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Increase Sales With Up-Selling

Offer your existing customer base something extra.and watch your business grow.

Q: I've been operating my business part time for over three years now. I would like to increase my business's profitability to the point where I could afford to devote myself to it full time. The problem is, I'm not certain how many new customers I can attract in the short term. Is there any way I can grow my business other than costly advertising or a major expansion?

A: Fortunately, most businesses have the potential to increase sales simply by selling more to their existing customers. When you attempt to sell additional products and services to members of your business's current customer base, you are applying a growth technique known as the up-sell.

The rationale behind implementing the up-sell is based on both cost savings and marketing efficiency factors. It is absolutely essential that your business develop appropriate backend up-sell products and services. Without these, your business' sales dollars will have to come from marketing strategies designed to generate "initial sales," which tend to be the most costly and time-consuming to implement. Not only is up-sell marketing less costly, but each dollar spent to remarket to existing customers tends to generate far more additional sales dollars from this up-sell marketing than corresponding marketing dollars spent in the initial sales and marketing efforts.

If your business can effectively reach its existing customer base, it will have the advantage of marketing to those who already know and like your business and its products and services, Your business's existing customers are aware that your business can meet their needs and wants, and within a cost structure they accept.

Next Step
Wondering what gets a customer to buy? Read "Attention, Shoppers!" and find out.
If you want to get good at selling, you've got to brush up on your technique. Try SPIN Selling by Neil Rackham for some assistance.

The following are four major ways to up-sell your existing customers. Note: In our example, let's assume you are in the media business.

  • Sell more of what your customers are already buying. Each of your existing customers have certain buying habits. Ideally you will have accumulated data that allows you to reference both the specific items they purchase as well as their frequency. With this information, you can offer additional products and services in which the customer has already proved to have an interest. For example, sell other music CDs featuring your customers' favorite recording artists, or send your customers a newsletter announcing new releases.
  • Sell complementary products and services. Your business may have products and services that can be sold in conjunction with other products and services. These items are often an easy up-sell that can be made at the point of purchase. For example, when a customer buys a music CD, you could offer them a CD carrying case or a storage tower.
  • Introduce noncomplementary products and services. Your current customers posses a degree of trust in your business, and this can be converted into sales of products and services that are not directly related to the customers' existing purchases. For example, a customer who typically buys music CDs can be introduced to videotapes and DVDs that provide access to the latest in recorded movies.
  • Offer new products and services that your business has added. As your business adds new products and services, these can be offered to your existing customers. This can be done without your having to convert these customers to your business, as they already like your business and how it operates. For example, if your media business adds media equipment, such as CD, video and/or DVD players, these can also be offered to existing customers.

Whatever your approach to generating additional sales, remember that the key to any up-sell effort is your ability to have collected and properly maintained an active database of your existing customers. This database should include a record of their current buying tendencies as well as an efficient way to access, interpret and use the database's information in developing your business' up-sell marketing strategies.

David Meier received an MBA in Finance from Loyola of Baltimore, 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. He is currently the founder and COO of Small Business 411, which provides small-business owners with ongoing business coaching and the knowledge and support required to enable them to become truly successful entrepreneurs. Visit the Small Business 411 site at http://www.smallbusiness411.com


The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.

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