Upselling: The Magic Road To Profitability

Dan 8

Everyone upsells, it’s the best way to increase your margins. The famous, “want fries with that?” is an upsell. Super sizing is upselling. That maintenance plan on your washer and dryer is upselling. That rust coating on your car, whatever that was…was upselling. Notice how when you buy a new laptop for $600 it’s still going to cost you a cool thou before you walk out of that office store; replacement warranty, upselling; removing all that unwanted software, upselling; adding the software you do want, upselling, and soon that great deal at $600 is no longer a great deal.

And wait there’s more…whatever there is more of is going to cost you. Take that great deal on Ginsu knives for only $19.95, but wait there’s more, you can get another set for absolutely free, just pay shipping and handling. Sounds good right? Another whole set you can give away as a gift next Christmas, for free…well not really, what is “handling” and why is it $10? Aha, that is the sneakiest form of upselling!

Last Sunday we went to the mattress store to buy a new mattress and box spring set. Now if you ever want to know what upselling is, go to a mattress store. My target price for a mattress and box spring set is always a thousand dollars (No, I am not interested in one of “those choose your number” six thousand dollars plus, plus rip-offs mattress).  The set we were looking at was nine hundred dollars for the mattress and when we asked about the box spring the salesperson said that would be free because we are good customers. Wow, that sounds great! And then he tells us that they are having Labor Day sales, (because for some reason Labor Day weekend is the number one mattress sales day of the year, who knew?) we’ll get another two hundred dollars off.  Man, we are cooking now …down to seven hundred bucks! But wait there’s more. He can give is a great deal on the mattress protection plan that is normally three hundred dollars, but today it is only two hundred dollars. Of course, we have to take that, who knows what can happen to a mattress? So, now we’re up to nine hundred dollars. But then we have to have that special mattress cover and that’s another hundred, and then he asks us if we are taking the mattress and box spring set with us today? Which, since my red Jeep Wrangler is parked right in front and he can see it through the window, he knows that we are not. Nope we are going to need delivery and of course take away of the old mattress and that charge will be only one hundred dollars, what a deal. Ann there you have it, the best upselling deal on the market today, eleven hundred dollars for a mattress that once cost only nine hundred and then with two hundred off only seven hundred and we walk away paying a measly eleven hundred dollars. Pretty good deal, right? That my friends is upselling at its very best.

Which leads me to the question. What are we in our industry doing about upselling? No please don’t tell me we are not in retail and that upselling scenario does not apply to our business. That is simply not true.

To prove it, here are some smart examples of opportunities for upselling in our business.

  • When negotiating a price on a new purchase order for PCBs use the economies of scale to sell more product. Point out the savings if the customer buys 20 boards instead of the 12 she needs. I know because of MRP systems it will not work all the time, but it will at least 20% of the time and it also plants the seed in the buyer’s mind that it is cheaper to buy 20 boards than 12 boards so the next time she works on their MRP she can insert that fact into the system. It also helps her make a mental note that you will probably have an additional 8 boards in stock that she can count on if she needs them in the future.
  • When a customer orders 12 boards and you successfully built 20 to get 12. Sell the other 8 at a discount. Get them sold off right away since they are not going to do you any good sitting on that stockroom shelf. And with things moving so quickly these days chances are good that the rev will change, and the same boards will be worthless in six months.
  • Speaking of rev changes. Keep a running inventory of what you have in stock and how long it has been there and then have your inside sales team check with your customers frequently to see if they have a need for their part numbers in stock and make them an offer they can’t refuse.

These are only three of the many ways that we can upsell in our industry and there are of course many others. Every time a customer needs boards faster than your normal lead times, is an opportunity to upsell. When you customer needs to make a rev change in mid-production process is an opportunity to upsell. The theory is very simple. Once a customer has agreed to buy from you, just make it more attractive to buy more from you. She has already said yes, she is already a customer, that big decision has already been made and now it’s up to you to say, “But wait, There’s more. It’s only common sense.

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