What’s in this article:
- Downselling can help you save lost sales and keep your followers on board
- The more you know about your customers’ needs, and about their path to purchase, the easier it will be to identify the right moment to downsell
- Your downsells should match the individual customer’s needs and expectations
As the owner of a retail store, your goal is always to get as much value as possible out of every transaction you process.
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Ideally, this means getting more value out of an already “sure thing” via upsell and cross-sell offers.
Of course, not every potential sale that comes your way will be such a “sure thing.” If a prospect is hesitant to go through with a purchase in any way, you run the risk of losing the sale altogether.
Don’t let it happen.
Instead, consider meeting your prospects where they are by providing a downsell offer.
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What is Downselling, and Why Should You Use It?
As the name suggests, downselling is the act of promoting a lower-cost offer to a prospect who has rejected your initial, higher-value offering.
A simple example:
You walk into a convenience store, and the man at the counter offers you a king-size Snickers. For whatever reason (e.g., you’re insane), you tell him that a king-size bar is too much for you—at which point he offers you a smaller candy bar for half the price of the big one. And, of course, you gladly accept the offer.
As in this example, downsells often refer to the actual product being offered.
But it can also apply to the additional offers that come with the purchase of a given product.
A few examples:
- Offering a trade-off between shipping time and cost
- Providing multiple warranty offers (e.g., three-year protection at X cost, one-year protection at Y cost…)
- Delivering less intensive or feature-rich services at a lower cost to the customer
As we’ve said, the main reason to offer a downsell is to salvage a potentially lost sale.
(Sometimes, “getting as much value as possible from a transaction” means taking what you can get.)
Needless to say, if a prospect ends doesn’t end up converting at all, their overall lifetime value to your business is zero. And, if a current customer doesn’t take you up on an initial offer, there’s a chance they’ll end up defecting altogether.
(To that end, it’s worth noting that avoidable churn costs US businesses $136 billion per year. This is due not only to the loss of potential revenue, but also to the actual loss of time, money, and energy experienced while chasing dead-end leads.)
So, again: Downselling is all about getting something out of every encounter you have with a prospect or customer.
Downselling also allows you to become more aligned with the needs of your individual customers.
The modern consumer is always looking for offers and brand experiences that are tailored to their needs. They aren’t always looking for the biggest and best thing you have to offer; they want the product or service that’s right for them. The better you align your offers with their needs, the more likely they are to stick with your brand for the long haul.
(Conversely, if they end up purchasing a higher-value product—and not getting full use out of it—it won’t reflect well on their overall experience with your company.)
Similarly, a successful downsell will allow you to flesh out your customer profiles for those who take you up on your offer. Since you’ve identified exactly what it is they want from your brand, you can continue giving them more of it—and can eventually build on this value over time.
Basically, you have a choice:
- Allow those not interested in your high value offers to walk away empty-handed, or
- Offer a downsell, save a sale, and start nurturing your low-value customers into VIPS
We don’t need to tell you which is the better option, right?
Best Practices for Effective Downselling
Alright, let’s be clear:
Just because you provide a lower value offer to your hesitant customers doesn’t mean they’ll take you up on it.
What’s more, a “successful” downsell won’t always necessarily be the best outcome for your business.
That said, let’s dig into the key best practices to adhere to when using downsells in your retail business.
Some Key “Don’ts” When Downselling
Actually, before we look at what to do when downselling your customers, let’s talk about what not to do.
First, don’t annoy your hesitant customers. If they don’t want to make a purchase at all, pestering them with a lower-value offer (that they still have no intention of buying) will only serve to alienate them. Yes, you want to put the downsell offer on the table—but you should then allow them to come to a purchasing decision on their own.
On that same token, you also don’t want to come off as desperate for a sale. To be sure, your prospects will pick right up on this—and, in turn, will likely begin to question the value of your products, overall.
On the other side of things, you also don’t want to get taken advantage of when downselling your customers. If your customers know you’ll give them a good deal on lower-priced products after they reject your initial offer, some may begin faking interest in the high-value offer as a way of gaming your system.
You also don’t want to jump right to a downsell at the first sign of hesitation from a potential customer. Instead, create a game plan for addressing common objections from your audience—and only resort to a downsell when it’s clear that your initial offering isn’t what they’re looking for.
Finally, as we alluded to earlier: Don’t neglect your customers after a successful downsell. Sure, they may not have provided the value you’d hoped for in that moment—but you can always build on this value as the customer learns more about what you really have to offer them.
Know When to Downsell
As with most things marketing and sales, timing is everything when downselling your customers.
As we said above, you don’t want to jump to the downsell too early.
Rather, you want to be sure you’ve exhausted all other options before you settle for a lower-value conversion. To that end, you’ll want to develop a workflow, checklist, or other solid plan to address the objections potential customers may have.
Along with that, you’ll also want to identify consumer actions, behaviors, and other triggers that clearly show they aren’t interested in your initial offer—but are still interested in finding a solution to their problem. In identifying these critical moments, you’ll know exactly when to switch to a downsell offer before the prospect loses interest entirely.
You’re probably asking, “How do I know when this ‘right time’ is?”.
Unfortunately, we can’t tell you that.
Reason being:
It depends on your circumstances: Your customers, the products, or services you sell, and a variety of other factors unique to your business.
This is where being data-driven comes in.
The more you know about your customers’ needs, and about their path to purchase, the easier it will be to identify the right moment to back off a bit from your original offer.
Do they have to tick all the boxes on your “objections” checklist? Probably not.
But you do want to know when continuing to push through said workflow for the sake of completeness will be pointless—or when it may do more harm than good to your relationship with the customer.
By looking at both your average customer’s path to purchase, as well as the individual customer’s behavioral signals, you’ll be able to switch gears at just the right time to save a sale—and keep your customers on board for just that much longer.
Know How to Tailor Your Downsell Offer
We talked earlier about the importance of providing personalized offers to your individual audience members.
With that in mind, you want to avoid providing blanket downsell offers based on specific products in your catalog.
Rather, your downsells should match the individual customer’s needs and expectations.
Take the following scenario, for example:
A customer comes into your electronics store looking to buy a new PC. You point them to a $1,500 machine and give them your pitch—and they respond with hesitation.
It would be a mistake to turn around and show them a lower-priced machine as a matter of course.
Obviously, not all $1,500 computers are created equally; neither are all $1,000 ones. It just doesn’t make sense, then, to assume that the customer will be swayed by a drop in price.
Instead, you’d want to listen to the actual objections your customer is raising—then work to find the exact machine that best fits their expressed needs.
In this example, you’d have a number of options:
- Offering a trade-off in terms of features (e.g., showing them a PC with the same amount of RAM but with less storage space)
- Reducing the amount of accessories included with the offer
- Removing protection plans, allowing for in-store pickup in lieu of charging for shipping, or reducing any other service-related fees included in the purchase
Again:
There’s no telling which of these offers will work—until you listen to your individual customers. Heck, it may turn out that they’re willing to spend the same amount of money but are just looking for a product whose features better align with their needs.
Still, once it becomes clear that a customer is actively looking for a lower-priced, less feature-rich solution, it’s your duty to figure out which of your products will best suit them. Do this, and you’ll almost certainly get them to convert.
Have a Plan for Moving Forward After Downselling
Alright, let’s be real:
Getting less value than you expected out of a given sale is always going to be a bit disappointing.
But, seeing customers who you’ve downsold to as “low-value customers” essentially closes the door on the potential value you could gain from them in the future.
While you typically do want to focus on your high-value, easily converted customers over your more hesitant patrons, you shouldn’t completely neglect the latter.
You shouldn’t even put them on the backburner.
Rather, you’ll want to have a solid plan in place as to how to continue building on their lower-value purchases.
The key way to do this:
Create new—and multiple—sales funnels based off of your downselling workflows.
We said it earlier: Just because a customer makes one low-value purchase doesn’t mean that’s all they’ll ever buy from you.
That’s just where they currently stand with your company—and it’s up to you to continue providing more and more value to them as time goes on.
In turn, you’ll:
- Allow your low-value customers to explore and experience your brand on their terms
- Build trust in these individuals while minimizing risk on their end
- Nurture them toward more high-value conversions—leading them to eventually become an integral member of your community
Will it take a bit more time and effort to get these low-value customers up to an acceptable level of value for your business? Sure will.
But, if you let your hesitant prospects off the hook without even trying to get some value out of the exchange, you’re guaranteed to lose out.
A downsell today can lead to an upsell tomorrow—but only if you serve your low-value customers as they need to be served, and empower them to reach far beyond the goals they’d initially set for themselves.