#087 - The Upside Of The Downsell For Growing Your Profits

Show Notes

You’re talking to a potential customer about a particular product or service. They seem to love your sales pitch. But then they throw out an objection such as your price it too high or they have to think about. Either way, it seems like the sale isn’t going to happen. What should you do?
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Acquiring a new customer can cost 5x more than retaining a current customer, which is why co-hosts Nola Boea and Lori Vajda wanted to discuss the power of a sales technique call the downsell. Not familiar with it or how it works? Tune in to find out how downselling can help you grow your business bottom line.

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In This Episode You’ll Learn 

• How to easily increase sales in your business.
• The what, why, and how to use 3 sales techniques to overcome customer objections.
• How effective downselling can increase more than just your sales.
• Tips for small business entrepreneurs who have never effectively used downselling.

Key points Lori and Nola are sharing in this episode:
(01:36:56) What is upselling, how does it work and why is it so effective with a certain type of buyer?
(03:47:92) How to use cross-selling, when it works best and why it’s so effective. 
(05:23.59) When your customer show interest in your offer, but is hesitant to make the commitment, this sales technique works best.
(06:49.89) How to strategically use the upsell, downsell and cross-sell to help increase your profits.
(8:26.33) The five ways downselling helps increase your bottom line. 

Resources 
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Transcript

[00:00:00] Lori: Has this ever happened to you? You're meeting with a prospective client. They love what you have to say. It feels like you're both on the same page. So you move in with your offer. They respond almost like deer in the headlights. An indication the price is too steep for them. What do you do? Stay tuned friends, because in this episode we're sharing the upside of the downsell so you can engage prospects and grow your sales.

[00:00:26] Announcer: You're listening to the Sticky Brand Lab podcast, where time strapped professionals like you learn how to create a business you love in as little as three hours a week.

[00:00:37] Nola: If your prospective customer says, your price isn't in my budget. Do you let them walk away? Well, you could, but you're not likely to grow your bottom line if you do. What's the alternative? Enter the downsell. In today's episode, we're sharing five ways you can use the downsell to grow your business.

[00:00:58] Lori: It almost sounds like an oxymoron, right? Downsell to grow? But upsell, downsell and cross-selling are all sales techniques. And if used strategically, can increase your sales. Whether you've ever used these techniques yourself, you most certainly have been the recipient of them, if you've ever purchased anything. At least one, two, if not all three of those. So we're going to get started by giving you a foundational understanding of what these techniques are, how they're used and why they work. We'll start with the upsell.

Sales professionals use upsell as a way for you to buy a more expensive version of a product or service you were already going to purchase. So for example, if you've ever purchased a basic model or you go in with the intention of purchasing a basic model, the sales professional shows you an upgraded version with a few extra features that you would love to have. That's an example of an upsell. I actually had this, my husband and I actually had this happen. We went in for our wedding thinking that we would just get a standard cake like at the local grocery store, because not very many people eat the wedding cake and for us, we were going to do a dessert buffet. So I just wanted a wedding cake so that I could cut the cake and we would have something good enough to eat. Well, we went and visited some bakeries. We found a bakery that was O M G delicious. In my mind, we were still going to stick with a basic cake. We walked out -- I actually had deer in the headlights because I realized I just bought a cake that exceeded any expectation I had for my price point at that budget. So, that's the good example of it works when the customer understands the value in making the upgraded purchase. And why it works? Because the sales person took time to let you know what you would be missing out. It's almost a combination of appealing to your heart and your head at the exact same time.

[00:03:18] Nola: Great. the other technique is cross-selling. Cross-selling it's about selling you a product that is related to something you're already buying. For example, you're buying a mobile phone and the sales professional might say, Hey, don’t you need some headphones or a SIM card or a mobile case, you know, to protect your phone when you drop it.
Or the classic example is, would you like fries to go with that?

[00:03:45] Lori: Yeah, that is.

[00:03:47] Nola: Other examples are like bundling a package. You bought that phone, right? Well, Today also sign-on for internet and HBO, you can get a better price. Well, it's a much higher price than you were expecting to pay for just a phone, but that bundle makes you feel like you've gotten that extra value. Right? So cross-selling works when your customer is buying or has bought that product or service. And it's usually, offered on the way to checkout or immediately after the purchase. Why it works? It's because it makes logical sense and it seems to be quite a logical benefit to the customer.

[00:04:27] Lori: Absolutely. You will see this a lot on online e-commerce sites. When you go to checkout, you're ready to pay and a pop-up shows up and says, would you like this limited time only. It's like a, a journal to go with the course that you are already paying. Or something related.

[00:04:45] Nola: Did you know they had a purse to go with those shoes?

[00:04:49] Lori: Thank And you DSW. Uh, yes. Now downselling is kind of like the name says, it's the opposite of an upsell. It's often used when the prospective buyer is interested in the product, not interested in making a purchase. So don't let the words not interested fool you. Sometimes it is related to the price, but it can also be related to the time commitment or they're not sure, the customer is not sure, that the benefits will truly resolve the problem that they're addressing. So downselling works best when your customer is interested in what you have to offer, the product or the service, but they're hesitant to make the commitment. And why it works is because it gives them an alternative that they're more comfortable with. It really aligns with their purchase decision. I don't want to spend. amount of time. I don't want to spend that price, but here's a way for me to get something that's going to work for me at a time commitment, price point that I'm interested in.

[00:05:55] Nola: So you mentioned price point, but is that really about the risk point? So when you, when you

[00:06:01] Lori: point. Another good point.

[00:06:03] Nola: You're really lowering the perceived risk in trying out your product. An example could be, you don't want to sign on for a four-month coaching program. Well, how about a one-hour coaching call, right?

Or with me? I am now a super fan of this particular gourmet popcorn. And you would never would have convinced me that I would pay what I do for popcorn. And I probably wouldn't have had I not been able to try out their sampler package. And after that, yes, the risk point was very low because I knew what I was getting. And I understood the value and yes, I am signed on to their higher to their popcorn now.

So. When used as part of your sales strategy, upselling, downselling and cross-selling can all be used to generate sales. Now downselling, which is what we're talking about today, it can increase your bottom line in five ways. Number one downselling can increase profits. It can have a very desirable effect on your bottom line. In fact, it can convert prospective customers into repeat buyers. Like I am repeatedly buying this popcorn now. Just

[00:07:20] Lori: I don't think a lot of people think about downselling because the name has such a negative connotation to it, but you're really talking about the difference between losing a sale and gaining a customer.

[00:07:37] Nola: Exactly. Because now that you've provided them with something that lower price product, and they have now made that sale, they are now your customer. You've made that sale and you have not lost one. So, you're right. The alternative would be crickets. It would be nothing. It's just the tip here though is just be sure that you're not offering that downsell too soon. Because the customer still may, after the deer in the headlights look wears off their face, they may actually process and decide. Okay. Yes. You know what? I may go ahead and get that original offer. However, if it looks like they're going to walk away, that is the time to offer that alternative. Just don't do it too soon.

[00:08:26] Lori: A second winning way that it helps increase your bottom line is happy customers are repeat customers. Although the profit in that initial sale was lower, you sold your brand, you sold a customer experience. If customers are happy, they become repeat customers. More likely to buy your higher priced service or product and repeat customers are your best advertisement for testimonials as well as for ways to test out new products and services.

[00:08:58] Nola: That's so true. And again, I am now a repeat customer of that popcorn product. And I'm very certain that they now have two customers at least because of my raving reviews. So that leads us to number three. Downselling can actually help you build that Know Like, and Trust factor with prospective customers. As part of your sales strategy, it can be a way for you to generate sales with new customers. This gives them a way to learn about you, how you work and the benefits of your services. One example might be, uh, somebody may not want to sign up for your mastermind, but if you give them a free webinar that leads to that cheap, you know, that very inexpensive cheap course. Okay. That may then lead them to the mastermind. But that's only, because they've now gotten to know you and how you work and how much value you bring to them, how you can help them.

[00:09:59] Lori: Absolutely. Number four, it helps you to reduce inventory. The longer you're in business. The more likely it is that you will continue to improve your products and services. And as you transition to new and improved versions, what do you do with the old inventory? Well, downselling is a way to generate sales and reduce excess inventory by moving products off your shelf or virtual shelf.

[00:10:24] Nola: That's right. number five, you can use downselling to grow your email list.

[00:10:31] Lori: Absolutely.

[00:10:32] Nola: So, you've been there. You're at a checkout, uh, let's say, on an e-commerce site and you're about to click away and it says, wait a minute, wouldn't you like 20% off of this? Would that make a difference? And of course, you're thinking, well, yeah, 20% off would be nice. Just enter your email address here, and we will shoot you your own personal promo code. That is a way to collect email addresses, you've now allowed the customer to sample your product or service at a price point that is comfortable to them. And now you have an email list. And guess what? With that email list, you can now send them more offers for the same product., you can upsell additional products. You can cross sell related products. You can just keep them in your sales funnel.

At the end of the day, you have nothing to lose and everything to gain by adding downselling to your existing sales toolbox.

[00:11:27] Lori: Thank you so much for listening to this episode. We hope it makes all the difference in you getting started on your business so you can create your best and most exciting life. If you found the information shared here today, helpful, let us know by posting where you're listening or on our Facebook page.

[00:11:44] Nola: Not sure how to turn your idea into a profitable side business? Contact us at stickybrandlab.com/contact. We'd be happy to help you.
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[00:11:53] Lori: Be sure to come back next Tuesday and every Tuesday for another informative, inspiring and motivating episode. And remember. Actions create results. So tap into your desire to create a business and brand you love by taking 1% action every day. Small steps, big effects.