The Pontiac Division of General Motors once received the following complaint: “This is the second time I have written you, and I don’t blame you for not answering, because I kind of sounded crazy. We have a tradition in our family of ice cream for dessert after dinner each night.
But the kind of ice cream varies so, every night, after we’ve eaten, the whole family votes on which kind of ice cream we should have and I drive down to the store to get it. It’s also a fact that I recently purchased a new Pontiac and since then my trips to the store have created a problem.
You see, every time I buy vanilla ice cream, when I start back from the store my car won’t start. If I get any other kind of ice cream, the car starts just fine. I want you to know I’m serious about this question, no matter how silly it sounds: ‘Why does my car seem allergic to vanilla ice cream?'”
The team at Pontiac was understandably skeptical about the letter, but sent an engineer to check it out anyway. The latter was surprised to be greeted by a successful, obviously well-educated man in a good neighbourhood. He had arranged to meet the man just after dinner so they could go together to the ice cream store. It was vanilla ice cream that night and, sure enough, after they came back to the car, it wouldn’t start. The engineer returned for three more nights.
The first night, the man got chocolate. The car started. The second night, he got strawberry. The car started. The third night he ordered vanilla. The car failed to start. Now the engineer, being a logical man, refused to believe that this man’s car was allergic to vanilla ice cream. He arranged, therefore, to continue his visits for as long as it took to solve the problem. He also started to test and measure – he collected all sorts of data, time of day, type of gas used, time to drive back and forth, etc. Soon he got his first clue: the man took less time to buy vanilla than any other flavour.
Vanilla, being the most popular flavour, was in a separate case at the front of the store for quick pick up. All the other flavours were kept in the back of the store at a different counter where it took considerably longer to find the flavour and check out. The power of this data driven insight was to immediately change the question from – “Why is my car allergic to vanilla ice cream?” to a more sensible, “Why does the car not re-start when it takes less time?” Once time became the problem – not the vanilla ice cream – the engineer quickly understood the answer: vapour lock. It was happening every night, but the extra time taken to get the other flavours allowed the engine to cool down sufficiently to start.
When the man got vanilla, the engine was still too hot for the vapour lock to dissipate. Here was a genuine technical problem that could be solved. There are several messages here for the business owner. First, the customer is always right! Thinking about every issue raised by a customer will go a long way towards improving the quality of your own product/ service.
Next, we often confuse correlation with causation. While the customer thought that buying the vanilla ice cream was causing the car not starting, these were merely correlated events and that made the initial complaint a lot more sensible. Finally, the first step to identifying a solution to any problem is to ask the right question.
The more time spent in identifying the right question, the easier it will be to find the solution. Remember – Questions are often the Answers.
I went into a McDonald’s yesterday and said, ‘I’d like some fries.’ The girl at the counter said, ‘Would you like some fries with that?’
As I was presenting at The Business Show last week, I delved once again into how small businesses consistently ignore the most obvious and best strategies out there to increase their sales massively.
One of the 5 Ways, working on increasing the Average £ Value, is used by almost every large company and yet small businesses consistently turn a blind eye towards these strategies. Two of the most popular strategies to increase Average £ Value are Up selling and Cross selling.
Upselling is suggesting your customer buys the more expensive model of the same product or service; or that they add a feature that would make it more expensive. With upsell you’re suggesting they pay more in exchange for a better product or service. Examples of this would be the customer buying a 42” TV instead of a 40”, or buying a branded product instead of an unbranded one.
Cross selling is when you suggest your customer buys additional products or services from a category that is different to the product or service they are purchasing. Examples of this would be buying a DVD player to go with a TV or paper to go with a printer.
Here’re a few quick tips on how you can start creating a system within your company to ensure cross selling and up selling opportunities are not being lost.
Perhaps the most important aspect of increasing average £ value is to have robust product knowledge with everyone who delivers the product. How is this product used? What would make it easier to use this product? What need are customers trying to fulfill by buying this product? This helps the sales person understand what products fit well with this product in the customers mind.
Price Vs Perceived Value
An up sell works best when the perceived value of the product being up-sold is significantly higher than the additional price that it commands. Remember, if the customer has already decided to buy a particular product, they have established an anchor for what they are willing to pay. Everything else is now going to be compared to this anchor price. Selling a £40,000 car to someone who has just test driven a £15,000 car may not work whereas presenting a £16,500 car which is a sports model of the £15,000 car may just do the trick.
What has the customer bought?
It’s important to understand specifically what the customer has agreed to buy. What are the key features of the product that really convinced the customer? When trying to up sell, it is critical to maintain these key features. The up sell should add other reasons to buy and not attempt to replace the current reasons to buy!
Make sure your team knows the key cross selling products
Some products work better than others for cross sell. Everyone in your business needs to know what the specific cross selling products associated with each product are. Think of your trip to the supermarket. You’ve done your shopping and you’re ready to complete your purchase and when you approach the payment aisle, you see chocolate bars, magazines, chewing gum, mints all lined up tempting you. Cutlery, flowers and frozen peas would hardly make you reach out at this point.
Cross-sell works better when the suggested items are half price or lower than the item being purchased. You’ll have more success convincing a customer to add a £400 DVD player to a £4,000 car, compared to trying to cross sell using an £2000 custom finish. Cross sell is also more effective when the original product is priced higher or requires more thought. Take a quick look at Amazon to see how intrinsic these strategies are to the way they do business. If you’re looking to buy a camera, you will be cross sold at every step of the process – ‘Frequently Bought Together’ and ‘Customers who bought this item also bought’ when you first look at the product, ‘Available Warranties for this item’ and ‘Make this a gift’ after you’ve chosen the product and ‘Amazon Prime’ or ‘Premium Delivery’ when you’re about to pay.
You may also be up sold through ‘More Buying Choices’ right at the beginning. Amazon reports that up to 30% – 40% of their sales come through cross selling and up selling! How much sale does your business generate through cross selling and up selling? Look at your own products and start to put these powerful average £ value strategies to work for you. If you’d like to bounce some of these ideas off me to make sure they will work, send me a mail with details of your product and the up sell/ cross sell strategy and I’d be happy to review it. One or our workshops later this month is also going to go into other strategies which form part of the 5 Ways that you can use to massively improve the profits of your business. Drop us a line to book your place.
Most small and medium sized businesses have a common thread running through their advertising and marketing material – their product or service descriptions are features-laden. What this ignores is that most clients and customers base buying decisions on the benefits they perceive the product or service to provide, not its features.
Most of us continue to focus on telling people what they’ll get when they buy a product/service…how ‘it’ works…not what it means to them to buy it…what ‘it’ will give them if they own ‘it.’ Think of the feature as the description and the benefit as the result. Then re-write your feature statements into benefit statements. You’ll save prospective buyers the trouble of trying to do it themselves…which they generally won’t.
Consider the following example pairings of feature and benefit statements:
Feature: We’re open until 10 every night.
Benefit: Because we’re open late every night, you can shop at your convenience and don’t have to take time off work
Feature: Our day care center provides age-appropriate stimulation.
Benefit: Because your child will be stimulated using age-rated activities and certified day care workers, their mental development will be accelerated. We care about your child’s progress.
Feature: We use only high quality woods and adhesives in building our furniture.
Benefit: Because we use only the best in making our custom furniture…your purchase will be a one-time, long-term investment that’ll outlast you.
Feature: Our bookstore features comfortable chairs throughout the store.
Benefit: Because we provide comfortable chairs throughout our bookstore, you can relax and read snippets before you buy the book. Know what you’re buying and you’ll enjoy your investment that much more.
Feature: I have over 20 years experience selling houses in the neighbourhood.
Benefit: Because I have over 20 years experience selling homes in your neighbourhood, your house will be sold quickly, for the highest amount possible, letting you focus on other important things. Let me take the stress out of selling your home.
As you read the feature and benefit statements above, which speaks directly to you? Remember, ‘Benefit-Selling’ is primarily about keeping the interest of your customer paramount in your communication with them.