I went into a McDonald’s yesterday and said, ‘I’d like some fries.’ The girl at the counter said, ‘Would you like some fries with that?’
– Jay Leno
As I was presenting at The Business Show last week, I delved once again into how small businesses consistently ignore the most obvious and best strategies out there to increase their sales massively.
One of the 5 Ways, working on increasing the Average £ Value, is used by almost every large company and yet small businesses consistently turn a blind eye towards these strategies. Two of the most popular strategies to increase Average £ Value are Upselling and Cross-selling.
Upselling is suggesting your customer buys the more expensive model of the same product or service; or that they add a feature that would make it more expensive. With upselling, you’re suggesting they pay more in exchange for a better product or service. Examples of this would be the customer buying a 42” TV instead of a 40”, or buying a branded product instead of an unbranded one.
Cross-selling is when you suggest your customer buys additional products or services from a category that is different from the product or service they are purchasing. Examples of this would be buying a DVD player to go with a TV or paper to go with a printer.
Here’re a few quick tips on how you can start creating a system within your company to ensure cross-selling and upselling opportunities are not being lost.
Perhaps the most important aspect of increasing average £ value is to have robust product knowledge with everyone who delivers the product. How is this product used? What would make it easier to use this product? What need are customers trying to fulfil by buying this product? This helps the salesperson understand what products fit well with this product in the customers’ mind.
Price Vs Perceived Value
An upsell works best when the perceived value of the product being up-sold is significantly higher than the additional price that it commands. Remember, if the customer has already decided to buy a particular product, they have established an anchor for what they are willing to pay. Everything else is now going to be compared to this anchor price. Selling a £40,000 car to someone who has just test driven a £15,000 car may not work whereas presenting a £16,500 car which is a sports model of the £15,000 car may just do the trick.
What has the customer bought?
It’s important to understand specifically what the customer has agreed to buy. What are the key features of the product that really convinced the customer? When trying to upsell, it is critical to maintain these key features. The upsell should add other reasons to buy and not attempt to replace the current reasons to buy!
Make sure your team knows the key cross-selling products
Some products work better than others for cross-sell. Everyone in your business needs to know what the specific cross-selling products associated with each product are. Think about your trip to the supermarket. You’ve done your shopping and you’re ready to complete your purchase and when you approach the payment aisle, you see chocolate bars, magazines, chewing gum, mints all lined up tempting you. Cutlery, flowers and frozen peas would hardly make you reach out at this point.
Cross-sell works better when the suggested items are half price or lower than the item being purchased. You’ll have more success convincing a customer to add a £400 DVD player to a £4,000 car, compared to trying to cross-sell using a £2000 custom finish. Cross-sell is also more effective when the original product is priced higher or requires more thought. Take a quick look at Amazon to see how intrinsic these strategies are to the way they do business. If you’re looking to buy a camera, you will be cross-sold at every step of the process – ‘Frequently Bought Together’ and ‘Customers who bought this item also bought’ when you first look at the product, ‘Available Warranties for this item’ and ‘Make this a gift’ after you’ve chosen the product and ‘Amazon Prime’ or ‘Premium Delivery’ when you’re about to pay.
You may also be up-sold through ‘More Buying Choices’ right at the beginning. Amazon reports that up to 30% – 40% of their sales come through cross-selling and upselling! How much sale does your business generate through cross-selling and up-selling?
Look at your own products and start to put these powerful average £ value strategies to work for you.
If you would like to discuss any of the points covered here, please feel free to request a free call below.