November 24, 2014

Upselling: Run Your Business Like the U.S. Postal Service and Thrive

upsellingIn any list of companies and organizations to emulate, you certainly will not see the United States Postal Service.  In fact, it was recently reported that the USPS is losing $25 million per day.

However, on a recent visit to my local post office, I saw one thing the USPS was doing very well: upselling.

Let me give you the full story. I had to ship back a defective cell phone so I took it to the post office. I put it in a priority shipping envelope, got in line, and soon (only took a couple minutes which impressed me) made it to the cashier.

The cashier greeted me, took the package, and began his upsell pitch:

“Would you like to receive confirmation when the package arrives?”

Followed by:

“Is the package valuable; would you like insurance?”

And then:

“With first class postage it will arrive in three days; for just a little more I could get it there faster – would you like that?”

Now, to be honest, I didn’t take any of these upsells. Because I was returning a defective product. And I didn’t really care how quickly it got there, and I didn’t want to waste any more money on it.

But, if I were sending other packages, I very well might have take one or more of the upsells and thus paid the USPS a lot more money.

Importantly, upsells can and will dramatically improve the profitability of your business. In fact, it’s been estimated that McDonald’s doubled its profits when it started asking customers:

“Would you like fries with that?”

It doubled profits again when it started asking:

“Would you like to super size that?”

Upsells dramatically improve profits since you incur no additional marketing costs. You have already incurred the marketing cost (e.g., advertising, PR, social media, etc.) to get the customer there, so the additional sales are much more profitable.

Airlines have also gotten better at upselling recently. The last time I purchased a seat, I was upsold on paying for:

  • Luggage
  • Seats with extra legroom
  • Flight insurance
  • In-flight movies and food
  • The convenience of boarding the plane earlier

Importantly, upsells not only increase your profits, but they allow you to advertise where your competitors can’t and thus dramatically grow your company.

For example, if your competitor’s average profit per sale is $50, they can only advertise in media where they can generate new sales for less than $50. Conversely, if your company, via upsells, generate an average profit per sale of $75, you’ll be able to advertise in many places they can’t.

For example, if one media source (e.g., a newspaper ad) generated new customers at a cost of $60 each, you would be able to advertise there profitably, while your competitors could not.

When thinking about what to upsell your customers, think about what additional products or services you could give them that would better solve their problems. If you were a hardware store about to sell a hammer, could you offer the customer nails? Or a glove to reduce blisters?

Some entrepreneurs and business owners think offering upsells is too aggressive. Sure, it can be if done in certain ways. But have you ever seen someone storm out of a McDonalds saying:

“The nerve of him.  I can’t believe he asked if I wanted fries with that?”

So, figure out the right upsells for your customers. Then create scripts for your employees to use to offer them. This can quickly boost your profits and allow you to dominate your market.

U.S. Postal Photo via Shutterstock

3 Comments ▼

Dave Lavinsky


Dave Lavinsky Dave Lavinsky is the author of, Start At The End, and a serial entrepreneur having founded companies in multiple areas. Dave runs Growthink, a consulting and information products firm that has helped over 500,000 entrepreneurs and business owners to start, grow and sell their businesses.

3 Reactions

  1. Thanks, Dave.

    Upsells sell, that’s for sure.

    It never hurts to ask…so all of us need to ask for a little extra.

    Of course, we have to provide the product or service add-ons to begin with.

    Thanks for the reminder.

    The Franchise King®

  2. To Dear sir

    This is Marketing book help in this

    Thanks
    Havender

  3. That’s really good advice and something that is often missed in small businesses. Rather than scripts if you can get staff to actually be aware of the range of solutions and be passionate about really helping the customer solve their challenge then that sounds more natural than the McDonald’s approach, but that’s a culture change issue, and something for a different post.

    A lot of small businesses do leave money on the table by not concentrating on back end sales though, and the customer will thank you for not getting stuck in the middle of the desert and missing a perfect holiday shot when you sell him a spare battery pack and a couple of extra SD cards to go with that camera he bought to capture a holiday of a lifetime.

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