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UP-SELLING & CROSS-SELLING – ‘WOULD YOU LIKE FRIES WITH THAT?’

Make the most of your sales with simple techniques that have been perfected across centuries by the maestros of sales. Mairead Rodgers looks into how you can translate the finer points of up-selling and cross-selling into exponential sales growth.

It’s a Friday night and you’re ordering a burger at your local take-out. As the employee takes your order, they ask you if you would like to upgrade it into a meal. They follow by suggesting their new ice-cream sundae for dessert. Before you know it, you’re walking out of the store with an extra bag of goodies you never expected to buy.

This is a classic use of two popular marketing methods: up-selling as cross selling.

Up-selling and cross-selling focus on retaining customers rather than gaining new customers. Fast-food and retail giants have used this for decades – proof of a highly successful marketing technique. You can use it in your small business too.

 

UP-SELLING

Up- selling is when an existing customer – who has previously purchased or is in the process of purchasing a product – is offered an upgraded version of their sale. Up-selling also includes suggesting an additional feature that may relate to the purchased product. A great example of up-selling is fast-food giant McDonald’s asking the simple question, ‘Would you like to supersize your order?’.

CROSS-SELLING

Cross-selling is selling additional products that benefit the buyer, using suggestion, incentives or product placement. Referring to McDonald’s again, ‘Would you like fries with that?’ is cross- selling, as it’s an incentive to buy an additional product.

DO THEY WORK?

If your business is able to gain a loyal customer, it is more likely that they will consider purchasing additional products due to the trust formed between business and client. In 2006, online book retailer Amazon reported that cross-selling was responsible for 35% of its sales. Imagine how big your profit increase could be if you sold a single extra item with every purchase.

Customer retention can also decrease the expenses of a business, as it costs six to seven times more to acquire a new customer rather than retaining an existing one, according to Frederick Reichheld of American consulting firm Bain & Company.

Furthermore, there is a 60% to 70% probability of selling to an existing customer, compared to just a 5% to 20% chance of selling to a new prospect, according to a study by Marketing Metrics.

Remember: you already have the customer and if you can add value to their sale, then it’s a win-win situation.

WHAT NOT TO DO

When you have a customer’s loyalty, it might be tempting to up-sell them for a few extra dollars, even if this involves offering something entirely unhelpful and unnecessary with their purchase. You must resist the temptation to do this as it ruins any trust in your brand.

Set some basic ground rules, such as no up-selling above 25% of the original price and no suggesting supplementary products if the customer has already declined an offer. A customer will not return to your business if they feel unreasonable promotions and accessories are being shoved down their throat. However, keep in mind the cost to install the incentives against the potential profit and return business. Only offer what you know you can afford; it’s not use giving out coffee stamps if a customer gets to number eight only to find out the deal is no longer valid because the business went bust!

If you time your suggestions well, place your products carefully and offer customers something for their loyalty, you will find your sales and profit increasing significantly with regular customers. Moreover, customers won’t hesitate to spread the word if they believe you are looking after their best interests. Soon new customers will be attracted to your business with no expensive marketing strategy required.

 

BRICKS & MORTAR SALES

It’s all about customer service in this scenario. If you’re dealing with a customer in person, it is vital that you keep their needs as a priority. Don’t be afraid to suggest other products that will be beneficial to the customer during sales. For instance, if they are purchasing a phone then it makes sense to offer them an additional cover or screen protector.

POS promotion

‘Point of sale’ (POS) promotion is as simple as placing chocolates on the register counter and allowing customers to buy on impulse. This is a very popular method in department stores and supermarkets. In any grocery store, no matter how big or small, you will find evidence of POS promotion. This includes the magazines that catch your eye as you wait in queue and the chewing gum you buy as you wait for your groceries to be packed.

 

Product Placement

Product placement is an easy way to increase your sales. Not only does it make sense to place the shampoo next to the conditioner, but it also encourages the customer to buy both products, even if they don’t necessarily need one. You will be surprised how small-ticket items will add up if placed in the right line of sight.

Incentives

Give your customer a reason to come back. Go a step above product placement and not only place the shampoo next to the conditioner, but offer a discount. For example, buy one and get the other half price. This will increase your chance of a sale as well as your customer retention rate, since they see a benefit to shopping at your store.

If you’re working at a café, then consider coffee stamps – if a customer returns to your store for a coffee 10 times, then reward them with one free. If you own a retail outlet, consider a loyalty card that offers returning customers an in-store discount for shopping with you.

Creating Community

Create a sense of community by supplying helpful advice in store. News travels fast on social media- you want your customer reviews and praise to travel far and wide.