Alright, so business is going well. Your customers are generally happy and the operation is running fairly smoothly. Now you’re thinking about how to maximize revenue! And you want to start focusing on…UPSELLING! We like it. We love it. We applaud it.
First, what is upselling? This is a sales technique designed to influence customers to spend more than they originally intended either by adding more to their cart or by choosing a higher priced item. A couple examples of upselling would be adding a bottle of champagne to the room, or a suite instead of a standard room at the hotel. Businesses frequently combine upselling and cross selling to increase value of the sale and maximize profits.
According to Oberlo, “ The probability of selling to existing customers is 60-70%, while the probability of selling to a new prospect is 5-20%.”
They have a great article on why upselling is important HERE
Now, let me tell you a story about our client, a small restaurant chain, and why it is important to create an upsell strategy before implementing.
We were on a call with our client and they were encouraging their managers and employees to sell a common dessert item at their restaurant. At first glance this made sense! And they thought they were creating an ‘easy sell’ situation. I mean, who doesn’t like dessert?!
However, when we started to explore this with our client we noticed a couple of opportunities and helped them restructure their upsell strategy to create an even bigger impact.
What we discovered was that the dessert item was not made in house, but by a 3rd party provider, the cost was greater, and provided less profitability than they expected.
Also, when we read online reviews, we noticed that the most common food complaint was about this dessert item. The other big problem was that since this was not made in house, like the rest of their menu items (other than not being in control of quality) was that they frequently ran out and could not predict the availability of the item.
After seeing this upsell plan and it’s flaws, we decided to provide you with a list of a few Do’s and Don’ts for your own upsell strategy to help keep you making additional profits, not failing your customers, and keeping your operation running smoothly.
DO Identify which products are best for Upselling. Be thoughtful in your choices. The goal is to choose a product(s) that will increase profitability while not impeding your current operation. Consider things such as room availability in your hotel or side dishes or desserts, as mentioned above, for restaurants.
DO NOT Choose a product that has negative reviews or has poor feedback from customers. You want the upsell to increase revenue AND improve the customer experience.
DO create a promotion and some exciting commotion! I mean, what’s the point if no one knows of the great product opportunity? Ideas might include print materials like a key packet in a hotel, or a table tent in a restaurant, social media, obviously, and email campaigns are essential! You will want the offer to be compelling and enticing so go ahead and offer a discount.
DO NOT sell at such a deep discount that it becomes a loss. Discounts can be great promotions but if you are not taking cash flow to the bottom line, what's the point?
DO Consider Operational procedures and implications. Some products require extra time and attention. So be sure to write out a SOP (Standard Operating Procedure) prior to promoting your upsell. Think about things like if this will require extra staff, how to communicate properly internally and provide the product to the guest. Be thorough and walk through step by step the guest and team member experience to think through all the details.
[Pssst…..Check back next week for “HOW TO WRITE AN SOP”]
DO Train on Upsell spiel and verbiage. If you are at the front desk, checkout counter of retail, or restaurant it is highly recommended that you educate and train your staff on how to upsell the product. Our suggestion is to share: Which Product, Why that Product, Feature and Benefit of the Product (What’s in it for the customer), The promotion/Offering, Internal process for the sale, Reward/Incentive (what's in it for them)
DO NOT force a sale to a guest/customer. No one likes to feel pressured into buying something they don't want. Make the offer and accept the no and move on. Remember you are always aiming for a positive guest experience no matter what product they choose.
DO Track your upsells! Data is a key to success and duplicating success. You will want to track things like which product sold best and associated trends. Top of mind, consider day of week or time of day that products sell better. Perhaps seasonality or target audience will shed some light on a successful upsell program too.
One last thing… DO reward and incentivize your staff. They are working hard to make these sales and that extra motivation may reap rewards for the entire team.