The Pricing strategy has always been key to sales and marketing, forming one of the 4Ps – Product, Price, Promotion & Place.
With such a competitive marketplace in recent years, your Pricing strategy has become even more vital. This is reflected by the increased development and use of CPQ software, to support businesses in pricing goods in more varied ways, as easily as possible.
A business can use various different ways to price when selling a Product or Service, but it should always consider the following factors:
• Customer / Target Audience
• Competition & Positioning strategy
• Business Goals
• Cost of Sale
• Supply and demand
To support selling your products in the most competitive and compelling way possible there are some key methods, beyond base price, that you should also consider within your sales process.
In this first piece of our ‘Ways to develop your Pricing Strategy’ series – we explore Up-Selling and Cross-Selling.
Up-Selling and Cross-Selling
By defining an Up-Selling and Cross-Selling CPQ strategy for your product ranges and business, you can support your sales team in making higher value sales.
• Up-Selling encourages the buyer to consider a higher quality, more expensive product than the one they are initially looking to buy.
• Cross-Selling offers the buyer additional products that support, or are otherwise related, to the product they are looking to buy.
Using these strategies at the point your customer is already engaged and ready to make a purchase will provide an increased sales value for your business, while also improving your service to the customer.
This doesn’t have to be a hard-sell technique at all.
Up-selling should be thought of as Up-serving.
By simply listening to the customer and what they need, or the problem they are trying to solve, you can identify other solutions or products that you can offer to assist them. Making sure the customer gets the best product or service available within their budget.
Keep it relevant & Be Prepared
Make sure your Up-sell and Cross-sell strategies maintain relevance.
There is no point trying to Up-sell or Cross-sell to products that are unlikely to be relevant to your customers.
Just because last week someone bought a Duvet Cover and a Set of Plates doesn’t make plates an obvious cross-sell for future Duvet Cover customers – more appropriate may be items such as Pillows or other bedding.
So be prepared…
• Define products that fit a scale of quality – for up-sell opportunities or even down-sell, if that may be needed to save a deal
• Select and build a range of products that complement each other to take advantage of cross-sell opportunities, normally cross-sell products should be of a lower price than the original product.
Make sure your team understand how your products fit together and into your strategy and use CPQ to offer up these recommendations for them, at the most appropriate stage of the sales cycle.
CPQ to supports Sales
Your sales person’s approach is vital to getting this pricing technique right.
They know or are best placed to judge if the particular customer is likely to be open to Up-Selling and Cross-selling.
If the Customer has been saying throughout the sales process that they have a maximum of £80 for their new Coffee Machine, there is no point trying to Up-sell them to a superior version at £150 if it’s entirely out of their budget. You could just put the customer off the purchase completely.
However, it may be appropriate to cross-sell a £10 jug, as their budget for the machine is one thing but they could have another budget in mind for accessories.
Customer relations can be vastly improved by making appropriate recommendations.
If your sales person is aware that a customer wants to be able to use loose beans in their coffee machine but the one they are considering, although cheaper, only works with the manufactures coffee pods, the customer will be grateful for you steering them in the right direction.
Here CPQ processes or software can support your sales person by giving them the relevant information at the point of putting together the quote or order.
They can then decide if it is appropriate to offer to the customer – based on what they know.
Sectors and solutions
As CRM consultants, specifically for Salesforce, we have worked with many businesses from a wide range of sectors and these techniques can and have been used in many of them.
We have spent time helping our clients define their Pricing and CPQ strategies.
There are many different Pricing strategies to explore, so even if you don’t think Up-selling and Cross-selling fits your business, do join us for the rest of the series where we will explore other strategies.
And if you do think Up-selling and Cross-selling could work for you, start to explore these techniques further and join us for more strategy ideas next time.
Join the conversation
- Do you think Up-Selling & Cross-Selling could work for you?
- Have you already improved Average order value using Up-Selling & Cross-Selling?
- Any other thoughts or questions – please comment below
