Let’s play a quick round of Jeopardy!
Player: “I’ll take Sales Techniques for $1000”
Host: “Whereby a seller induces the customer to purchase more expensive items, upgrades or other add-ons in an attempt to make a more profitable sale”
Player: “What is Up-Selling”
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Up-Selling is probably the most ballyhooed tactic for increasing revenue in your business. It’s effective and often beneficial and even necessary to meet the requirements a prospect or client has given you.
But let’s talk about Down-Selling.
Down-selling is the art of narrowing a customer’s expectations and matching them more effectively with a solution that best fulfills their needs or desires.
Down-Selling is about serving the customer, first and foremost. Listening to their needs, wants, desires, and recommending a solution (hopefully your company has a matching offer) that addresses those needs.
Down-Selling here at Pagely
We typically recommend our lowest priced VPS Hosting plan to a prospect that may be unsure what their resource needs are or will be in the future. We say “Let’s see how things go, and then you can grow into a larger plan as your needs justify.” – Committing to earn the customer’s future MRR growth.
There are times when a customer will come to us about ‘needing to upgrade for better performance,’ citing a ‘slow site’. Most of the time, their site is bypassing cache, but after a few moments with one of our support agents identifying and correcting the issue – no upgrade is needed. – We fix the issue instead of up-selling the plan – saving the customer money.
Over time, a customer may have added CDN add-ons of various sizes to accommodate the growth of their traffic profile. 50GB here, 100GB there, 2 more 50GB packs, etc. Our prices go down as your CDN purchase goes up. We periodically scan our customer base and will swap out the 4-5 individual add-ons, with a single, lower priced add-on has the same or more CDN bandwidth, but at a lower $ per GB – Saving the customer money.
Sometimes a customer’s site needs may change where raw computing power may become more important than High-Availability (HA). If cost is a concern, we typically move them out of a more expensive HA setup into single instance plan with the higher computing resources required. – The customer gains a more stable site + saves money.
Stop Pagely, you’ll go broke!
Yes, some readers may be shaking their head about the dollars we are leaving on the table – we’re not maximizing our MRR or ARPU in all cases.
However, what we are doing is serving the customer in a manner we believe is fair while building LTV and reducing churn. In some cases, we actually grow our profit margin when we eliminate a wrong-sized plan for a right-sized plan simply by reducing the support burden of that site/customer. – The net effect of utilizing down-selling is we actually do better overall as a company.
Up-selling is a powerful skill, but only when your customer is getting more value. Not less. When you down-sell you build trust and demonstrate you are acting in your customers best interests.
Up-Sell where appropriate to grow your top-line MRR
Down-Sell to build LTV and reduce churn.
Good luck out there.
Josh, I LOVE the spirit of this. We do the same thing with development. Plus, by anchoring to higher-cost options, the ultimate choice feels cheaper by comparison and you build trust that you’re looking out for your customers’ best interests. I wish more companies implemented this attitude.