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Copyright © 2005
Tobacco Outlet Business
Updated September 24, 2005
MARKETING STRATEGIES: Sales Technique – November/December 2003
Up Selling Your Customers
Successful techniques can move customers to more profitable items.
There's no doubt that you have customers coming into your store day after day buying the same merchandise. Standard sellers such as lighters, cigarettes, moist snuff, cigars, etc. are like an "annuity" for your store-they are good for x amount of sales per year.
While not a new concept, the concept of "upselling" is often overlooked in the day-to-day frenzy of managing a retail store. Yet, shifting your customers' purchases to more profitable products can prove a profitable strategy.
Upselling – A Definition
In simple terms, "upselling" is the basic practice of moving the customer from a less profitable item in a category to a more profitable one in the same category. For example,when purchasing a car, after you finally decide on the make and model, you sit down with the salesperson and work out the details. The salesperson's job is to "upsell" you into elaborate packages of leather, sound systems, and wheels. If he or she is good at what they do, you sign on the dotted line and pay as much as $5,000 more than what you wanted. The result? A more profitable transaction for the dealership. The same holds true-with more modest numbers-in tobacco outlet stores.
Customer Service
Trust and credibility are two of the most important attributes a salesperson should have when dealing with customers. It is very important to continually train your employees to be knowledgeable in all product categories and to be service-oriented. There is absolutely no chance of upselling customers to higher-margin products if your salespeople do not have these attributes.
Selection
In the world of category management, you try and maintain the right number of SKUs in different price points so that you meet the needs of a wide variety of customers. For example, you probably have a wide selection of cigars ranging from machine-made to hand-rolled Honduras. There are different sizes, different flavors, different countries of origin, and different price points. In order to upsell, you need to stock this range of products so that customers have a choice. By and large, you'll make more money on the premium smokes than on the machine-made, popular-priced smokes. To do that you have to move your customers up. The same principle holds true for lighters, accessories, and collectibles.
What to Do?
Most store managers and store employees have a handle on their customer bases. Who comes in when, what they purchase, and how much they generally pay. The key is to identify these people in advance of their visits so that you can properly present the right items to them for the upselling opportunity. For example, if "Brian" comes in and buys machine-made cigars twice a week, you might do a little research and select a hand-rolled cigar with similar shape and size that is a little bit more expensive than the machine-made cigar Brian purchases regularly. Present it to Brian-reviewing the features and attributes of the cigar vs. the machine made cigar-and explain that for a few cents more per cigar, he will enjoy a premium smoke. Nine out of 10 times, the customer will take the advice and give it a try. If he likes it, you'll make significantly more from that customer on an annual basis. In addition, you have cemented the relationship and made him a loyal customer.
Try this on a few regular customers. Focus on the merchandise you feel most
comfortable with and merchandise you have a decent selection of (cigars,
lighters, accessories). Most importantly, train your staff. Give them direction
and advice on moving the customer up. ٠
-Mike Kirkwood