A guide to down-selling and its benefits

As a sales representative for a brand, you have to know how to generate income regardless of the challenges involved. Many of buyers will leave abandon their cart in your sales funnel. This might be do to outside interference, pricing, change of mind, red flag or an unanswered question. Instead of letting them just leave we want to try and give them one more option (typically at a lower price).

The way of doing this is through down selling. This is a strategy whereby you will have to appeal to different customers whose budgets are limited. With down selling, businesses and brands can retain their customers as they go ahead to sell a service or a product. If you know the right way to implement this technique in your sales strategy, you will know how best to deal with customers who are not looking to spend a lot of money.

What is a down-sell

A down sell is a type of offer that is made to a prospect after they may have refused your initial product offer. A down sell is a downgrade from an initial product offer. In this case, the prospect may be ready to purchase a less expensive product. A down sell does not mean selling a product of lesser quality. It usually means selling a product at a lesser price.

Down sell example

For instance, imagine that you are at Starbucks ordering a coffee, and the cashier approaches you to place an offer. They might approach you to have a cake to go with the coffee that you just ordered. They might offer you the cake for only $5. Let us assume that you do not accept the offer. The cashier does not give up, and they ask you if you would rather go for a cookie with a value of only $1.75.

So, maybe now, you feel that the price is rather low and you cannot refuse it. So, you go ahead and buy the cookie to be taken with your coffee. Due to the persistence of the cashier, you finally bought the cookie. The down-sell has finally been accepted! Down selling may not help you hit that high-profit margin that you have always dreamt about. But it can help you keep your customers who may be looking at other brands that have generally lower prices.

How does it work?

If a company stocks a product or has a service that is selling poorly due to its increased price, it will resort to down selling by marketing a substitute with a much lower price. This will work if the product or service is still in demand. This means that customers are more likely to buy the replacement rather than the more expensive option. This way, a business can avoid a total loss from the actual product to make sure that they make some money from the customer. If there isn’t a good replacement for the service or the product, the business may offer the original product using a low price that comes with a time limit.

Why is down selling important

Down selling as we have learnt from the example with the cashier above, is very important to making great revenue. Before we go ahead and let you know why down-sell offers are important, it is important to understand why upsells are rejected by customers. A customer will usually reject an upsell due to the following reasons:

  • The price of the item that was pitched to them.
  • How relevant is the item offered.
  • The readiness of the customer to buy.
  • The nature of the copy of the page as well as the supporting claims.
  • A lack of the right elements such as social proof or a video that can help the customer make decisions.

What is the importance of down selling? Down selling has some benefits. This is not usually a preferred strategy for some companies because it involves some losses, but it can help businesses adapt in certain cases where their expenses could be more than their income. The following are some of the reasons why down selling is important:

Increased sales: Many customers look forward to getting good deals when they go to the market. They prefer to save money while taking care of their needs and wants. If businesses bring down the prices of their services or products, they could make more sales than usual. For example, some people may not like to purchase a massage service, unless the price is sufficiently low to justify the reason that they are spending the money.

Interest new customers: One of the main aims of down selling is to get new customers. People who may not be able to pay for your products or services may decide to buy as soon as they see the low prices that you are offering the products/services.

Retain your customers: By down selling, businesses can adjust to the budgets of customers and show that their finances have a limit. This way, customers can understand that the business knows how to meet their needs. This way, the customers may come back to the business to make more purchases, rather than go somewhere else.

Down sell vs up-sell

Down selling is different from up-selling based on the value offered. They are opposites in the fact that down sell usually means selling something of a lesser value to a customer when they have rejected your offer. Up-sell is the process of offering a product to a customer after he may have purchased one before. This is a strategy that is employed by the sales representative to sell a product with a more superior value which is usually more expensive and has more features to increase the proposed value.

Down sell vs cross-sell

Down selling usually is offering your customer a similar product or service with a lesser value to limit their expenses. In the case of cross-selling, you offer the customer complementary products to add to something that they have already purchased. Products meant for cross-selling are usually used to increase the satisfaction of the customer. It is also meant to increase the profit margin of the customer. It can be seen as an additional service or product whose sales will not be possible without the customer purchasing the initial product.

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