘basic' or ‘standard'. In other
words, very plain names. Then the upsell options are named much more
exciting and appealing, such as ‘platinum' or ‘premium'. Few people want
basic, we tend to want the best.
If the value proposition is a
good one, then it's relatively easy to make a powerful case for an
upsell. In other words, as a customer, if you see that you're getting
twice the amount of ‘stuff' for just a 30% increase in price, then
that's obviously a better deal.
Other examples of an upsell would
be a faster computer than the one you initially selected, a gym
membership with a personal trainer rather than just the ‘basic' plan
which only includes the use of workout equipment. It could also be a
cell phone plan with more minutes than you originally planned to buy.
Back
to McDonalds. The employee then says to you, “would you like fries with
that?” That's the cross-sell. By the way, when they ask me that, my
natural instinct is to blurt out something like, “do I look like I have
some disability that would prevent me from asking for fries if I wanted
fries?” But I don't say that, I hold myself back…
So the question,
‘would you like fries with that' is a cross-sell. They're asking if
we'd like to ADD another item to our purchase.
A cross-sell item
is almost always at a lower price point than the original item, and
that's deliberate. Why? The decision should seem easy.
Another
example of a cross-sell is when someone offers you an extended warranty
to go with a new household appliance. We've all been in an electronics
store and been offered the opportunity to take advantage of ‘extended
coverage or protection' at the time of purchase.
Amazon do a great job of the cross-sell. They always offer compatible items that other customers purchased. That's a cross-sell.
If
the customer agrees to the cross-sell, the ‘bump' is where they're
offered a special ‘upgrade' deal on what they've already committed to.
For example, if a cross-sell is for an apple pie at McDonalds, the
employee might offer ‘another dessert for just $1 more if you buy it
now.' Or, ‘three apple pies for just $1 .50 more.'
Taking another
example, if you had committed to, say a 2 year extended warranty on an
electronics purchase, the bump would be to offer 5 years “for the price
of the 3 year plan” or something similar.
The point is, a bump has
to be perceived by the customer as an irresistible offer. They should
reason to themselves, ‘I'd be a fool to pass this up.' In a way, it's
the upsell to the cross-sell, if that makes sense.
Of all sales
devices, the upsell is the most well known, but very few businesses
employ it. The other two, the cross-sell and the ‘bump' rarely get a
look in.
What about on eBay? Is it possible to utilize these
clever techniques? The ‘other items from this seller' box that appears
below many listings are really a cross-sell opportunity. The upsell can
also be achieved by pointing out the benefits of a premium version. The
bump is a little more difficult, but once the customer is yours, you can
offer a special deal on future purchases. Hopefully the examples in
this article will trigger some further thoughts for you.
Why
employ these devices? Because they take very little effort, and they can
substantially increase your profit. If a company offers a 1 dollar
upsell and they get 120 customers a day to agree to it, that's an extra
$31,200 a year! And what was the cost of offering the upsell? Zero. A
few seconds of someone's time.
Coming back to the McDonalds
example, ironically, despite the way their selling system has been
tweaked and perfected over the years, it still falls down in one crucial
(and basic) area in a BIG way.
Can you guess what it is?
One
word. Employees. Even though they're trained to maximize every sale,
the implementation is not consistent, as you've no doubt observed. You
can't count on being asked EVERY time, can you? So the lesson there is,
you can have the best sales system on the planet, but it's useless
unless it's put into action consistently and reliably.
Another
danger to be alert to is in overly pushy sales people. No one likes an
obnoxious, forceful salesperson where you feel like you're having an arm
twisted to ‘comply' with their wishes. Remember, in that kind of
situation, the value of the offer should speak for itself. If you have
to do a lot of selling then it's not a good enough offer.
Lastly,
be sure that when an upsell is offered, that the customer has a great
experience with your company. If the employee is half-hearted, just
going through the motions, and seems as though they're simply reciting a
script, then few customers will respond to that.
The secret key to using all of these techniques effectively is….
To assume.
What do I mean by that?
Assume
that the customer will take advantage of your offer. Be confident. Try
and convey that MOST customers take the upsell, cross-sell or bump. It's
the normal course of action.
Present the offer in a low key, ‘by
the way' type of fashion. Say something like, “I almost forgot to
mention' so the customer feels like you're doing them a favor in getting
a better deal for them.
By contrast, if you make it seem like a
big decision, to be thought about carefully, guess what customers will
tell you? They'll have doubts and won't respond positively to the offer.
I
urge you to look at ways to implement these powerful selling options in
your business. If necessary, phone your customers to offer them these
options, or figure out a way to interrupt the usual sales process to
make these important offers. And remember that lots of relatively small
amounts DO add up, and they can be surprisingly profitable.
