It’s no shame of mine to admit that I learnt the art of upselling behind the till in the service industry, after all they seem to have it nailed. It is a shame in our industry however, that it’s principles haven’t been adopted as a source of increased revenue and profit, at very little cost. Acquiring new customers is expensive, on the other hand selling to existing customers costs very little. Upselling helps you increase sales figures without having to rely solely on the expensive task of increasing your customer base year on year. What the heck is upselling I hear you say, and how do I get me some of that there profit? We explain all in this latest article...
What is Upselling?
Upselling is the process of offering a customer the opportunity to buy more than they asked for. That’s not necessarily more of the same, it could be the offer of an additional or accompanying product or service. It’s also a handy technique when you’re trying to get potential customers to expand their minds in terms of what YOU could offer THEM.
“...Upselling is the process of offering a customer the opportunity to buy more than they asked for...”
Upselling is a common technique in the B2C space, but the principle can be applied readily in the B2B space. Have you ever been to a Costa or a Starbucks and immediately after you tell them you want a Grande Caramel Latte, they ask you “Would you like a cake, biscuit or bottle of water with that?” That’s upselling.
That’s a really consumer lead example, but the possibilities and opportunities for upselling in the B2B sector have huge implications. As a subcontract engineering business you have an array of capabilities which can be offered, extend that into your own subcontract supply chain and you can offer a well rounded service regardless of the number of machines in your workshop.
Why is Upselling such a great idea?
Think about it. You’ve got the opportunity to increase the value of an existing sale. Still not seeing the massive benefit? How much does it cost you to acquire a new customer? How much does it cost you to make sure you get a flow of RFQs from that customer? Each customer and each RFQ have a cost associated with them. You’ve put in the work and money to generate your customer list and to pry the RFQs out of their hands and into your business. Seeing it now?
It is far more profitable to increase the value of a sale by “x” than it is to try and generate ANOTHER sale of value “x”, because you’ve already done the work to acquire the customer and the RFQ. And the benefit isn’t just in one direction…
Your customers have bigger problems than they let on. They’ve got an array of subcontractors to manage with all sorts of complicated systems and hurdles to jump through. By offering more services, demonstrating you can solve MORE of their problem, they benefit from less work and less complication in their supply chain. You alleviate their pain.
“Your customers have bigger problems than they let on...”
Your customers may not even know you can solve their problems from within the 4 walls of your workshop. Their database may only have a few of your manufacturing capabilities recorded, meaning they don’t offer you the work you can already do. I wrote an article on this a little while ago entitled “How well do your customers know you?” It’s unbelievable how common this is. Upselling can help you win bigger, more profitable orders, whilst helping reduce your customer's pain. It’s Win-Win.
Why you always have to be upselling
Your customers are busy folk. So they can be forgiven for forgetting or overlooking your capabilities occasionally. As I’ve already mentioned, your customers supplier databases are flawed, they don’t categorise things entirely accurately and are often out of date. You risk falling through the cracks if you AREN’T upselling on a continual basis.
Your customers recognise suppliers who do this. When subcontract manufacturers do this effectively, you can often hear feedback along the lines of “...they go above and beyond” or “...they really go the extra mile”. You can soon get yourself a reputation as the "go-to" subcontract manufacturer, simply by offering and upselling additional services.
This does not happen based on one occurrence of upselling. Continuously upselling builds that reputation, even if the customer doesn’t take you up on the offer EVERY time. Conversely, not upselling puts you firmly in a box. Your capabilities can be misunderstood, your appetite to solve wider problems for your customer is seen as non-existent and you soon become an also ran.
How to start upselling in your subcontract Manufacturing Business
Great upselling in the Manufacturing world is all about seeing beyond the RFQ. Once you look beyond the request outlined, the possibilities start arising. In some cases, too many possibilities! If that’s the case, pick up the phone and talk, ask open ended questions about the larger project, be inquisitive but helpful.
“Great upselling in the Manufacturing world is all about seeing beyond the RFQ…”
In a lot of cases it will be clear what you as a company can offer as additional or “supplementary” services. In which case, start with those services. Could the RFQ require any of the additional services you offer? If so, here’s your upsell opportunity.
Think up AND down the supply chain. Think about what pre-processing and what post-processing will be required based on the RFQ. Upselling isn’t just about selling finishing processes, it could be about selling preparation services such as sourcing the profiled stock material. This is a process you could take off your customers hands and simplify their job, whilst increasing the value of your sale.
“Think up AND down the supply chain...”
Another classic, but overall worrying issue is the quality of engineering drawings. This is an issue, but it’s also an opportunity. Have you got the skills in-house OR access to the skills needed to produce engineering drawings? If so, this is a service you can upsell. Further to that, your customers engineering drawing could be flawed, they could have missed key inspection points amongst a bunch of other things. Help them fill in the blanks, understand their problems and you may find the RFQ expands all on it’s own.
Now you’ve found the opportunities, how do you actually upsell? Your quotation is the first place to start. Quote for the work requested, but then offer additional services as separate line items. Even if the prices are indicative, give them something to think about. And don’t just stop there. Once it’s in your quote, follow up. Make sure they noticed the additional services you had offered in your quotation. How you follow up is up to you. Email them, call them, visit them, whatever form of communication, just make sure to follow up.
If you implement this thinking and this methodology into your quotation process 9 times out of 10 the customer will contact you before you have chance to follow up on the quote. Your quotation will stand out and YOU will stand out.
Upselling vs Diversification
You could be forgiven for mistaking my advice as a push towards diversification or increasing your capability spread. However, this isn’t the case. You don’t need new machines or capabilities to start upselling in your subcontract manufacturing business. Upselling is about the customer and their problems.
“You don’t need new machines or capabilities to start upselling in your subcontract manufacturing business”
Within an RFQ you should see opportunity to do MORE based on the capabilities within the 4 walls of your factory and utilising the skills and expertise you have available in YOUR supply chain. As a CNC Machine shop you will more than likely offer levels of finishing such as polishing or anodising, this doesn’t mean you’re going to invest in the equipment to do so yourselves. Even if the customer hasn’t asked for it in the RFQ, offer them the service as an additional line item and you’ll be surprised by the results.
Diversification is a valid way of increasing your credibility and capability within a sector of the industry, but with increased capital equipment comes an increased sales burden. You may find that you can’t maintain or justify the capital equipment on upselling alone. You then need to go and find new customers with new problems. You can then go and upsell to them!
Upselling can naturally lead to diversification. As an example, you could start upselling a painting service to your customers, but not actually perform the painting yourselves. You could soon find yourself in a situation where the demand for the upsold painting service is so high that you can justify investing in equipment, people and further sales activity. This is the way so many successful manufacturing businesses have grown. Firstly by testing the market using a subcontractor, growing the offering into something that can sustain itself, then bringing the service in-house to reap the benefits of control and profit margin retention.
“Upselling can naturally lead to diversification...But it doesn’t have to…”
On the other hand, if you don’t ever plan to offer the service yourself, you can still upsell. Whilst you’re upselling, you’re increasing revenue and profit, whilst not needing to invest in capital equipment. Not forgetting, that first and foremost, you’re solving the customer's problem.
Upselling is predicated on the fact that you offer services your customers don’t necessarily already come to you for. Either because you don’t advertise them as a core service, or because of their own poorly managed supplier databases. If you don’t ask, you don’t get. So start asking…
Never forget that it’s a Win-Win situation. If you maintain the mindset that you are understanding and solving your customer's problem you won’t go far wrong. When it becomes all about you, it’s no longer upselling, it’s pushing.
“Never forget that it’s a Win-Win situation…”
It’s not British to upsell in a pushy manner. We expect courtesy and politeness. Don’t let these get in the way of solving your customer’s problems. They won’t thank you for it, they’ll just judge you without saying anything. Now that’s very British! Upselling with a Win-Win mentality is key to maintaining your Britishness, whilst boosting your sales figures. It’s also a fundamental principle of same side selling. If you missed our article on Same Side Selling it’s worth checking it out here.
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