Up-sell, Cross-sell
The Limited (women’s clothing): When you take your blouse or top to the counter they ask, “ Did you know that since you are buying that
blouse you can get an additional top for just half price” (up-sell). They also have belts, earrings, socks (items you would pass on unless you
had a specific need) right at or near the counter. These are offered at incredible savings - i.e. “ buy two get one free or buy one get two free”
(cross-sell).
For example, if you own a Men’s Clothing Store and a customer comes in to buy a suit, you can often get them to purchase a better suit that
they perceive meets their needs. You can accomplish this simply by showing the customer the better suit and educating them on the
advantages of purchasing it over the less expensive suit. These advantages include the prestige and the fact that it will last twice as long, will
not matter, and how the higher quality wool lays better on them.
Going back to the men’s clothing store example I used earlier. Let’s say that they sell an average suit for $500 and that the gross profit (after
advertising/marketing/sales expenses to get the customer there in the first place) is 30%. Therefore the store makes $150 on that suit. For
illustration purposes, let’s make this the baseline profit. Now, if they up-sell the customer to buy the $750 suit (which the client really wants) for
a deal of just $625 and if that suit has a profit of $175 they generate an extra profit of $25 over the baseline profit or a 17% increase.
Next, now as they are feeling good about the great suit they got for a steal (after all it was not advertised) you can now cross-sell them. While
you are ringing them up you say, “Since you purchased a finer suit, today’s special enables you to buy a second pair of pants, belt, shirt or a
tie for half-price”. Why would that be of interest to them? Because the old belt or tie does not do this great new suit justice. They are in a
purchase state and a funnel has been created.
The profit margin on these accessory items are enormous, 75% 80% (remember, since marketing costs and overhead have already been
absorbed by the initial purchase, the purchase of the extra items represents almost pure profit.
If you sell them just one additional $50 item for 1/2 off or just $25 which will cost you just $10, you earn an additional $15 profit or another 10%
increase in the baseline profit from the original suit sale. The end result from cross selling and up selling the customer is an increased profit of
$40 above the initial sale baseline profit of $150 – This equates to a 27% increase.
Now although simplistic, the results are significant – and best of all employing the strategy requires no investment, no effort, and no risk!
Script: “By the way, since you purchased a shirt today, you get a second shirt for half price”
Or “I know the European suit you really liked was too expensive. If I could get it to you for just another $125, would you like it instead?”
Or “Would you like some socks to go with the suit?”
Expanding Customer Purchases
In your database, create categories for your customers according to their area of interest (expensive dresses, sports clothing, shoes, etc.)
When you get a new product that you know they'll like, give them a call (or mail them) and tell them what you have. You can do the same when
they come into the store.
Script: "Occasionally we get some wonderful items, but they normally sell out within days. Since you're one of our best clients, would you like
me to call you when something (in your area of interest) comes in. I would be happy to hold it for you for two days, as long as you promise to
come in." This will build loyalty and response very quickly.
Strategic Endorsements (a.k.a. JVs)
A designer clothing store would love to know the names and addresses of the customers who purchase the $399 boots from you. Why?
Because this is their target customer as well. They understand that it costs them perhaps $50 or more just to get their message read by them.
Consider making deals with beauty salons, health clubs, spas, jewelers, cleaners, restaurants, florists, photographers, maternity clinics and
furniture stores. You can mail to each other's lists, or you can pay a certain amount per sale that you make. Remember your lifetime value of
your average customer. What would you be willing to give away to capture another satisfied customer. Don't be stingy in your offers for your
JV partners. Make them a deal they can't refuse. You can even lose a little money on the first sale, knowing that you'll make a handsome profit
over time.
Other Ideas
1. If you sell sports clothing, approach the various gyms and health clubs in your city. Offer their members an amazing offer on one select item
of clothing (e.g. sports bras for women). Try to work a deal with your wholesaler before you do this. When the women come into your store for
their deal, make sure you take time and "sell the store" -- that is, build such value in your store and your products that they will want to come
back. You may not make any profit on your offer, but you may make a lot more money on other items you sell at the time, or into the future.
2. Joint venture with a shoe manufacturer and allow them to place their shoes in your store for straight percentage of gross sales (e.g. 30%).
3. At the point of each sale, ask the customer, "What else were you looking for today?" This may easily generate an additional 15% to 25%
more sales because they start to think of other things that would go well with the item they bought.
4. Make sure you capture the names and email address of everyone who comes in your store. You could do this simply by having a contest--
one grand prize winner gets a shopping spree. Make sure that everyone wins second prize--15% (for example) off any purchase. Notify
everyone by email that they have won.
Clothing