HOW TO BOOST THE SALE OF YOUR PRODUCTS FOR HUGE PROFITS

At times, it can seem as though there are as many pricing and sales strategies as there are business industries. Certain companies down-sell, while others rely on cross-selling and upselling to match their customers with desirable products to build a sustainable business. For many CEOs, the distinctions between these methods can be unclear at first – especially in regard to upselling and cross-selling, which share some similarities.

Below is a beginner’s guide to these techniques that outlines all the information I wish I had known when I first started Varsity Tutors. As you move forward with your company’s sales initiatives, you may find that these fundamental concepts help you strengthen your bottom line.

Upselling

Upselling is a popular sales strategy in many industries. Upselling encourages a customer to purchase a more expensive model in the same product family, or to augment the original model with additional features. Consider JetBlue’s “Even More Space” initiative, which allows passengers to buy seats with more legroom. This upsell was projected to net JetBlue $190 million in additional revenue in 2014 (compared to $45 million in 2008, when it first launched). On a broader scale, let us consider statistics from the travel industry: 48% of airline passengers and 59% of hotel guests are interested in upgrades and additional services, which means that you could be leaving money on the table if you neglect to research upsell options in your industry.

Once you decide on the features and/or models that you plan to upsell, develop a range of options that positions one choice as the most attractive. Timing is also critical. One great way to upsell is to ask a customer who has already committed to purchasing Item A whether he or she might be interested in a slightly more premium product that offers the same features as the basic model, plus additional functionalities. If you own a car dealership, this might mean the difference between the base model of a Toyota Camry, and one with leather seats and a rearview camera.

When upselling, the key is to keep your customer’s needs and wants in mind. A person who is looking at a $20,000 sedan may not be interested in a $50,000 sports car. However, that person may be interested in a $23,000 sedan. Be sure to align your upsell with the underlying needs and wants that drew this customer to the original product.

Cross-selling

Cross-selling is a technique that entices a customer to supplement his or her initial purchase with products that complement it. Amazon attributes up to 35% of its revenue to cross-selling – both the “Frequently Bought Together” and “Customers Who Bought This Item Also Bought” sections promote products related to the item that you are currently viewing on the site. Another prime example is McDonald’s classic question, “Would you like fries with that?”

To cross-sell effectively, think about those products that naturally pair well, like coffee and donuts. What is the coffee to the “donuts” that you’re selling? Pay special attention to the price points of the items you pair, as cross-sell products are typically similar in cost, rather than different by multiple orders of magnitude.

Whether you choose to cross-sell, upsell, or both, strongly consider tracking your data. Which of your products pair well for cross-selling? What features drive your upsells? What moment in the purchasing decision process is the best time to suggest a cross-sell or upsell? Metrics can help you fine-tune this portion of your sales plan, and carefully developed cross-selling and upselling initiatives can enable you to dramatically increase your company’s growth.

Chuck Cohn is the CEO and founder of Varsity Tutors, a technology platform for private academic tutoring and test prep designed to help students at all levels of education achieve academic excellence.



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