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Winter 2004 Up Your Profits By Upselling

Upselling: Identifying additional customer needs and meeting those needs with additional merchandise. Most retailers know they should do it. And those who do upsell reap the benefits.

It’s worth learning how to do it right. “Upselling spells the difference between ‘just getting by’ and having a very profitable year,” says Dr. Jon M. Hawes, director of Akron University’s Fisher Institute for Profes-sional Selling. “Revenues from upselling are usually over and above a store’s break-even point, so the extra sales quickly turn into profits.” Retailers commonly enjoy sales increases of 20 percent or more when they start upselling, he says.

Movin’ up: six techniques

Successful salespeople upsell from the time a customer arrives to the time she pulls out her wallet. And it doesn’t stop there. “The key is to always think about meeting the person’s needs,” says Linda Richardson, president of The Richardson Company. You can start today by using these techniques:

Establish rapport on the spot

Start upselling the minute the customer comes to your cart or into your store. Starting the conversation with the right opener makes all the difference, says Richardson. She suggests something like, “Nice to see you! What brings you to our store today?” This opener lets customers expand on their reasons for visiting you. And in their answer is the need you can fill—thereby opening opportunities for upselling. “The customer represents a relationship opportunity,” she says. “In a sense, the visitor has come into your home. Make the guest feel welcome.”

Here’s another opener, this one from Myers Barnes of Kitty Hawk, NC: “Hi, I’m ___. Thanks for coming in. If you have questions, I’ll be right there to help you.” Notice the balance between engaging the customer and respecting his wish to be alone. “The idea is to give customers the space they need,” says Barnes. “Then make yourself busy without irritating them by hovering over them. But keep yourself within sight so they can contact you easily.” Browsers will be grateful for both the warm welcome and the space, while customers who are looking for something specific can get the assistance they need.

Sales experts caution against the all too familiar “May I help you?” As common as the greeting is, it destroys any opportunity for relationship-building and upselling. Why? “Without fail, the
customer’s knee-jerk reaction is a resounding ‘No,’” says Barnes. People don’t like to feel a sales staffer crowding them, and they distrust any salesperson who hasn’t taken the time to determine their needs first.

“Customers won’t buy from indifferent sales people,” says John Tschohl, director of Service Quality Institute in Minneapolis. “Call people by their name if you know them, but in any event, smile and recognize them as important,” he says. “Let customers know you really care about them. If you don’t, you’ll never get onto the playing field.”

Then take a half-step back after you say hello. This signals that you’re giving them personal space, alleviating the feeling that you’re pushy.

Identify additional needs

Now you can start identifying more needs that you can fill. “The magic in sales is when you stop thinking of yourself as a salesperson of merchandise and services,” says Dr. Wolf J. Rinke of Clarksville, MD. “Think of yourself as being in the business of meeting the needs of the customer.” The only way to do that, he says, is to concentrate on the customer.

That’s easier said than done for many salespeople, though. “A lot of people get into sales because they’re good talkers,” says Dr. Bill Gallagher of Diamond Springs, CA. “But it’s when they stop talking and start listening that sales boom.”

Your task is to engage in conversation that stimulates the customer to open up and reveal his needs. “Ask questions that result in a ‘needs assessment,’” says marketing psychologist Dr. Elliott B. Jaffa of Arlington, VA. “Avoid questions that elicit yes or no responses.” Start with the customer’s response to your greeting: look for a reason, any reason, to continue the dialogue, says Jaffa. For example, if the customer says “I’m looking for a widget,” respond with something like, “Have you seen our newest style? It just came in this week. Let me show you.” As you’re getting the item or taking the customer where it’s displayed, keep asking questions like “Why are you buying a widget? Is it a replacement? Or a gift?” Taking the customer to the merchandise gives you an even better chance for dialogue that reveals the customer’s needs. “[It] provides a much higher level of service,” says Tschohl. “It shows you care.”

But “don’t waste your time telling the customer about features,” says Jaffa. “They couldn’t care less.” Instead, excite them by showing how the merchandise will help them, he says, by saying something like, “Did you know the new widget can help you [do something specific]?”

Rinke suggests this kind of question to uncover customer needs: “Let me ask you: What was the last widget you purchased? Why did you buy that particular one?” The customer might say, “It was the best one at the time,” or “It was the cheapest one I could find.” Whatever the answer, you get a good clue to that customer’s needs today. “Past behavior is usually predictive of future behavior,” says Rinke.

“How much?” To uncover price motives, try asking, “What price range do you have in mind?” Or “How much did you want to spend?” If the customer gives a certain range, explain the benefits she’ll get from an item in that price range. Then upsell by explaining the benefits of the items in a higher price range.

Customers appreciate being upsold if they really do want the benefits of the higher-priced merchandise. But be sure not to “oversell.” This happens when a salesperson convinces a customer to spend too much—more than the customer is comfortable spending. Then that customer is lost forever.

If the customer has no idea what the prices are, expand on the relative merits of merchandise in each price range.

“What’s it for?” Find out why the customer wants the item. A simple “How do you plan to use it?” will work. And if it’s for a gift, they’ll say it’s a gift. “Clarifying why the customer wants an item will help you make a recommendation,” says Tschohl. “If the customer indicates the need for more sophisticated features, you can explain how it’s to their advantage to buy the higher-priced item.” But if the customer shows resistance to a higher price range, talk about the benefits: “Even though this widget is more expensive, you get much greater value for your money. Here, let me show you… ”

“Just browsing.” A word about browsers: A customer answers your greeting with the classic “Just browsing.” If you sense he resents your approach, Rinke suggests something similar to Barnes’s approach: “Hi! Welcome to [name of business]. Glad to have you here. Let me know if you have questions.” Then step or look away and make yourself busy—but not so far out of sight that the customer can’t see you or easily get your attention.

Suppose you have a customer who’s browsing, someone you didn’t get to greet immediately. Try something like: “I see you’re looking at our new line of widgets. They’re a great buy. What in particular caught your eye?” or “What do you especially like about them?” The answer will bring out that customer’s needs.

Cross-sell related items

Once the customer has decided to buy something, ask about related items to meet additional needs. The trick is to suggest additional items without being pushy. Say something like, “Here’s something most people buy with that, since it helps them… ” Jaffa says “this focuses on the benefit of the additional item. And it implies a third-party endorsement you don’t have if you just say, ‘You should also buy… ‘”

Introduce additional items with an attitude of service rather than selling. For example, play up the convenience factor: “If you buy this second jar now, you’ll save yourself a trip in a couple of weeks.” Or if there’s a sale price on that additional item, be sure to mention it! (“By the way, they’re on sale through tomorrow.”) Doing this highlights a customer need and identifies you as the one to fulfill it. It also stimulates impulse buys. “In your conversation with the customer, you can do things by suggestion that create an impulse to buy,” says Tschohl.

If no cross-sale items suggest themselves, don’t hesitate to ask direct questions about additional merchandise (“Do you need a gizmo?”). Customers are looking for salespeople to guide them, says Barnes. “The key word is ask,” says Barnes. “The world belongs to the people who ask.” Don’t assume the customer is finished making a buying decision, he says. “Always make a further recommendation.

In fact, if you fail to keep presenting them with additional merchandise, you’re in effect talking them out of making an additional purchase. “Very few people are decision-makers,” he says. “Most are afraid of making a mistake or paying too much. They really want the salesperson to make the decision for them, even though they think they don’t.”

Upsell at checkout

You have upsell opportunities at checkout, says Tschohl. “It’s very possible that the customer didn’t see all your signs or notice the specials.” Tschohl suggests questions like, “Did you see our sale area? We have a tremendous selection of… ” or “Do you have enough… ?” You can also suggest additional services that increase the amount of the sale. Again, meet the customer’s needs: “Don’t have time to gift-wrap? We can do that for you for just $3.50,” or “Will this fit in your car? We can deliver it for only $10.”

Relationship-building starts at Hello and continues with Goodbye—or more to the point, with a cheerful invitation to come back soon. Gallagher suggests something like, “Looking forward to seeing you next time!” or “Remember, we have a special on widgets next week!” These farewells are more useful to encourage repeat buying than the ubiquitous (and mindless) “Have a nice day.”

Train your staff

Make sure your sales staff learns and uses these upselling techniques, says Jaffa. An untrained staffer costs you. Rather than just tell the employee what to do, show them: “model” the selling behavior you want. Set a good example by using these techniques. Have your staffers watch you in action and then emulate your approach to customers.

“Your task is to transform your staff from order-takers to individuals who are proactive in meeting customer needs,” says Richardson. “For the techniques to work, everyone needs a mind set of relationship and service.” Build their sales skills one step at a time, and be sure to emphasize that it’s the attitude of helping that’s all-important. “Then watch the staffers in action,” he says. “Find something they’re doing well, and then build from there.” He suggests statements like, “You did OK with that customer. Next time you could try making a suggestion like… ”

Upsell after hours

Upselling doesn’t stop when you lock up for the night. Keep the momentum going. “Think lifetime upsell,” says Barnes. Personalize your approach by taking note of personal aspects that can spark conversation: Does the customer have a vacation home? A hobby? Use anything to open up conversation that can lead to upselling. One way: create a list of your best customers and call them weekly or monthly. “Ask them how they’re doing with their last purchase. Suggest additional items,” he says.

Upping the ante

Upselling isn’t just “extra” dollars in your till—it’s vital to the long-term profitability of your specialty retail business. According to the experts, here’s why:

  • Customers may believe they are shopping for price, but they really want value. They will return only if what they buy meets their needs.
  • Customers feel suspicious of a pushy salesperson, but at the same time they need shopping guidance from a sales staffer who is focused on their needs.
  • With more stores advertising huge markdowns and discounts, you have to keep your margins up by upselling with better merchandise and cross-selling with desirable add-ons.

By doing that, you have what Richardson calls “a triple-win”—for your customers, your sales staffers, and your business. And nowhere to go but up.

Phillip M. Perry

Perry is a freelance writer based in New York, NY.

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