In the latest blog we are going to look at up-selling and cross-selling. They fit together into a tidy package and you’ll see very shortly how this package is designed to increase the revenues and profits in your business. You’ll find that this concept is simple to understand though no less impacting in the results it should produce.

The philosophy behind up-selling and cross-selling is simple—your present customers trust you enough to enter into a buying relationship with you. You have already gained their trust and now you have the opportunity to present to them another level of products or services that you have created that are in their best interests.

In a nutshell, up-selling means offering a higher grade or quality or size of the item that the customer may be interested in at the point when the customer is ready to buy.

Cross-selling, on the other hand, means offering other products or services which complement the item the customer is interested in, at the point when the customer is readytobuy.

Up-selling and cross-selling are essential elements that can lead to immediate increases in profitability. Unfortunately, most businesses waste this valuable opportunity because they don’t think of these strategies as tactics that belong in the marketing plan and should be a part of the policies and procedures of every company. They are not to be left to the casual whim of a salesperson. They must be strategically thought through and systematically incorporated so that your marketing efforts have the greatest leverage.

There are three questions you want to prepare a ready and compelling solution for. Answer these ahead of time and you will see your revenues and profits grow.

What else do my clients want if they accept my initial offer?

What can I offer them right now?

What can I findtooffer them that I myself don’t have, but could obtain from another business?

If a customer chooses a particular item, can you find a compelling reason to induce them to upgrade and buy something that costs a little more (up-selling) and brings you a little more profit? If so, will your offer be in their best interests or yours? This is a key question. If you take the philosophical standpoint that “I’m here to do what is right for the customer,” then you will likely begin to win more customers than you can count. However, if you’re selfish and think, “I’m going to get as much money out of this customer as I can,” then you will lose more long-term business than you can even begin to imagine.

Second, for each item that you sell, think of complementary items that you might offer that would make the offer more attractive. If you’re ready to give compelling reasons why a customer should buy something else from you, then you have understood the concept of cross-selling. Fast food restaurants can offer a drink at a “special price” for a cross-sell because the profit margin on drinks is so high.

Let’s first take some time and look at specific examples where up-selling is effectively used. It’s important for you to look at each situation and ask yourself, “What is it about that situation that I might be able to extract and use as a method for up-selling in my unique situation?”

Up-selling Examples

Every week Tim goes to the  chiropractor. He was new intown and met Dr. Mike. Mike is truly a caring person. He wants the best for Tim. So when he brought up the fact that he needed some chiropractic help he said, “Why don’t you bring in your whole family? I’ll give all of you a free exam and free x-rays.”

Mike was smart. Tim didn’t see this coming but when Tim saw his children’s spines and the way that they were all a little bit out of alignment, then he knew they had to get the care that he had denied himself for the past 15 years. He told Dr. Mike, “I can’t afford £30 a visit per person for my family of 5, twice a week.”

Mike said, “Don’t worry about that. I want to help you guys. Let me think of a solution.” And he did! The next time they saw him he said, “If you agree to come in for one year, I’ll get you healthy. I’ll just charge your family a total of £300/month.”

Tim knew it was a good deal and went for it.

Dr. Mike is bright too. He took a single patient who might come a few times and pay £30 a visit, and turned it into a significant sale.

If you’re in a service-based (or even a product-based) repeat business, then you can follow this model.

– Are you a consultant? Then design your program as a long-term deal and make it a win/win for both you and your client.

– Do you service cars? Perform oil changes? You can up-selltoa more in-depth maintenance package and you’ll probably find even more problems every time your client comes in the door.

– Do you offer dry-cleaning services? Could you up-sell to a one-year cleaning program?

– Could you do the same for a house-cleaning service?

– Or a coffee shop? (Sell a larger cup of coffee).

– Or a restaurant? (Restaurants frequently bring the dessert trolley around as a way to entice customers to order dessert. What if they gave a free sample of each dessert to everyone at the table? The taste and “reciprocity” would instantly double their dessert sales).

– Do you offer advertising services? (Sell a larger space ad for just a little more than a smaller space).

You can often up-sell to a greater package with a higher sale value that creates a win/win situation for both you and your customer. If you sell them an annual program, chances are they’ll spend a little more up front and you might get a little less over the long run, but here’s the key. There’s no guarantee that they’ll come back to you for their next service. It’s better to lock them in long term.

Cross-selling Examples

How about fast food restaurants? From the moment you walk in you know the cross-sell is coming: “Would you like fries with that or the meal deal?” That question has become ingrained in their business model and is worth billions to them. So if it works in their business model, do you think it would work in yours?

Remember that cross-selling is the process of selling complementary goods or services that are related to the original product or service that the customer wanted to buy.

These are other examples of cross-selling.

– If someone asks for a haircut, you sell them a manicure.

– If a painter is asked to paint the exterior of the house, they would ask to paint the interior as well.

– If that same painter went to buy paint, perhaps the shop assistant could sell them extra tools, tape, drop cloths, rollers or brushes.

– If someone wants to buy a suit, you sell them a belt and some ties.

– If a lady wants a new dress, you can also sell a matching sweater, shoes, a purse or jewelry.

Use Proper Timing

The best time to ask your up-sell / cross-sell question is AFTER the customer has committed to the initial purchase, but just before they pay for their purchase. Once they commit they’re instantly in a purchase mindset. But after they pay for their purchase, they have mentally closed the transaction.

You also want to avoid giving discounts on products or services they would otherwise have bought. One way to avoid this situation is to ask them if they need anything else BEFORE you complete the transaction. If they say no, then ANY additional sales you make amount to additional profit you would have otherwise missed out on. NOW is the time to mention the up-sell and cross-sell items on your special list.

Create a Script

Scripts will typically be a question that your staff will ask… or it will appear on a sign right by the register. If you want the flexibility of asking the up-sell/cross-sell question only if the customer does not purchase the item automatically, then you must deliver your script verbally as McDonald’s does when they say “Do you want fries or a Coke with that.” This will either take place at the physical point of purchase or when the purchase takes place over the phone.

If you want to stimulate the purchase of high margin products or services and want to provide the offer to every customer, then you want to post a sign near the cash register or other appropriate location. However, you should also ask the question at the time of purchase if the customer doesn’t purchase the item. This simple step will add 25% or more to the conversion rate.

The Financial Impact

Up-selling and cross-selling are not exciting strategies but you will find that a commitment to consistent up-selling and cross-selling where they become regular, systematic processes of your business will give you dramatically higher profits for very little extra work. Let’s look specifically at the impact.

Implementation

The hardest part for any business owner is to implement what they know to be right. If you’re working with your people, you have to make it a policytoup-sell and cross-sell… and your people has to understand the impact on your business and on their livelihood if they actually do what you ask them to do.

Recommendation: first decide what up-sells and cross-sells you want to offer… then write them down. (Look for items with high profit margins if possible). Next, find your best-performing sales person and have them test the idea for a few days. Take good notes and track results. Make sure they ask on every possible occasion.

See what difference it makes on your business. If it’s positive, then make it a policy for all staff members to follow. Tell your staff what the policy is, what they should expect (as a reward) if they follow the policy and what will happen (as a consequence) if they don’t follow the policy. Don’t allow their laziness to rob you of your profits.

Keep refining your up-selling and cross-selling strategies until you’re satisfied that you have served the customer at the highest level and you have ethically captured every penny of profit from them.