Increase Sales With Up-Selling Offer your existing customer base something extra.and watch your business grow.
Q: I've beenoperating my business part time for over three years now. I wouldlike to increase my business's profitability to the point whereI could afford to devote myself to it full time. The problem is,I'm not certain how many new customers I can attract in theshort term. Is there any way I can grow my business other thancostly advertising or a major expansion?
A: Fortunately,most businesses have the potential to increase sales simply byselling more to their existing customers. When you attemptto sell additional products and services to members of yourbusiness's current customer base, you are applying a growthtechnique known as the up-sell.
The rationale behind implementing the up-sell is based on bothcost savings and marketing efficiency factors. It is absolutelyessential that your business develop appropriate backend up-sellproducts and services. Without these, your business' salesdollars will have to come from marketing strategies designed togenerate "initial sales," which tend to be the mostcostly and time-consuming to implement. Not only is up-sellmarketing less costly, but each dollar spent to remarket toexisting customers tends to generate far more additional salesdollars from this up-sell marketing than corresponding marketingdollars spent in the initial sales and marketing efforts.
If your business can effectively reach its existing customerbase, it will have the advantage of marketing to those who alreadyknow and like your business and its products and services, Yourbusiness's existing customers are aware that your business canmeet their needs and wants, and within a cost structure theyaccept.
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Wondering what gets a customer to buy? Read "The following are four major ways to up-sell your existingcustomers. Note: In our example, let's assume you are in themedia business.
- Sell more of what your customers are already buying.Each of your existing customers have certain buying habits. Ideallyyou will have accumulated data that allows you to reference boththe specific items they purchase as well as their frequency. Withthis information, you can offer additional products and services inwhich the customer has already proved to have an interest. Forexample, sell other music CDs featuring your customers'favorite recording artists, or send your customers a newsletterannouncing new releases.
- Sell complementary products and services. Your businessmay have products and services that can be sold in conjunction withother products and services. These items are often an easy up-sellthat can be made at the point of purchase. For example, when acustomer buys a music CD, you could offer them a CD carrying caseor a storage tower.
- Introduce noncomplementary products and services. Yourcurrent customers posses a degree of trust in your business, andthis can be converted into sales of products and services that arenot directly related to the customers' existing purchases. Forexample, a customer who typically buys music CDs can be introducedto videotapes and DVDs that provide access to the latest inrecorded movies.
- Offer new products and services that your business hasadded. As your business adds new products and services, thesecan be offered to your existing customers. This can be done withoutyour having to convert these customers to your business, as theyalready like your business and how it operates. For example, ifyour media business adds media equipment, such as CD, video and/orDVD players, these can also be offered to existing customers.
Whatever your approach to generating additional sales, rememberthat the key to any up-sell effort is your ability to havecollected and properly maintained an active database of yourexisting customers. This database should include a record of theircurrent buying tendencies as well as an efficient way to access,interpret and use the database's information in developing yourbusiness' up-sell marketing strategies.
David Meier received an MBA in Finance from Loyola ofBaltimore, and spent much of the 1970s teaching business courses;later, he created a consulting group, and for the next two decades,provided accounting and tax services to small-business owners. Heis currently the founder and COO of Small Business 411, whichprovides small-business owners with ongoing business coaching andthe knowledge and support required to enable them to become trulysuccessful entrepreneurs. Visit the Small Business 411 site athttp://www.smallbusiness411.com
The opinions expressed in this column arethose of the author, not of Entrepreneur.com. All answers areintended to be general in nature, without regard to specificgeographical areas or circumstances, and should only be relied uponafter consulting an appropriate expert, such as an attorney oraccountant.
