What is downselling. How does it work
If you think you should apply one of these strategies but are unsure which is most suitable, here we will explain what they entail.
And, importantly, when you should consider initiating a downsell…
¿What is Downselling?
While upselling encourages customers to add more related products to their initial purchase to increase the sale value, downselling takes the opposite approach…
This sales technique aims to ensure the user does not leave without making a purchase, even if it’s significantly smaller than the initial offer.
This strategy is applied when the user is about to abandon the purchase for any reason (the product is larger than desired, too expensive, or they want a smaller version for a trial, etc.), but without being intrusive with the offer.
The goal is for the customer to decide on a more economical purchase than they initially sought, for instance, by offering a discount for their first acquisition of the service or product.
But ensuring they don’t leave without making any purchase!
¿How Does Downselling Work?
When a company has a high-priced product or service that isn’t selling well, they can resort to downselling by offering a more affordable substitute to customers. This works because the company maintains demand for the product or service, and the lower price motivates customers to buy the cheaper substitute to meet their needs.
This way, the company ensures it earns some revenue from its products or services. If the company can’t provide a sufficiently similar product or service, it might offer a limited-time deal with lower prices on the original product.
¿Why Do Downselling?
The main intent behind this strategy is to capture more customers and establish a longer-term relationship with them.
With that said,
It’s easier to attract users already on the website or visitors to a store (depending on the business type) with low-price offers that help funnel them further into the conversion process.
While you might earn less with this strategy, ultimately, the most important aspect is that you can generate a higher ROI by acquiring new potential customers.
Once they are in your conversion funnel, you can nurture them further and encourage them to buy your more expensive offerings further down the funnel.”
The Pros and Cons of Downselling
Various types of downselling can be designed according to a company’s services or products, as long as they can be targeted at those leads who are still undecided about making a purchase, even after an upselling strategy has been applied without achieving the sales goal.
Let’s look at the advantages and disadvantages of this type of sales strategy.
Pros of Downselling
- You can generate more revenue to offset advertising investment.
- Good opportunity to build loyalty with new customers to your brand.
- You offer your customers several purchasing options according to their budget.
- More people can become long-term buyers of your services, even if at a lower price.
- If your business or e-commerce offers services, it’s more likely that based on the initial purchase experience, people will decide to invest in more expensive programs the next time they buy from your brand.
Cons of Downselling
- Depending on the downsell strategy used, you may need more investment in time for email marketing or similar strategies.
- The implementation of different downsell offers might be necessary.
- If not executed correctly, it can negatively impact the purchasing experience and reduce the chances of future sales.
¿How Do I Know If My Company Needs a Downsell Strategy?
There are several ways in which companies can benefit from using a downsell strategy. However, there are some key factors that should be considered first.
- Current market conditions.
- What products/services are currently selling well?
- Is there something unique about the product or service that sets it apart from others?
- Does the product offer something new or different?
- Are there competitors already doing similar things?
- Do they provide better quality than their competition?
The important thing to consider is whether your company is making a profit. If you have a successful product that is selling well and it’s the only thing you are selling, you might want to offer a simple payment plan as a pricing option for customers who didn’t buy the product. You are likely to have several customers who opt out due to budget concerns. Offering a downsell in this case could provide an excellent way to handle these objections and ensure all your customers are catered to.
Effective Ways to Apply Downselling
We’ll show you 4 ways to effectively apply downselling without losing potential customers and favoring the journey through the conversion funnel.
1. Do Not Apply Downselling Too Soon
Presenting a discount offer too soon can confuse potential customers and lose them just as quickly.
This is a common mistake in downselling strategies and can show “desperation” on the part of your business to make a sale…
We recommend considering each customer’s needs based on their behavior at the time of the potential purchase.
While some may be up for a larger offer (upselling), others may be more receptive to downselling.
2. Use Exit Popups
If you want an effective webpage, find strategic ways to include popups on the site or your payment gateway for various purposes, such as upselling and cross-selling strategies.
One of the least used popups is the exit popup.
It’s a small, emerging window that can predict when the person will leave the website, even though they’ve already added products to the shopping cart but didn’t complete the purchase.
Thus, you can offer a lower deal at that moment, helping the person make the final decision to acquire the product or service at a lower cost.
3. Offer a Free Trial Period
Another effective way to do downselling is to include a free trial period without reducing the original cost of the service.
Do this with complete transparency for the potential customer, indicating how many days the period will last, whether the paid subscription automatically renews after this time, and that it’s the customer who must indicate cancellation…
In short, set your purchase conditions appropriately to offer the free trial period.
4. Create Basic Packages Without “Premium” Features
If making an initial offer with a premium package at its original cost, and the person still shows no interest in making the purchase, you can design basic packages or plans without one or several premium functions.
This is a very good downselling strategy, which will also help you offer that same customer a subsequent purchase with the functions they don’t have, adding value to their shopping experience.
5. Create a Dynamic Section on Your Homepage
Through cookies or heat maps, you can identify how often a visitor comes to your site’s pages and what products they have seen and interacted with, etc.
You can use the information you have about your visitors to create a dynamic and personalized section for each of them on your homepage, where you can show cheaper alternatives to the product the user has previously viewed.
6. Offer a Discount
Technically, offering a discount can also be considered a down-selling technique. After all, a discount remains one of the most effective options in a negotiation that leads even the most indecisive consumers to conclude a purchase.
However, it’s not recommended to offer a quality product at a lower price simply to close a sale. In fact, remember that, besides diminishing the value of your products, a simple $5 discount means a loss of:
- $50 in 10 sales
- $500 in 100 sales
- And so on.
If you decide to offer a discount, remember to inform your customers and visitors about it. Adding a bit of urgency or motivation to the offer is also helpful. You could, for example, offer a discount for first-time customers. Offer a limited-time discount. Alternatively, you could offer a discount in exchange for signing up for your newsletter (it’s also important to make clear the benefits of your newsletter). This way, you could convert those customers who had considered your product but hadn’t reached the payment stage.
The sales strategies we’ve discussed here are very effective for capturing and retaining potential customers who are still not convinced about purchasing one or more products.
The key is to recognize when to apply upselling, downselling, or cross-selling without any of these strategies being intrusive to the customer or negatively impacting the shopping experience of visitors to your e-commerce or physical store.
If you want to learn more about other digital marketing strategies, we recommend reading our guide, it will surely clear up many of your doubts!
Juan Esteban Yepes