Why do some people quote product at very low or no margin? Are they dumb, crazy or crazy like a fox? I am sure that some are dumb, others are crazy but what I think we all should focus on is learning from the few who are crazy like a fox.
These are the creative business people who offer an irresistible deal to capture a low profit sale and rely on their selling skills to build back end profit to the deal.
These business people have discovered that training the sales force to consistently offer specific cross-sell and up-sell opportunities turns marginally profitable customers into profitable ones.If the salesperson can up-sell a marginally profitable customer into a high margin custom molding or cross-sell into a very profitable lighting system for the glass front cabinets; great margins can be made.
The first step to successful cross and up-selling starts with listening to the customer. Before a highly trained salesperson (a.k.a. Natural) starts talking about budget; they ask the customer about their wish list and listen carefully to which items they like and which ones they love. Then they quick quote them based on their wish list and ask them how that price compares to their budget. Most of the time customers are surprised by how much it actually costs to get what they truly want.
The sales pro begins by setting the ground work for future sales and talks to them about the products that can be removed from the bid but can be purchased later. Then they stress the value of factory installed upgrades, like dovetail drawer guides.
The Sales Strategy
The key to this successful approach is this: the sales pro lets the low-margin customer know that it is them (the customer) who is in control of how much they spend. The sales pro is simply there to help the customer make educated choices. That’s because the sales pro knows that the average kitchen buyer happily extends their budget by approximately 15% by investing in upgrades and additional options they learned about during the sales process. In fact, industry research shows the average buyer’s main frustration with their salesperson is that the salesperson did not offer them enough upgrade opportunities. Instead of buyer’s remorse, customers have remorse that they didn’t spend enough!
The key is the sales pro’s pressure free, educational approach to sales. They let the prospect know that they are a very valuable resource to them during this process, and they take time to show their product knowledge. They ask their prospects to experience the upgrades. They encourage prospects to have fun and enjoy the process of creating a dream kitchen. They make the prospect feel comfortable enough to ask any question. That’s because the more informed the prospect, the more comfortable he/she is in making a big decision.
This is also a critical time for the sales pro to reestablish their company vs. the competition. That’s because the sales pro assumes that no matter what the prospect tells them, there are at least 2 other competitors bidding on the business.
As they are educating the prospect on getting the most kitchen out of their budget, the sales pro also stress the features and products that cannot be obtained from the competition. That means they take time to shop the competition to understand their offerings. This helps them know how to position themselves as the best alternative. Is their advantage quality? Service? Product? They make sure the prospect knows how to distinguish them before he/she leaves the building.
Beginning salespeople sometimes fall into the rut of describing products and their company’s unique value in a very factual manner. The pros know that prospects remember stories and buy based on emotion. So they tell them stories of people who made similar upgrade choices and the benefits they received. They talk about the satisfied customer’s emotions. How happy they are. That’s because this is more persuasive and memorable to the prospect.
A good open dialogue will offer an attentive salesperson many up-sell and cross-sell opportunities. But it is also important to be attentive to the prospects state of mind. Are they getting tired? Confused? Anxious to make a decision? Sales pros sense this and stop cross and up-selling so they can ask for the business and close the deal.
They also take time to tell them how much they enjoyed helping them make the right decisions and that they now look forward to helping them get their project underway.