Upselling is a tried and true method for increasing revenue and enhancing customer service. It’s as deeply entrenched in the culture of selling as the business card, and almost as ubiquitous. Check any beginning sales course and the tactic of piggybacking additional complementary items onto a transaction or enticing the customer to opt for the next most expensive model, brand, or version will be front and center on the syllabus. As a business owner, upselling has big potential benefits. You’ll typically make more money from your existing customer base, and if a customer really does forget that he needs batteries to power his new universal remote, you’re on target to perform a little customer service wizardry.
When Upselling Fails
Marketing programs reward salespeople for upselling. The more a salesman sells the more money he makes. This can extend to premium commissions on harder to sell or targeted merchandise too. It all sounds pretty effective and positive, and it can be, when times are good. When times aren’t so good, suggestive selling can sometimes be a quick way to lose customers. Here’s why:
According to the “Smart Money” column of The Wall Street Journal, only about 15 percent of consumers want to hear about other offers. Most want their goods, and that’s it. Why listen to a pitch about a more expensive vacuum cleaner model when you can barely afford the one you have in mind.
Explaining about consumable and ancillary purchases can focus the buyer’s attention on important extras that aren’t included in the base price of an item, creating a backlash when he realizes that a “kit” isn’t as complete as he expected or that “some assembly required” really means that the set of optional tools aren’t optional at all. Informing a customer that an item’s packaging has gotten smaller, a common occurrence in this economic climate, so he should buy two, won’t win any awards.
The nature of the “suggest” in suggestive selling is important too. If the recommendation is perceived as silly, like pointing out the value of buying an area rug to enhance that vacuum cleaner purchase, then the salesman, and the store, can lose credibility. Recommending extended warranties for unlikely items and making irrelevant pairings forged just for the purpose of upselling both qualify as the sales equivalent of junk mail.
One Sale Does Not Fit All
You’re probably not going to ban upselling any time soon. That tantalizing 15 percent of consumers who will be interested in an upsell are still out there. Some retailers identify upselling opportunities by targeting product purchases that indicate good discretionary income or, as in the case of bulk purchases, appeal to customers who may be open to upselling if it results in additional savings. In the end, knowing your average customer and employing an experienced and intuitive sales and marketing staff is the best way to know when and how to upsell effectively.