The sweet spot in upselling

By John DeRosa, SRS Distribution. 

What choices do you offer your customers during your sales pitch? Learn about the role of psychology in upselling and start using it to your advantage. 

Ignoring the fact that Goldilocks and the Three Bears tells a story of an unsupervised child breaking and entering the home of three bears, this children’s story provides an important lesson in sales. When faced with each problem in the story, Goldilocks had to make a choice based on what fit her needs best. The answer in every situation was the most moderate of the three choices – a decision most people will make when faced with multiple options. 

In sales, the Goldilocks Principle describes the practice of providing a premium as well as a budget option alongside a regularly priced option to make the latter seem more appealing. A good example of this is present in most liqueur stores where you’ll often see a $45 bottle of wine next to a $15 bottle and a $90 bottle on the other side. In this example, you might assume the store wants us to buy the $90 bottle, but their positioning is actually priming us to buy the $45 bottle.      

Why Goldilocks pricing works for roofing contractors 

Often referred to as the good, better, best strategy, the Goldilocks Principal is a sound pricing strategy because it helps buyers make smart decisions by exploiting their psychological aversion to extremes. The method is incredibly effective, and most buyers will justify their decision to go with the middle, better option because they see the best option as too expensive and excessive, and they perceive the good option as being good and they believe they deserve something better than good. In other words, they feel good about choosing the middle, better option because they’re not being too frivolous or too cheap. They, just like Goldilocks, see the better as just right. 

This strategy also works because it shifts the buyers from a buy/don’t buy mindset to consideration of incremental value and spending. This works in two ways: 

1 – Buyers don’t like ultimatums, so three differently-priced options can give them a sense of empowerment – satisfying their inherent need for choice. 

2 – Buyers tend to decide more quickly whether they are going to buy something, using the remaining time to focus on “Which option is best for me?” If there was only one option, the buyer would simply decide to buy or not to buy. But by presenting them with a couple options, you shift their mind to operate within those three choices. The option of not buying at all becomes sidelined, which renders them more likely to buy in the first place. 

One final thought 

A few years ago, I was doing a sales seminar at the International Roofing Expo (IRE) in New Orleans. During that seminar I mentioned the importance of upselling and referenced the need for storm-restoration contractors to take advantage of this awesome opportunity to boost profits. At the end of my talk, one of the participants approached me to tell me he thought I was delusional to suggest contractors try and upsell in a storm environment. When I asked him to explain why he said, “90% of my customers are only going to want what the insurance company is going to pay for.”  When I agreed he asked, “So what’s the point?” I went on to explain that we don’t offer the upsell because 90% of the buyers will say no. We offer it because 10% of them will say yes and it’s with those 10% that we make significantly more money. 

It’s my strong recommendation that contractors educate their clients on the different options available to them and bundle those options as a part of their good, better, best pricing packages. Offering options and giving clients the power to choose is an excellent way to differentiate yourself and further position you as the contractor of choice for the project.     

Original article source: SRS Distribution