Down-Selling: A Strategy

22 April 2024

"Downselling" is when you offer a less-expensive product or service to a potential customer who has declined your main offer. It's a good practice because it means you're at least getting some return for your sales effort. Even more, serve them well, and it's likely you'll have other chances.

Ddownsells can be annoying and can encourage bad buying behavior. To avoid these issues, you should ensure the downsell is easy to understand and doesn't just seem like a cheaper version of the main offer. It should offer value to the customer and be significantly different from the main offer.

For instance, if a customer didn't buy your main offer because it was too expensive or too complex, you could offer a downsell that's less expensive and simpler. To understand why customers didn't buy your main offer, you could ask them about their main objections. This can help you design a downsell that addresses these objections.

Downselling can be applied to professional services too. Sometimes, a client might feel your service is too expensive or not exactly what they're looking for. In such cases, you can offer a downsell. For example, if a client doesn't want to proceed with a consulting project, you could offer a less involved training course. Or if a client doesn't want a major program, you could offer a smaller pilot program.

Downselling is most appropriate when a client is not going to buy your current offer. Make sure you offer your downsell at the right time. Too early and you might discourage your main offer. It's best to reintroduce the problem and solution and then introduce the downsell. This way you and your customer are sure the downsell aligns with the problem/solution.

Know Your Margins

If you know your true profits, consider offering a cheaper option, also known as "downselling". In this case, look at your gross profit, which only considers the cost of making and delivering the product or service, and any sales commissions. It doesn't include overhead or other expenses, as those are usually covered by the first sale.

Think of downselling as "extra money". For example, I had a client who helped people write their first book. He helped them to write, publish, and market it. He sold this service for $5,000. He had an 80% profit margin, meaning it cost him only $1,000 to deliver this service. This left him with a gross profit of $4,000.

So, what would happen if for every five people who show an interest in his service, he only manages to sell to one? He obviously makes $4,000. But what if he could offer the remaining four people a slightly smaller program, maybe one where they would work with one of his coaches instead of with him personally?

They could get that program for half the price… $2,500. And maybe he could let them pay it over three months, or six months, or maybe a year. If three of them bought that program, and it still cost him the same $1,000 to deliver it, he just made an extra $4,500 without any extra work or effort on his part.

However, you should be careful not to undermine your pricing.

You shouldn't give the impression you're reducing your price just to make a sale. Instead, you could use a "scholarship" or "hardship" program, where you offer a discount to a limited number of customers each month due to their specific situations. We can negatively train our customers to say "no" first, just to get a better price. That's why when we downsell, what we are "re-offering" should be different enough from the main offer.

Having a series of downsells ready can be beneficial. However, the downsells must still meet the needs of the customer.

Several downsell ideas:

Let's say your main offer is a 10 day on-site analysis project. You send out an email campaign to your targeted list. You could plan to follow up a few days later to all that said no, and offer a half-day workshop. They may have been just shy of willing to commit to the scale of a 10 day project. If you could deliver on something related in a meaningful way, you could very well find yourself having THEM bringing up the original project.

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