MBA2703 How To Make More Money With Upsells & Downsells

You’ve made the sale. Now what? If you’ve ever felt unsure about how to keep the momentum going, this episode offers a fresh way to think about what comes next. Omar explores a set of strategies that top brands use to increase revenue without chasing new customers or spending more on ads. You’ll hear how small, well-timed offers can turn a single purchase into something much more valuable for both you and your customer. Want to know how to make more money after the sale? Hit play at the top of the page and learn how upsells and downsells can help you grow your business the smart way. Watch the episodes on YouTube: https://lm.fm/GgRPPHiSUBSCRIBEYouTube | Apple Podcast | Spotify | Podcast Feed Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

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• 1:54Speaker 01

  Today, I want to share with you one of the simplest ways to make more money in your business without finding new customers, without running more ads, or trying to get more traffic, without changing your product. It's upsells and downsells. Upsells and downsells is a strategy we all experience as consumers, but forget to apply in our own business. We see it every day. It's the same strategy McDonald's uses when they ask you, would you like fries with that? Or would you like to upsize your meal? Or go large, as they say? Today, I want to show you what upsells and downsells are, how they work, and how to apply them to your own digital business, your own online business, without annoying your customers, without making them feel like you're being pushy. You're actually being helpful with this strategy.

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  And I'm going to show you step by step. Let's get into it.

• 2:46Speaker 01

  Welcome back to the $100 MBA Show. I'm your host, Omar Zenhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday, to help you start, grow, and scale your business.

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  Real quick, if these episodes help you in any way, hit the follow button on this podcast app. It helps us to keep bringing you practical business insights three times a week for free. Thanks. Let's start with what they are and why you want to use them. Let's start with upsells. Upsell is offering a higher-priced or additional product after a customer commits the buy. So, for example, you order a burger at a fast food restaurant, and they ask you, would you like to make it a combo? Your intention was to buy a burger, right? But then they offered you, hey, you can get fries and a drink for an additional $4. You can obviously refuse the upsell and say, hey, I just want a burger. Or you could say, no, that's actually a pretty good deal.

• 3:44Speaker 01

  I'd love fries and drink with that for just $4. You're giving the customer optionality in this scenario. They don't have to buy, but by giving them the option, by presenting it, you're actually making yourself more valuable to them. Because now they know that, hey, I could have gotten that if I wanted to. I've made a decision. Or I've made the decision to go ahead and buy it because it's a good deal, or it's exactly what I was looking for. A downsell. A downsell is offering a lower price alternative when a customer says no to your main offer. This is like Netflix offering you their basic plan, which is their cheaper plan that allows you to use a limited number of devices, or maybe it's not full HD, when you cancel maybe a premium plan.

• 4:28Speaker 01

  So hey, maybe you don't like this premium plan, but maybe you want to hold on to Netflix and pay a little bit less if you go with the basic plan. Again, you're giving the customer optionality. There is a good chance that they're canceling because they don't want to pay that much money. Maybe they don't see the value in what they're getting. But maybe they would see the value in the lower plan. Okay, that's much cheaper and I can afford that, or I can see the value in that. Of course, they can cancel and not take the downsell. But by giving your customers options, you're actually serving them better. So why do upsells and downsells work? Well, the hardest part in sales, in business, is getting someone to say yes the first time, to get the actual yes, or the buy, or the transaction.

• 5:14Speaker 01

  Once they've decided to buy, they're in the buying mode. They already have decided they're going to go with you, right? They've trust you. Psychologically, it feels like a small step to add or to adjust the purchase. So just even think about your own psychology when you go to a store or a restaurant, or McDonald's, for example, and they offer you that upsell. It's not a big decision, right? You're just saying, yes, I want fries, no, I don't want fries. Yes, I want to make it a combo, no, I don't want to make it a combo. It's not the same size of decision of making the decision of going to the actual restaurant and buying the food. What we're going to eat today, that's a bigger decision. Once they've made the decision, okay, we're going to go to McDonald's,

• 5:58Speaker 01

  and they go to McDonald's and they're at that counter, that big decision is already done. All the other decisions at the time of transaction is a lot smaller. It's less pressure, it's easier for them to make. That's why businesses from Starbucks to Amazon, from your local supermarket to SaaS startups... They use this constantly. It's called average order value, AOV. They're increasing the average amount of money you are making per order without adding any new customers, right? Because they're just spending more with you. This is why your corner store, your supermarket have gum and chocolate and candies and little items. You might want gift cards, right? You see that at the checkout line?

• 6:41Speaker 01

  These are called point-of-sale upsells because, hey, you're there already. You're scanning things, you're putting things on the conveyor belt. So it's an easy upsell and increases the average order value for each customer. So I'm going to give you some rapid-fire, real-world examples of this in action. So we talked about fast food and would you like fries with that? But even fine dining, right? They have like a chef's menu or tasting menu. And then there's the option to have the wine pairing, right? Where you pay X amount of dollars more with your degustation to get the wine pairing. That's an upsell. Airlines, right? They are the king of this, right? They have economy class. And even within the economy class, there's different classes of tickets that allow you

• 7:24Speaker 01

  to do certain things like refund or change, you know, the dates or luggage and all that kind of stuff. Then they have premium economy, then they have business class, and they have first class. So they have all different upsells that you can look at. And of course, you know that when you check out in any kind of like especially low-cost airline, they have add baggage, add travel insurance, add seat selection, add your meal. If you want an exit seat, that's an upsell. So they have that process in the checkout because they're giving the customers optionality. And now people have just gotten used to this. Be honest, as a business owner, how much of your day is actual work? And how much is it just getting ready to do the work? Answering emails, tweaking presentations, hunting for numbers?

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• 9:41Speaker 01

  Now, I'm going to say first of all that that experience is not the best experience for the customer. And I'm not a big fan of that, of annoying people with all these upsells. But I do like the idea of having at least one upsell and downsell with your products. So that way, your customers at least know what's available and it's frictionless. And you want to make this as pleasant as possible. Unlike some of the checkout in these, you know, low-cost airlines where you have to go through five or six or seven pages just to finish your actual reservation. And there's like this timer, it's a lot of pressure, it's not a fun experience. So there's ways to do this tastefully in your online business. Another example is like when you buy shoes at a shoe store, right?

• 10:23Speaker 01

  They suggest socks that go with it, or shoe cleaner, or you know, the protective spray that allows it to be like water repellent. These are upsells. Gyms, they have a membership. You can also add personal training sessions. You can add nutrition coaching. You can add buying, you know, the protein shakes and their creatine. These are all upsells. There's also down sells, of course, in the gym. They say, hey, our annual price is XYZ, or you can go monthly. That's considered a down sell. Some gyms and some reoccurring like shared spaces, like coworking spaces, they allow you to like have a really cheap membership that only allows you to go to the facility three times a week, or two times a week. And that's a down sell. Hey, you don't want the full membership?

• 11:05Speaker 01

  Fine, but we got this option that's less expensive, but limits your membership. Now, the funny thing is, is that often down sells increase the value of the actual flagship offer, or your main offer, where they say, oh, actually, yeah, I do want to go every day. I see the value in that now that I'm looking at this other plan. So as you can see, you are experiencing upsells and down sells every single day, but most entrepreneurs don't realize they can use them in their own playbooks, in their own digital businesses. So let me give you some examples in the digital product world. And you could do this tastefully, without being annoying, with just giving the customers the option to get more value, or make the best decision for them when it comes to maybe getting something

• 11:50Speaker 01

  that's a less expensive offer, and exactly what they need. So for example, an online course. You have a main product, maybe the course is $200. And then you have an upsell to have a one-on-one coaching call for $99. So a lot of people will go for that upsell just because they want one-on-one coaching. They want to speak to you and ask some questions and get some tailored advice. And for $100 for an hour session, say, for example, is pretty reasonable for them. And they can see the value. Now, some people are not going to see the value, and that's because that's not what they need. And they may even see the core product, the main product, which is this $200 course, to be out of their price range. And maybe too much of a leap for them at this moment. You have to remember that your customers are on a spectrum.

• 12:34Speaker 01

  Some people are ready and prime, ready to buy and ready to pay whatever you are asking them to pay. And some people, not so much. So a downsell is if they say no to the main offer, you can offer, for example, a $49 workbook or template, or a mini version of the course, or maybe the first module of the course, or even the course without lifetime access. So you're like, hey, you're not going to get lifetime access. You have access to this course for 30 days. If you want to consume it and take it, it's $49, but after that, it'll be gone. And some people will take that and be like, hey, I will consume it. And that's perfect for me. I'll pay $49 for that. Let's go into membership sites. Your main product might be a monthly membership of $49. An upsell could be an annual for $490, which allows them to get two free months.

• 13:19Speaker 01

  And a downsell might be a light version of your membership, $29 a month with fewer features or benefits. SaaS, software. I ran a software company for 10 years, grew it to over 30,000 users. I learned a ton about pricing and packaging through the process before we sold the company, exited to ProProf. So what can you do with software? Well, upsell, you can upsell extra storage, premium features, premium plans, concierge onboarding, white glove service, whatever it might be, premium support. Some people offered that. We didn't do that because we felt like we wanted to give premium support to everybody. But these are options. A downsell could be a lower tier plan for those who don't want to pay full price or just want to try you out. What about e-commerce?

• 14:02Speaker 01

  What if you sell like physical products on an online store? Let's say you sell cameras, right? You could buy a camera and the upsell is a lens bundle. Or a downsell is a cheaper tripod than the one that you're recommending in the bundle. And Amazon does this a lot with, you see it, frequently bought together, right? They know that people want to accessorize, want to have options to improve their experience with this new product. But quick pro tip, digital products have the best margins for upsells because the cost of delivery is basically zero. So how do you add these upsells and downsells? To your funnel right now. Step one, map your customer journey.

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  What's the natural next step after the main offer? Whatever your main offer is, what's the next thing that your customer wants to solve, wants to do? Create that offer and create a one-click upsell. Don't make them re-enter their payment information again. Use a checkout tool that supports one-click add-ons. So that way, when they're in the checkout process, it makes sense for the add-on, the templar, add-on, the coaching call. Step three, decide on your down-sell. Ask yourself, if they say no to my main offer, what's a smaller version or a starter option of my main offer? Again, this could be the offer itself, the product itself,

• 15:26Speaker 01

  but with limitations, maybe a limitation of time or content or support. Step four is to test the placement of these offers. If you want to do it pre-checkout with the upsell or post-checkout after they say, "Thanks for your order," and you want to add this to your cart. So you want to test these out in your own system or follow-up or cart abandonment emails for down-sells, where you email them and say, "Hey, I saw you checked out this offer, but didn't buy. We have another option that's a little less expensive, but have these limitations." It might be up your alley. And lastly, step five, you want to track the impact. As Peter Drucker says, what gets measured gets managed, right? So you want to watch what your average order value is and the conversion rates.

• 16:11Speaker 01

  So even 10% to 20% take rate of an upsell can transform your revenue incredibly. So when you're getting started, look at what your average order value is right now so that you have a benchmark to measure against. Before we wrap up this episode, I want to give you some parting advice, some last tips to help you out. When you're thinking about building your upsells and down-sells, think about building like a menu. Like you have a restaurant and you're building out your menu. The burger is your main product, right? The fries, the drinks, the desserts, that's your upsell menu. And a smaller burger, instead of the Big Mac, just a cheeseburger, is your down-sell. So how do you make money with upsells and down-sells? Stop thinking only about the sale and think about the total order and how I can

• 16:55Speaker 01

  solve more problems for my customers and give them more value because if I give them more value, they'll be willing to pay for it. This is the thing a lot of people don't comprehend when they're starting out in business, is that people are willing to pay for more value. And we just think, who's going to pay more? Lots of people. There's a lot of people that have enough money to spend to get more out of what you offer, meaning that they want you to help them with other things. Do this right, and you'll boost your revenue without spending more on ads or chasing new customers. Now, before you go, I want to leave you with this. If you ever have the feeling like, I don't want to know my customers, the customers are going to get angry, ask yourself how you feel as a customer.

• 17:36Speaker 01

  The airline example of checking out and buying an airline ticket is the worst example and the other side of the spectrum. But on this other side of the spectrum where upsells and downsells are great, for example, the company Apple, right? Apple has a ton of products in its product line, right? It has the AirPods, which is kind of their starting line product. And they have, you know, the watch, the Apple watch, and then they have iPhones, and they have iMacs, and they have iPads, and they have AirPod Maxes, and you know, like, I can go on and on and on. And the reason why they do this is because they know that once you consume one product, you're going to be like, hey, actually, I love their products, they're high quality, they work perfectly. I might want to consider buying my next tablet from Apple. I need a new laptop. Maybe I should look at Apple since I love their other products.

• 18:21Speaker 01

  So, we're not so inconvenienced by it. We actually love the fact that we can get more value from a company that gives us value in the first place.

• 18:31Speaker 01

  If you found today's episode helpful and you want more practical business lessons to help you start, grow, and scale your business, the best thing you could do is subscribe to this podcast. Hit subscribe or follow on your favorite podcast app, the one that you're using right now, whether it's Apple or Spotify, or wherever you listen to podcasts. By hitting subscribe, you get our next episode automatically, and it's the best way to support the show. It's absolutely free, and it's a way for you to commit to growing your business. And now that you've subscribed, I'll check you in the next episode.

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