Lifecycle Marketing Consultant
  • Awarding a 2014 Chevy Camaro to The Big Drive winner Janette Gleason at PartnerCon 2013

    Awarding a 2014 Chevy Camaro to The Big Drive winner Janette Gleason at PartnerCon 2013

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    Teaching Infusionsoft Partners at the Partner Summit of the Rockies

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    Meeting with Alex Houg from BlitzMetrics

How to Offer Compelling Deals: A  Lesson in the Art of Upselling and Cross-selling

How to Offer Compelling Deals: A Lesson in the Art of Upselling and Cross-selling

Entrepreneurs often lose potential revenue when they do not utilize upselling or cross-selling tactics, which is a subtle, almost natural, point-of-sale add-on. From McDonald’s “Value Meals” to Amazon’s free shipping qualifications, the upsell and cross-sell are powerful marketing tools that many business have learned to embrace because of how simple they are to implement and of their staggering ROI. When all is said and done, the key is to offer compelling deals that give customers a sense of savings and value, which prods them into making an additional purchase. The following is a lesson in the art of upselling and cross-selling.

What is Valuable to the Consumer?

Everyone likes to feel that they get some value out of the things we use. Commerce has always understood this, hence why trillions of dollars exchange hands around the world everyday. Consumers want to know that they’re getting something valuable from your product or service. There is the perception of value versus actual value, and adding on features that provide tons of value at little or no additional cost to the business accounts for a greater net profit per transaction. After decades of marketing research, technological advances and consumer evolution, discovering what is considered “valuable” to consumers is still elusive, as this notion of value is in a constant state of flux, with changing consumer trends and perception. Value, like beauty, really is in the eye of the beholder.

Why is It Valuable to the Customer?

At the point when a consumer is approached with an upsell or cross-sell offer, they must decide in a mere instant whether or not the offer is valuable. What kind of deal am I really getting? A perfect example is the McDonald’s “Value Meal” model. Let’s say you walk under the Golden Arches and order a cheeseburger. Do you want fries with that? Fries do compliment a burger, so you order the fries on the upsell, but now because you bought fries, do you want a “Value Meal” that includes fries and a drink for only a dollar more? Many fast food establishments now utilize the “Value Meal” and “Upsize” models to not only give consumers more choices, but also significantly increase profits.

Create Interest and Incentive

We know that consumers contemplate an offer’s value when they are presented with different options, so how do you create the interest and incentive for the upsell or cross-sell? For instance, if your website or app has membership options, price them accordingly to reflect the value of each option to consumers.

Membership options for Gold’s Gym in Long Beach, CA

Membership options for Gold’s Gym in Long Beach, California. “No Monthly Dues” may be the most valuable in terms of savings, but consumers may see more value in the other options, as the upfront cost is not as steep, thereby being more accessible.

Upselling and cross-selling offers should not be overly complicated; the simpler the better. Remember that consumers want immediacy and if they have an offer in front of them and in that moment they find value in the offer, they will most likely purchase. In the mind of the consumer, they are thinking which is the better deal?

Steps to Successful Upselling and Cross-selling

1. Create an Entry Level

Apple is one of the masters of upselling and cross-selling. Think about the iPad for a moment. What does an iPad cost? How much did you pay for your iPad? Are you willing to upgrade to the latest model iPad for $499? It is clear that many consumers are willing to go for the upgrade, as iPad sales are at record levels with many users having previously used at least one generation of the popular device.

2. Give Consumers Easy Choices

Going with the iPad example, Apple doesn’t overwhelm customers with purchase options. Ultimately, Apple knows that these upsells and cross-sells for the iPad provide customers with a good value without breaking its price-points.

Apple's iPad options

Is a 16GB iPad the right one for you? For only $100 more, you can get 32GB—a 200% increase in storage for only 20% more in price (a pretty good deal). Then for an additional 6%, you can also add 4G LTE service.

The most important aspect to pricing your upsell and cross-sell options is to ensure that the options themselves do not exceed 25% of the total purchase price. Although the iPad example breaks this model, Apple is one of the few exceptions to the rule.

3. Offer Bundles

Consumers tend to like products and services when they come bundled. This gives the greatest perception of value to consumers, and bundles can significantly increase your upselling or cross-selling efforts. Kickstarter does this very well, with project producers offering various incentives as rewards for project donors. Generally the larger the donation, the better the bundle. Some offer packages similar to this one, which is from a Kickstarter project for a success coaching book:

  • Basic – Coaching Package ($999)

  • Deluxe – Coaching Package + 3-hour one-on-one mentoring ($1299)

  • Premium – All the above + a signed copy of the book ($1500)

Remember, it’s all about how valuable your offers are to consumers.

4. Leverage the Power of Social Value

When it comes to services and products in particular, consumers like to be like their friends. This is the power of social value that is created when consumers see what their friends and other like-minded consumers have purchased. Amazon is the leader at doing this. Facebook is playing a stronger role in leveraging the power of social value with their new ads platform.

5. Meet the Need for Bulk

To many consumers, what’s better than one of something? Two of something, naturally! Your upsell or cross-sell should entice consumers with buying in bulk because in reality, bulk purchases yield a lower cost-per-unit. This can be applied to your product or service offers to increase your profits.

6. Limited-time Offers

Consumers understand urgency when it comes to purchasing power. By presenting limited-time offers, this creates the need to make a compulsive purchase to get the deal at hand, resulting in a high upsell rate. Save 20% when you buy 2! or Free Shipping before such-and-such date!

7. Upgrade from Competitors

Mobile and wireless providers are constantly in battle over their customer bases, with consumers always looking for the best value in terms of service. With steep competition, some mobile carriers are vying for subscribers by offering options ranging from getting new customers out of their old contracts to no monthly contracts at all. While this has helped the newer players on the mobile scene, major providers like T-Mobile, AT&T, Verizon and Sprint have had to revamp their offerings to meet the expectations of this generation of consumers.

8. Warranties and the Fear of Loss

People like to feel secure and in this age of privacy protection, by using consumers’ fear of loss, warranties are upsold or cross-sold. Warranties give consumers the peace-of-mind that they need, knowing that should anything happen with their purchase. Just in case… Some examples of this would be:

  • Extended Warranties

  • Dedicated Tech Support

  • Managed Services

  • Upgrades for Life

There are huge margins for warranties, too. According to the journal Business Week, warranties account for 45% of Best Buy’s annual income. Most warranty margins range between 60 to 70%, which breaks down as: for every $1 spent on a warranty, 60 cents goes to the retailer, 20 cents goes to pay out on claims with 20 cents going to the insurance company. Now you see why Best Buy always tries to upsell warranties.

9. Post-purchase Cross-sell Targeting

The sale doesn’t have to end once the consumer makes a purchase. Cross-selling by targeting customers post-purchase is a great way to drum up repeat business, as it keeps your brand and its awesome offers in the consumer’s mind. A simple email blast or reaching out via social media is an effective way to do cross-selling.

10. Become an Affiliate

Affiliate programs run far and wide and make for a good incentive for consumers that love your brand and want to grow with it as an affiliate. Affiliate programs have to offer relevant value to the consumer by being in a particular niche industry or having a partner program that works as part of the overall solution. Infusionsoft’s affiliate program offers an easy, flexible and free way for you to generate extra revenue if you have a strong presence among small business owners through your website, email contacts or social networks.

The Bottom Line

There it is. The art of upselling and cross-selling. By giving your customers compelling offers, they likely will be upsold or cross-sold because they perceive some intrinsic value with your product or service add-ons. Keep the offers coming and the customers will keep coming, too.

Do you know any good tips for upselling or cross-selling?

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