“Would you like fries with that?” These six simple words have gone down in business history as they are credited with generating millions in profit for one of the biggest companies in the world – McDonald’s. They are also one of the most well-known examples of cross selling.
Upselling and cross selling are strategies that you can use in your business to increase revenues and profits. When done right they can generate results with minimal investment or resources. Usually it involves training and motivating your staff, or making small adjustments at the point of sale, whether that is a physical point of sale in a shop, or in an ecommerce store.
How can you include upselling in your business strategy?
Understand The Difference Between Upselling And Cross Selling
The first step is to understand the difference between the two. They are similar terms that are often misunderstood, so, what is the difference?
- Upselling involves selling a similar but more expensive item, an upgrade, or an add-on
- Cross selling involves selling a complementary, related, or supplemental item
An example of upselling is where a sales person convinces you to buy a feature-packed model of car instead of the base model. An example of cross selling is Amazon’s “Customers Who Bought This Item Also Bought” section.
Both can be effective strategies, depending on your business. Here are some tips for making upselling and cross selling work.
Make Sure The Offer Or Pitch Makes Sense
The products that you are trying to upsell or cross sell should be related. The car sales person above, for example, would struggle to upsell a customer to buy a boat instead of car. Getting them to buy a higher specified car is much more realistic. Similarly, if McDonald’s offered pairs of socks with their burgers instead of fries they would not have had anywhere near the same cross selling success. So, make sure the upsell or cross sell offer that you are making is sensible.
Timing Is Everything
Timing is also important when you are upselling or cross selling. If you jump in too soon you could lose the sale altogether. The right timing will depend on the nature of your business, but it is likely to be whenever the original sale is closed, or when the customer is very close to a buying decision. The thing you have to avoid is scaring the customer off, or appearing greedy.
Don’t Price Yourself Out
The impact of price depends on whether you are pursuing a cross selling or upselling strategy. If you are pursuing an upselling strategy the tipping point is usually around 25 percent – the customer may be willing to pay an additional 25 percent to get more features, extra functionality, or add-on products, but they are unlikely to pay more. The same price restriction is not as important when cross selling as the customer has to perceive value in the item itself, not in the overall deal. If you follow the Amazon model, however, most of the cross selling that they do is for products that are close in price to the item originally purchased.
Always Add Value
Selling additional or more expensive items just to generate more profit, or to clear out inventory, will not be successful if the offering doesn’t genuinely add value to the customer. Customers can sense when businesses are just trying to make a quick buck. Even when they purchase the upsell or cross sell they don’t feel good about it, which is not positive for you in the long term. You should therefore always consider your upsell or cross sell offers from the perspective of customer value first and profitability second.
Contact a member of the Gilroy Gannon team today for more ideas, tips, or advice on how to increase sales, revenue, and profit in your business.