Dancing with Your Sugar Daddy (Part 3)

by | Advertising, Define & Target, Digital Marketing, Marketing, User Engagement

Up-Selling and Cross-Selling: Adding to the Sale to Increase Wallet Share and Profit

IKEA has a dirty little secret. Their biggest selling item and one of the most profitable in their chain is a product no one ever comes to the store to buy. Yet, year in and year out they sell millions of them. It’s called a votive candle. You buy them by the dozen, even if you never need any. And the only place you can get them is at the cash register, after you’ve decided on what you “intended” to buy.

McDonald’s does it too. The friendly clerk who asks, “would you like some fries with that?” isn’t just being friendly. They’re doing the most important and profitable job in the place. They’re up selling, leveraging the moment of purchase to increase the total ticket of the sale. Up selling is the process of adding to a single sale, increasing the total amount of that sale. Usually, the “add-ons” are perceived to add very little to the cost, but offer high perceived value. Often, they are intrinsically related to the original purchase, such as the “extras” in car sale. However, they can be the “impulse” items at the cash register, that you decide to buy “as long as you’re there.”

The automobile dealer that shows its cars full of extras, the restaurant that offers desserts and pies to go, the bank teller that offers you a CD’s. Everyone is doing it, as well they should. They’re all leveraging us, the customer, to get a bigger share of our wallet. They realize that once we flip out our credit cards, we’re in buying mode, much more likely to buy anything, especially related the sale. Its time to up sell.

Another form of leveraging the customer is through cross selling. Cross selling differs from the upsell in that the product or service in the cross selling situation is not perceived to be marginal. It is another, separate product, and is often sold at another separate time. If you’re a law firm doing litigation, you have a great opportunity to market employment law to the same client. If you’re selling heavy equipment, the equipment needs to be serviced. Even accountants have gotten in to the game. For decades, CPA’s focused on financial statements, audits and tax returns. Then came software that did that. Now, those same clients are buying financial planning, asset management, insurance and business consulting of all sorts.

You’ve Got To Ask
The simple act of asking “would you like fries with that order” or “would like to Supersize that drink” actually activates demand, prompting people to open their wallets by an additional 22%. The reason is the process we all go through before we decide to buy something. There’s a fear of making a commitment. Any commitment, whether its our time or money. We want to keep our options open. But, having made a commitment to buy something, we want to save ourselves time and money in the future if we can get something that is easily accessed at the same time or in the same place. In the case of cross selling, almost all buyers would rather deal with the same source for as many products and services as possible, if they were only able to get them.

Asking has a few important advantages. First, it creates awareness. Our customer may simply not know we have an item or offer such a service. The ‘ask’ may actually be put as a question about awareness. For example, “do you know about our 24/7 service program?” may be more comfortable than “would you like a service program with that copier?”

Second, asking creates demand. The buyer may not realize it, but the purchase of one item actually creates the need for other things that they may not be immediately aware of. They need to be “reminded” about the other possibilities. Selling a warranty program or installation makes no sense before you’ve purchased a washing machine. But, having made the commitment to buy one item, creates the need for related products and services.

Third, asking provides efficiency for the buyer. If the buyer is going to need or want the item in the future, they will perceive efficiency of getting it now.

Here’s an example of how it might work with the book you’re now reading. You’ve purchased this book and have gotten to page ?. If you’d like to get an audio tape of this book so you don’t have to read the rest, you can go to the last page of the book and order a synopsis of this book and other things I’ve written, for only $10. Also you can also get access to a number of other products we offer. Just call 800-837-2705 anytime or visit our website. And, as someone who has already purchased this book, you are automatically entitled to a discount.

Fourth, asking shows you care. When asked, “have you thought about what kind of coffee table would look good with that color sofa?” …the question is not so much about selling as advising or reminding. As the seller, you actually know a lot about what customer needs are likely to be. The simple act of asking for more business while you’re in the middle of a transaction plants the seed of a new sale, fertilizes it, allows it to grow in a matter of seconds. No prospecting. No advertising. No printing. It’s leverage at its best.

The items you’re suggesting have to make sense. Asking, “would you like some pizza with your burger, m’am…” will only get you a stare. Burgers and pizzas are substitute main courses. Cokes and fries are accompaniments. You’ve got to be asking about the accompaniments.

Assess New Needs
Nothing works better to cross sell or upsell a customer than knowing them better. The internet has made one-to-one marketing a high art, making it possible to adapt content and promotions to individual users based upon your knowledge of their needs. But, knowledge of your customer can be acquired through a variety of methods, including surveys, self assessments or advisory groups.

Surveys allow you to ask specific questions, in either in writing or in person. For example, warranty forms that come with products, and ask for a variety of information to activate your warranty are a form of customer survey, to allow companies to better understand their customers. If you have a product, it is a great way to get information from your customers. If you provide a service, sending a written “customer satisfaction survey” can provide the way for customers to give you feedback on your service, and qualify themselves for future services. Providing a “request for information” list of your products and services, gives them an opportunity to express their interest.

The results of a sales effect of surveys can be quite extraordinary. A recent study conducted jointly at Rice University and New York University confirmed the amazing impact of surveys on customers buying behavior. Although the study was testing the impact of survey research on sales of financial products, the results are instructive. Customers were three times as likely to buy something else and half as likely to defect.

In fact, the sales effect of surveys is so powerful, you have to watch how you ask. You could be “sugging.” Federal law requires marketers to disclose if their purpose is to sell goods or services when they’re conducting research because even the Feds realize the unfair advantage you have when your conducting research.

Self Assessment
Providing customers a way for them to assess their own need can be a power motivator, because they are effectively “selling themselves.” The key to selling more products or services to a customer comes down to two things: The customer knowing they have the need, and their knowing you’re a good resource for them to use to address the need. Self assessments do both extremely well. With a few key questions, customers can begin to understand their own vulnerability in servicing their product, or in other areas. These can be in the form of true/false questionnaires or more complicated “scaling.” In simple assessments, you need only to give a “score” and interpretation to be helpful. In more sophisticated assessments, you might even issue a report. An example of a self assessment can be found at the end of this chapter.

One of the possible ways of positioning a self-assessment is as an “entitlement,” ie, the client is entitled a free assessment of their needs at no additional charge. Entitlement marketing is the basis of many successful businesses, where the use of already “earned” benefits might be forfeited if not redeemed.

The next time you’re in an auto showroom, just try to find a striped-down model. If there are any, they surely aren’t on the showroom floor. The only cars you’ll see are the ones with extras that are bundled with the base product. In restaurants, the “all inclusive” dinner with salad, vegetable and dessert is bundling. A warranty or service agreement with your washing machine: bundling. The McDonald’s Kids Meal: bundling.

Bundling is simply the process of combining products and services to increase the perceived value and wallet share of a sale. Just like the up sell-by-asking, the bundling-by-bundling requires an understanding of what the natural “extras” should be. They can’t be capricious. Bundling fries with a burger makes sense. Bundling pizza and fries does not.

Done well, bundling serves a number of purposes. First, it increases the ticket of the sale, so you’re getting more wallet share from the start.

Second, customers often perceive added value in a bundled product or service, because the added services are perceived to have a lower price when bundled than when added after the sale, if for no other reason than convenience. If I were going to get a stereo in my car, I’d rather get it done without hassle and as part of the “package” than as an aftermarket product.

Third, you are positioning your firm as a multi-level provider. The simple act of bundling signals the breadth of your offering, even if you aren’t the manufacturer of the product or actual provider of the service. In fact, on of the best forms of bundling is providing products or services you don’t even make or do. You’re creating strategic partnerships to give more value and receive more wallet share from your customer.


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