Tuesday, December 10, 2013

SG Sales Training: To Up-sell or Down-sell?

The question of up-selling or down-selling invariably comes up when working with clients on developing their product range.  To me, they are actually two sides of the same coin.  (Although some sales consultants will disagree. Click here for an alternate perspective)

When a company introduces a "new" product into its range, the intent is to meet the needs of a distinct new market segment. Designed and packaged correctly, the new product should not canabalise the existing market but create new markets. If there is canabalisation, then there is an overlap of needs and there is insufficient product and market differentiation. In this instance, offering a lower priced variant may hurt the business as clients will naturally gravitate to the cheaper alternative i.e. down-selling.    Down-selling is however not all bad, and may even be necessary if the company's strategy if on gaining market share. 

Up-selling on the other hand is capitalising  on an existing sales relationship. As a strategy, the company offers a "lite" version of the product that meets the needs, but not the complete needs, of the buyer. Then, once the buyer has bought and used the product, the sales professional highlights existing gaps and offers the buyer the full-version solution.  Key point to note is that an up-selling strategy does not equate to introducing a cheap product and then getting the buyer to buy the more expensive product. This is because a properly designed product range has different products for different market segments. In short, in up-selling, one generally does not cross market segments.

Up-selling and down-selling are therefore two distinct strategies.  Being clear on this will save companies a lot of lost revenue and profits.

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