Most of us are very familiar with the up-sell. My most memorable up-sell experience was buying a jeep. The advertised cost was “Starting at $17,500”. That got me interested. I drove away with a $24,000 jeep. How’d that happen? The up-sell.
Up-sells are predicated on one simple idea: multiple product and service levels. If you only have one standard offering, you can’t make the up-sell. If you have multiple levels from basic to standard to superior then you have the opportunity to up-sell. Cars have base models, sport models and options. Gasoline has regular and premium. Cable TV has basic 20 channels, 40 channels and 80 channels.
A great management tip you can take away from this is that multiple product and service levels allow us to sell people the level of service they desire and serve the needs of a wide market.
So when is the best time to offer the up-sell? To understand this we need to review the customer purchasing cycle.
All customers go through four basic stages when making a purchase:
1. Shop for it and make a decision to buy
2. Order it and work out the details
3. Get it and pay for it
4. Use it
When you are still deciding what to buy you are researching, price shopping, comparing features and doing all the things you need to convince yourself you really need to purchase something and deciding where the best place to do that would be. I call this the shopping stage. During this stage you looking at what is available and who you can trust. There is so much information, that you can’t possibly start to consider all the details of each possible purchase. This is not the time to up-sell. You must sell before you can up-sell. Up-selling at this stage can turn people away.
At some point along the way you make a decision. You pick a place and a thing (or a service) and you decide “I’m going to do this”. From a business perspective something very important has just happened. You have started to imagine you already own it. You have crossed a very important psychological boundary from shopping to ordering. You are no longer comparison shopping and wondering if you really need it, you have decided you are going to take the necessary steps to get it. You are now open to the up-sell.
The best time to consider offering your customers the super-duper package is after the purchase decision has been made. This is a simple idea and also a very important concept to understand because it works. It is so important that many businesses hand you off to a different department as soon as they determine the purchase decision has been made.
When you buy a car, the sales person takes you to the decision point, then the “manager” works out price and lays out the “additional items” that you won’t want to turn down because they are so important.
When you go to the till in an electronics store they then ask if you want to add the “extended warranty”. None of these were mentioned during the conversation with the sales person that convinced you to buy. All of them are valuable to you, and increase the overall value of the sale to the business. They are all up-sell opportunities.
Offering multiple levels of your product or service allows you to employ up-sell strategies to increase the value of your average sale. The up-sell offerings must be of genuine value to the consumer, and are generally accepted best if you wait until after the initial purchase decision to offer them. For some types of up-sells you may even want someone other than the sales person to offer it to the customer when they are placing the actual order.
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