What is downsell and how can it increase my sales?
In a world where competition has become tougher than ever with the advent of digitalization, companies are forced to multiply their efforts to define effective strategies. How do you sell when today's consumers are faced with so many offers?
This is where add-on sales strategies come in. Cross-sell, down-sell or upsell, these marketing concepts have proved their worth in a wide range of brands and business sectors.
What is down-sell? How does it differ from other sales strategies? And how can you use it to boost your sales? Find out in this article.
What is downsell?
Downsell: definition
Downselling is a marketing technique that consists of offering your customer a cheaper alternative to a product or service they have rejected.
Most often, downselling takes the form of a move downmarket. But this does not prevent you from benefiting from an equal or even higher margin.
Downselling can take place in a number of situations:
- Face-to-face sales (stores, boutiques, points of sale, etc.),
- Commercial negotiation (BtoC or BtoB),
- E-commerce (the strategy can be automated via recommendations).
How does it differ from upsell and cross-sell?
Upsell
Upselling is a sales technique that consists in offering your customer a more expensive product than the one they had previously chosen. It means moving upmarket.
👉 F or example: One of your customers wants to buy a printer. He has already chosen the model and seems confident. In the course of your discussions, you'll suggest a more functional, higher-quality printer at a higher price.
Cross-selling
Cross-selling is a technique that consists in encouraging customers to buy more of what they had planned by proposing the purchase of additional products linked to their initial purchase.
👉 F or example: Your customer wants to buy an evening dress. You can offer to complete her outfit by adding pumps and accessories. She'll end up buying more than she originally intended.
So, these marketing concepts have one major thing in common: they all 3 represent up-selling strategies. They enable the salesperson to increase turnover and improve sales.
Their difference lies in the way they work. Upsells offer a more expensive product, while downsells offer a cheaper one. The cross-sell, on the other hand, offers a multitude of other products to complement the initial purchase.
4 examples of downselling
- Example 1: A customer in an electrical goods store wants to buy a dishwasher. You offer him one of the best products in your store, but you notice that the price seems to be a problem. He refuses the offer. You present him with a more accessible model at a lower price, which nevertheless meets all his expectations.
- Example 2: A customer wants to buy a body scrub. The product you offer is fine, but seems too expensive. You suggest a set of 3 body products at a lower price, but with smaller packaging and therefore less material.
- Example 3: A customer wants to buy a car. You offer him a complete model, but he doesn't seem to like the price. So you present him with the same model, but with 2 or 3 fewer features, which reduces the price.
- Example 4: A customer wants to buy a handbag on your online site. She' s added a bag to her shopping cart that she loves, but hasn't completed her purchase. At the bottom of her shopping basket, you offer her similar items at more affordable prices.
Why downsell?
To maintain the sale
Downsizing is a strategy that enables you to keep your sale by offering a more affordable product.
👉 One of the biggest disincentives to sales is price. So downselling is an excellent way to keep your customer buying while satisfying their needs.
Reduce cart abandonment
It's very common for consumers to abandon their baskets and not proceed to purchase.
👉 According to Fevad, the average transaction abandonment rate is 67.4% : more than half of consumers who intend to buy a product do not finalize their purchase.
Digital downselling is based on cheaper recommendations presented at the bottom of the shopping cart page or directly on the site's product catalog. This gives e-consumers more choice, and therefore more chance of not abandoning their shopping baskets.
Increase the average shopping basket
👉 Of the 64.7% of e-consumers who abandon their baskets, 44% do so because of price.
The downsell seems to be the ideal technique to alleviate this problem. Offering one or more products at a lower price will reduce this disincentive and thus increase your customers' average basket, as they buy more and more often. Repeating their purchase will be easier if they know they won't be paying too much.
Keep your customers
Finally, downselling enables you to retain your customers and improve their loyalty rate.Indeed, if a customer feels that your products are too expensive for him, and that you have no alternative to offer him, he will go and see the competition. You lose your customer.
Downsizing enables you to retain your customers by responding effectively to their needs. Consumers need to be able to find what they're looking for in your store, and this builds loyalty over the long term.
What's more, it's easier to build trust between salesperson and customer if the latter can see that the salesperson is offering products that meet his or her expectations, rather than trying to sell the most expensive products at any price.
How to downsell? Our 3 key tips
Choose the right moment
To be effective, downsell must be offered at the right time. Offering it too early or too late will cost you your sale and probably your customer too:
- Too early, the downsell risks lowering the value of the average shopping basket. This is a shame, since the very purpose of this sales technique is to increase the value of the average shopping basket.
- Too late, and the downsell is no longer relevant to the customer, who has already made up his mind.
But how do you know when is the right time to offer it?
The answer is simple. The best time to downsell is when the customer is looking at the products. This can happen at the point of the sales pitch or negotiation in your sales tunnel.
When the customer consults the products, talk to them to find out more about their motivations. This is the ideal time to offer downsell: just before the decision is made and after the research phase.
👉 Example : A customer would like to buy a cell phone. During your discussions, you notice that he's rather price-conscious and has a limited budget. While he's looking at the products, offer him a phone adapted to his needs. If he objects, move straight on to a more affordable offer, or to the same offer but with fewer features.
In the case of an e-commerce site, the downsell is often proposed:
- In the bottom or side banner,
- At the bottom of the shopping cart page,
- In recommendations on the selected product page (this is also the case for cross-selling).
Take the time to analyze customer habits
It's essential to analyze your customer's buying habits and motivations. Although price is known to be the main deterrent to consumer purchases, this may not be the case for everyone. What's more, it also depends on the product in question.
So, to avoid offering a downsell when the customer was expecting an upsell, for example, you need to analyze their motivations and needs through exchanges. For e-commerce sites, you can analyze their searches or filters.
💡 Tip: Listen to what your customer is asking for, find out what motivates them, what their needs are and what holds them back. Understand their expectations and propose a suitable product before they make their decision. If they don't like your first proposal, don't panic! Move straight on to a more accessible proposal (if price is the main obstacle).
Offer cheaper products at the top of the range
The customer may want the same product, but at a lower price. In this case, you can :
- Offer a product from the same range, but at a lower price. For example: a customer wants to buy a Channel foundation. The price seems to be a problem, but she really wants a luxury foundation. You can offer her a high-end but more affordable product such as Lancôme, Laura Mercier, Fenty Beauty...
- Offer the same product, but with fewer options and/or features.
For example: a customer wants to buy a particular brand of washing machine. But the products you offer are beyond his budget. You can offer him a machine of the brand he wants, but with fewer features to reduce the price.
Downsizing is a real performance lever for companies, with many relevant advantages, but you have to choose the right moment to present it to your customers. In this way, you can maximize sales and build customer loyalty.
Article translated from French