When David Neinstein opened Barque, a Toronto barbecue restaurant, five years ago, he offered a fixed-price special to large groups on Sunday evenings. Diners would get an appetizer, salads, various barbecue dishes and dessert for $39 each.
On a traditionally slow night, the offer was popular. “They spent a bit more and got more food,” Neinstein explains. About a year ago, Barque began offering the fixed-price menu every night. Then, earlier this year, Neinstein decided to try extending the option to every patron, not just those in big groups.
The upshot? The average amount each customer spends has gone up approximately $9, or about 20%, Neinstein says, and his kitchen staff has found it easier to prepare meals. “It’s a win-win.”
While some consumers balk at blatant upselling, savvy entrepreneurs understand how to persuade clients to spend more in ways that leave everyone satisfied.
“Forcing [customers] to buy goods they don’t want will just get them angry,” observes Jeffrey Skurka, who owns an upscale men’s clothier, Classica Imports, in Toronto. He encourages his sales floor staff to offer clients merchandise that complements their core purchase—for example, showing how socks and a belt would go with a new shirt—without coming on too strong.
Yet there’s as much science as art in the upsell. Marketing expert Brynn Winegard, an adjunct professor at Ryerson University’s Ted Rogers School of Management, says smaller companies should emulate the kind of clientele analysis large firms conduct. For example, she recommends segmenting customers into categories such as the amount spent or the length of the business relationship. By identifying clients with little price sensitivity and lots of brand loyalty, you can focus upselling strategies on receptive parties.
In the retail space, Winegard believes in the value of smart merchandising: packaging Band-Aids with Polysporin, for instance, since consumers who want one will likely need the other. “Neuromarketing” techniques, such as removing clocks from a store, pumping in oxygen or providing out-sized shopping carts, can also work. “If I make the baskets bigger,” Winegard says, “customers will want to fill them up so it’s not a piddly haul.”
For B2B firms, upselling involves determining what else key clients need in order to make their own operations more effective, says Zeeshan Hayat, co-founder of Vancouver-based Prizm Media, a seven-year-old lead generator focused on the health-care sector. A few years ago, Hayat discovered some of his mail-order pharmacy clients were having difficulty turning diabetes patients into customers. So Prizm worked with its pharmacy clients to develop an electronic medical record channel—a bit of extra effort that has generated disproportionate returns, both in terms of sales to the pharmacies and for Prizm itself. “It became an upsell for us,” explains Hayat, adding that the company now regularly adds adjacent services to complement its core lead-generation business and, in so doing, bolsters its sales.
Hayat feels all entrepreneurs can upsell with impunity if they start by really working to understand what customers need. The strategy, he says, “has allowed us to retain clients for seven years, and they’re still growing with us.”
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- 5 deal breakers that kill your sales (and how to avoid them)
- How brick-and-mortar storefronts boost sales for online retailers
- The smartest startups invest in their sales team early and often
- Nike founder Phil Knight on how to build an innovative culture
- Business New Year’s Resolutions: Evolve your marketing strategies
- Business New Year’s Resolutions: Get more creative with pricing
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