The most profitable six words in history - Oct 07
How do you upsell? Why should you upsell?
These are two very important questions for any business. When you last visited a supermarket, did you notice those items right by the checkout? It’s no accident that they are there, and it’s no accident that they are usually low-cost items either.
You already spent £50 or so on your shopping, you’re already in a ‘buying mood’. What difference is another 60 pence, or £1.50 going to make? None, probably. Now consider that the store might be making 50% profit on those items.
Let’s say 4,000 people through a store each day and 20% of them spend an average of £1 at the checkout, of which 50% is profit. That’s £400 profit per day, or given a six-day week, £124,800 per year profit. Just for that little tiny upsell.
Now, what if you had 80 stores nationwide?
McDonald’s made this an art, part of their legend; perhaps the most profitable six words in consumer history: “Would you like fries with that?“. Burger King does the same, “would you like to go large?“. When you bought your last car, did you buy the warranty? Did you get the stain protection when you bought your carpet? What about that no-claims bonus protection when you bought car insurance, or legal cover, or that extra scoop when you bought that iced-cream?
Can you do this with your business? Sure you can. If you’re letting holiday homes, offer a delivery of groceries, or a ride from the airport. If you’re a graphic designer creating a web site, what about rebranding the letterheads, business cards and brochures? Selling kitchens? What about a new set of crockery, or some nice stainless steel pans, or a water filter.
The cost of sale for that extra profit is virtually nothing. You already bonded with the customer, they already trust you. It takes but a few moments to add a little more profit in the deal.
When 20% = 100%
Let’s say that your marketing campaign costs £1000 per month, and you regularly get 100 opportunities for that investment (an opportunity cost of £10). Out of those 100 opportunities, you regularly close 40 deals (a 40% conversion rate), at an average £200 gross profit per deal.
Your cost per acquisition (CPA) is £25, so you made £175 profit on the initial deal, or £7,000 for the month.
Consider how small improvements could make a huge difference.
Some small tweaks to your marketing campaign could gain you 20% more opportunities (120)
Some further refinements could increase your conversion rate -20% more opportunities (48)
Add a little upsell to the transaction so there’s 20% more profit in each deal (£240).
120 opportunities X 48% conversion rate X £240 = £13,824 profit. And still for that £1000 marketing budget. What if you increased that by 20% too? That would be £16,588.80 - double the profit for just 20% more.
