Cross Sales and Up Sales

Nearly every company is trying to figure out ways to increase sales and generate sales that deliver better margins. But are they turning over every stone to do so?

The Typical Approach

One of the first things most companies do is put pressure on sales people to generate more sales. Along with that they often become more lenient in sales terms, thus creating more accounts receivables and in the process likely increasing days to collect. Be careful when you decide to relax your credit terms. This can be a recipe for disaster and reduced cash flow. See 3 Reasons Past Due Receivables May be Worthless and 3 Low Cost Sources of Cash – Part 2 for more on this. But suppose it is not practical to grant more lenient sales terms? What are some other ways to generate increased sales?

Your Best Customers

Your best customers may be one of the first places to look for additional sales. Perhaps you can encourage them to purchase more if you give special terms like an added discount or offering a special sale price. What you forfeit in margin may be more than made up for in increased sales and an overall increase in profit. Be careful here that you do not overdo either of these methods as you may be training customers to expect this forever.

big sale

What other ways can you encourage your best customers to buy more from you?

Other Products

Two ways of improving sales that can be highly effective are cross sales and up sales. Cross sales are generated when a customer is making a purchase and your company makes them aware of an add-on or complementary product that they may not even know existed. For example, in a retail environment an example of this would be asking a purchaser of a big-screen television if they would also like to purchase a wall mount for the TV. Probably the most well known example of this technique is the cashier at a fast food place asking the question, “Do you want fries with that?” Perhaps you have taken your car in for routine service and the next thing you know you are having much more done. These are typical examples of a cross sale. Likewise, a company that is treating a customer’s home for termites might suggest an on-going pest control service. This last example borders on another way of increasing sales- the up sale.

Have you ever been shopping for something and think you have found what you want? Just as you are ready to purchase, a sales person says something like, “That’s a great choice. But, let me show you another model you might like even more. Now, it’s just a little more, but the benefits it offers are great.” An example of this might be someone buying a stove. Just when they are about settled on a purchase, a sales person points out a model with a self-cleaning oven. The sales person will say something like, “Before you make up your mind for sure, let me show you another model. It’s only about seventy-five dollars more, but it has a self-cleaning oven. I believe you’ll find the time that saves you to be worth the extra money.”

It is rather amazing how often we all get drawn in to one of these two techniques. There is nothing wrong with that, but it does demonstrate how effective both methods are at generating more sales. Sometimes a customer never realizes what just happened. Other times they realize it later but justify it in their own mind. Of course, some people recognize the cross sales or up sales techniques as soon as they are attempted. But, that does not mean they will not go right along with it. Incidentally, cross sales and up sales are one of the most common methods online sellers use to increase the value of a customer.

Think about some creative ways your company can utilize these methods to increase sales and bring more to the bottom line.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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