How To Upsell Any Customer And Boost Your Business Profitability.
Business Lessons From Amazon That Will Increase Your Customer Lifetime Value
I love Amazon. I enjoy the convenience of sitting in front of my computer, and with just a few clicks get everything I ordered online delivered to my house. That’s the power of Amazon. More importantly, Amazon uses its robust website algorithm to get people to purchase more items on the website. They have perfected the act of upselling.
Have you seen this section on the Amazon website before? “Most customers who bought X also bought Y?
That’s called upselling. They made you spend more after you’ve already opened your wallet to spend on the website. Every sales professional and entrepreneur must learn how to upsell so that they can boost their profit margin. To do that, you should offer complementary products or services that will further give your customers an awesome user experience.
How exactly can you do this?
We can all agree that our phones have almost become an essential tool that we take around throughout the day. This is due to the multiple functions that the phones offer, which makes our lives a little easier and more organized. Many years ago, the purpose of a phone was just for making and receiving calls. Phone manufacturers stepped up their game by offering other functions that your phone can perform.
For example, you can now take photos, make videos, use your phone as a navigation tool to guide you from one location to another as you drive on the road. Furthermore, the manufacturers added the Bluetooth connectivity feature that makes it easier to talk on the phone when driving. If you regularly drive and talk on the phone, you can consider the Bluetooth feature as complementary. Similarly, a car manufacturer that is producing a driverless car is providing added features that they can upsell and make more money.
If you own a restaurant, you can offer transportation to pick up and drop off your customers to upsell and make more money.
If you own an auto mechanic shop, you can provide a lifetime value to your customers by offering them a free car wash whenever they stop by for an oil change at your workshop. You can turn them into loyal customers by providing them with a loaner car when they bring in their vehicles for servicing with you.
The question that must always be at the back of your mind is, “What other product or services can I offer my customer that will make their life a little easier?
In his book, “The Psychology of Persuasion”, Robert Cialdini discussed how to use the contrast principle to upsell. The contrast principle comes into play when two different things presented sequentially feel more different than they really are.
According to this principle, if a customer has spent $250 in your store buying a suit, if you offer complementary products (shoes, belts, socks), they will be willing to spend more money.
Why?
First, the contrast principle. The customer has spent $250; spending $25 on a belt or a pair of socks will not hurt him.
Second, if the prospect was not shopping for your suggested add-ons, they’re much less likely to be price-sensitive on the items being attached.
How should you upsell?
Amazon is a successful company by all measures. All you need to do is copy their framework and tell your customer that “Most customers who bought X also bought Y?
The result
Everyone wants to participate in social norms. By telling them what “normal” buying habits are, you tap into the powerful, deep-seated psychological human desire to fit in with the norm.
Should you upsell?
Definite yes, if you want to create a growing and thriving business, then you need to figure out how to increase your customer lifetime value by offering complementary products or services and making them spend more money with you.
