Too many small business people spend inordinate amounts of time and money trying to increase their profitability by attracting new customers when all along they’re allowing a goldmine of profits to slip by right under their nose.
What is a “Bump?”
Yes, on each and every transaction you have the opportunity to increase your margins dramatically with a simple “bump” or “up-sell.” Bumps are offers made at the point of sale by giving a simple suggestion.
For instance, my son and I go to McDonald’s every Saturday morning. He likes to meet new friends and play in the children’s recreation area and I like to sit down and read a book.
I always order a regular breakfast and each tie I go to order, the counter person asks me if I’d like to have the “big breakfast” instead for only a dollar more. This is a good example of a bump.
Bumps Add Up!
Although it only amounts to an extra dollar in revenue for that order, on an annual basis McDonald's rakes in millions of dollars based on that one simple suggestion.
You see, an important marketing principle to understand is that when people are in the act of buying something, they are in the buying mood and are highly susceptible to buying more.
This is especially true if you’re giving a related offer. Why wouldn’t your prospect what to buy more of what they’ve already decided to buy, especially if they can do so at a heavy discount?
Nine Simple Ways to Create a Bump
There’s a bump for everything – you just have to be creative. The following are nine ways to create a bump:
Bump #1: Unbundle your product or service and offer one of the pieces of your bundle as a bump.
Example: Unbundle a training kit and offer one of the CDs when selling the training kit.
Bump #2: Offer instructions on how to use your product on video, CD, or a manual.
Example: An instructional video when selling a new lawnmower.
Bump #3: Offer additional tools to make your product or service easier, faster, and simpler.
Example: A hands free car adapter when selling a cell phone.
Bump #4: Offer a low priced complimentary product.
Example: A hand shovel when selling a full-sized shovel.
Bump #5: Offer an extra unit of your product or service.
Example: Two pans instead of one.
Bump #6: Offer something to clean your product.
Example: Lens cleaner when selling sunglasses.
Bump #7: Offer a “secrets of” special report.
Example: Secrets of Do-It Yourself Beauty Makeovers when selling a haircut.
Bump #8: Offer a consumable product.
Example: A set of VCR tapes when selling a VCR machine.
Bump #9: Add extra shipping and handling.
Example: Add a shipping and handling fee 30% above the actual cost.
The Importance of Scripts When Bumping Customers
Scripts are essential for bumping customers. Your script should be a simple suggestion made to the customer at the point of sale. After deciding on your bump, create a script for your employees to use.
Make the script simple so that your lowest level employee can use it effectively. More than one or two lines usually tend to confuse employees (especially lower level associates).
Now that you have a script and you’re comfortable that it’s working, weave it into your business process. By this I mean, put measures and controls around it to make sure it’s happening and being delivered effectively.
You might do this with periodic mystery shoppers or simply calculating a percentage of bumps by employee and charting it. When you see the bumps per person go down it’s a flag that something isn’t right.
You’ll be amazed at the power and the profitability of a simple suggestive bump. Now on to up-sells.
Creating Profits Out of Thin Air Using Up-sells
Up-sells are offers made to customers for larger, more expensive products and services. Many business people think up-sells are bumps, but in reality an up-sell is the process of persuading buyers to purchase either a premium version of the same product or an additional premium package of products or services.
The key to effective up-selling is in the “value quotient”. The value quotient states that Value = Perceived Benefits / Price. When price stays the same and the perceived benefit goes up, the value goes up.
The process of up-selling attempts to increase the perceived benefit more than the increase in price, resulting in an increase in value and hopefully a successful up-sell.
Let me Let me give you a few examples, suppose your customer enters your hot tub store and wants to buy a $3000 hot tub. As an experienced up-seller your next move should be to…
Introduce your prospect to the $5000 model.
Explain all the added benefits of the premium model.
Make an offer that includes better payment terms (i.e. for only $15 more a month you can own -- ) and a host of additional accessories as a free gift (stuff they would have purchased with the smaller hot tub.)
The goal is to add so much value that your offer becomes irresistible. But don’t get greedy. As my friend Brad Anton once said, “Bulls make money, bears make money, but pigs get slaughtered.”
Up-selling to a Package of Products
Perhaps you have a higher priced product or service package (and I hope you do), why not offer your customer the entire package? The following are a few examples of single products and potential packages:
Oil Change: Total Engine Service Checkup Package
One Video: Monthly All-You-Can-View Video Continuity Program
Tax Return: Comprehensive Personal Financial Analysis
Dinner: Multi-Item Coupon Sheet
Hot Tub: Premium Hot Tub
Vacation Package: Hotel Upgrade + Additional Activities
The idea is to create higher priced upgrade package that are offered at a discount of what they would normally cost.
As with bumps, your up-sell strategy should be preplanned by developing up-sell scripts and creating incentives for your salespeople to close the up-sell offer. Put some thought to your incentive program because without it, your up-sell program will fail.
Other Ways to Offer Up-sells
There are many ways to offer up-sells other than in person. A tricky way to offer an up-sell on your website is to send your visitor to an up-sell web page after they have clicked on the “Buy” link.
On this page you can place a short salesletter upgrading them to the premium version of what you’re selling or simply an additional but complimentary product.
If you’re using direct mail you can put an up-sell offer in a second envelope that goes inside the main envelope. This creates intrigue and separates the main offer from the up-sell offer.
Every time someone buys from you why not include a sell sheet or catalog inside the product package that you are sending to your customer. This allows your customer to look over and purchase even more products from you. If they’ve bought from you once they are likely to do it again.
Once your prospect has purchased from you, put them on a scheduled follow up direct mail program that triggers a direct mail letter to be sent at preset time intervals. So lets suppose your customer purchased a lawnmower from you.
After the purchase they will get an offer for an additional bag one week after the sale, an engine cleaner the second week, a mower cover the third week – you get the idea.
The Art and Science of Cross-selling
Cross-selling is similar to up-selling; however, it happens over a longer period of time. Another word for cross-selling is “backend selling”. If you’ve ever heard of the term “backend,” then you already know about cross-selling.
Usually cross-selling to your customer comes after you have established a relationship with them over a period of time and they have purchased one or several products from you already.
To set up your cross-selling system you should start by developing a cross-selling list. This will be a one-to-many list, which identifies all the products you carry that complement (or that someone would be interested in) one product. Once that list is done then you move on to the next product.
Examples of Complementary Cross-selling Lists
If I sold business opportunity courses such as Profiting from Real Estate, my cross-sell list might contain:
1. Information Marketing Course
2. Internet Marketing Course
3. Stock Investing Course
4. MLM Marketing Course
If I sold marketing courses my cross-sell list might include:
1. Copywriting Mastery Course
2. Referral Marketing Course
3. Direct Mail Marketing Course
4. Print Advertising Course
5. Free Publicity Course
If I were a CPA and I sold tax return services my cross-sell list would include:
1. Bookkeeping
2. Personal Financial Advisory
3. Life Insurance Investments
4. Asset Protection Consulting
5. Will and Trust Consulting
If I were a pest control company, other services I would cross-sell would be:
1. Tree Cutting Service
2. Lawn Care and Maintenance Service
3. Landscaping Service
4. Small Home Repair Service
5. Mosquito Repellant Systems
What Happens If I Don’t Have Other Complementary Products or Services?
A common problem is business owners who sell only one product or service and don’t have anything to sell as a backend. If that describes you then you should either be licensing other people’s products or developing joint ventures with owners of businesses that offer complementary products and services.
You see, your customers are loyal to you and trust you. They would rather pay for a home repair done by you even though you do pest control than from someone who does home repair as 100% of their business.
Your relationship with your customer has value and that value is called “customer equity,” much like the equity you have in your home. Take advantage of it by consistently making complementary offers to your good customers.
Down-selling—The Little Known Psychological Trick That Results in Hefty Sales
Down-selling is based on the fact that if people buy respectable amounts of your high priced product or service, they’ll buy lots of the same (or similar) product or service at a much reduced price.
Haven’t you ever wanted to purchase something but you just couldn’t bring yourself to open your wallet or purse and give up the money? What if at that point you were offered a slimmed down version of that product or service at a much reduced price? The average buyer would jump right on it. That’s the down-selling concept.
Robert Cialdini, Ph.D., in his book Influence: The Psychology of Persuasion noted that people are magnetically attracted to a lower priced version of a product of service (and more willing to purchase it) once they’ve been exposed to a higher priced product or service in which they’ve shown interest as compared to those who were just exposed to the lower priced product or service.
If They Don’t Take the Bait—Lower the Gate
The way this tactic is implemented as a working marketing strategy is to always offer the higher priced, bells and whistles version of your product or service first. If your prospect doesn’t take the bait, then present them with a better offer for a scaled down version of your product or service but that keeps the same fundamental benefits of the high priced version.
For instance, pool builders who sell to home-owners should present their high-priced mega pool that may include a diving board, automatic built-in filtration system, custom shaped granite molding, etc., etc. Then if the customer says it’s too much, you can offer the line down at a reduced price.
If you’re selling consulting services offer the comprehensive service package. If the client shies away, then offer a scaled down version that provides the core benefits that the client is looking for.
If you’d like to see a live Internet version of a down-sell, visit www.MaketheGrade.com and scroll down to the bottom and look at the asking price. Then click off the site and read the popup. I get a lot of customers opting for the down-sell version.
Conclusion
Bumps, up-sells, cross-sells, and down-sells can all mean significant additional revenue for your business. In fact, your margins will be significantly higher on sales made using bumps, up-sells, and cross-selling strategies because you didn’t have to pay any marketing costs to get the customer; they were already yours.
To simplify this marketing strategy you always first want to up-sell and then bump on the up-sell. After you’ve up-sold and bumped then you want to try to cross-sell your customer more products and services. If they didn’t take the bait on your sales effort, make a down-sell offer.
People like to receive offers on products and services that interest them. Even the rich and famous want good deals. All you’re trying to do when you up-sell, bump, cross-sell, and down-sell is make irresistible offers that your prospects can’t refuse. |
