In this post I discuss how to upsell every time. This is a staple of online and quick food sales. We all know the best example of this “would you like to supersize your drink and fries? ” This should be just as common in B2B and B2C selling as well.
This story happened a couple years ago but demonstrates the power why to upsell every time. We were invited to participate in a formal Request for Proposal for a pretty significant procurement. By the way, when these come as a surprise you are often at a huge disadvantage as your competitors may have already influenced the process. In this case this was an existing customer and their procurement rules dictated that any capital project over $500,000 had to go through a formal RFP process. We were on the list and one of only four companies invited to bid.
This was quite a complex solution and we had a few ‘testy’ discussions about how to structure our bid. Watch this short video 1 minute video to see what happened and what we decided.
In the end we won the business. More importantly we were able to include two upsells into the final contract and even though they only increased the overall contract value by about 20% it increased our overall gross margin on the deal substantially.
Lessons Learned – Upsell Every Time?
- My recommendation is to always propose or quote to meet the customer requirement and no more, especially when it is formally defined. Why? Think about the last time you got a quote from anyone for anything – what was the first thing you looked at? Of course it was the price. If your price seems high you start in a negative position. All the fancy words and descriptors sometimes don’t even get looked at.
- Add options which are really your upsells. Your primary bottom line price must meet the requirement but this where you start to layer on stuff.
- Use the upsells as negotiating tools. You do not have to be as price aggressive on the upsell options so you should always leave yourself some price ‘maneuvering’ room. For example if the customer asks for an additional 5% off the base price you can counter with ‘happy to give you that if you also take Option 1’. Sometimes you can even create a bundle for multiple upsells at a great price; by leaving yourself extra margin up front to give away here it is still a Win-Win.
- Create separate Value Propositions for the primary bid and each option. If you blend them all into a single Value Prop the customer may get very confused about what they get for what.
- It does not have to be a formal RFP to do this. You can include options (upsells) in every proposal you offer a customer. They can be small extras that have good margin and are especially attractive when they offer great value and are tied to incentives to purchase.
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