What Is an Add-On Sale?
An add-on sale refers to an ancillary item sold to a buyer of a main product or service. Depending on the business, add-on sales may represent a source of significant revenues and profits to a company. An add-on sale is generally suggested by the salesperson once the buyer has made a firm decision to buy the core product or service. It is sometimes known as “upselling.”
1. Selling a mobile phone cover or a screen guard in addition to a purchase of mobile phone will be an Add-On Sale.
2. Providing an extension of warranty or a tech-support package with a purchase of software is also an example of Add-On Sale.
Note that Add-On sale directly relates to the purchase and the added item costs less than the core item. Understanding the consumers’ needs is pivotal for effective Add-On selling. Staying aware of the customers’ needs helps the salesperson or the service provider to provide the options for appropriate Add-Ons. The primary benefit of Add-On selling is to increase the items purchased thus increasing the total purchase amount. Also customers sometimes view Add-On sale to be useful and of good service thus and tend to return to business in future. To make the Add-On sale to be effective it should sound like a solution to customers’ problem and not an additional sale. The salesperson should explain all the available Add-On options to the customer carefully and elaborately so that they can make an informed choice.
Effective add-on selling hinges on understanding the customer’s needs. A hardware store customer who buys a wheelbarrow will probably not want paint samples, but he might need a shovel. Staying conscious of the customer’s needs lets the salesperson direct him to an appropriate add-on. The add-on should sound like a solution, not a sale. The customer should see how the add-on will solve a problem, not just pad the business’s bottom line. The salesperson should present several add-on options and an explanation of the value for each one, which allows the customer to make an informed choice.
Common Add-on Sales
Standard add-on sales vary by industry, but some add-ons work in a variety of industries. Warranties on parts or products are very common. Many businesses offer upgraded versions of a product for less than the equivalent retail cost, such as a software upgrade on a new computer. Businesses that deal in products installed in homes or offices frequently make service plans available at a discount from normal service call prices.
Understanding Add-On Sale
Typical examples of add-on sales are the extended warranties offered by sellers of household appliances such as refrigerators and washing machines, as well as electronics. A salesperson at an automobile dealership also generates significant add-on sales by suggesting or convincing a buyer sitting at his or her desk that the buyer would be much happier with the car with a few or several add-on options.
The primary benefit and goal of add-on selling is an increase in the total purchase amount. Businesses that employ effective add-on selling also benefit from increased customer loyalty. Customers who view businesses as providing good service, such as making useful suggestions, tend to return to those businesses for future purchases. The business serves as a resource for information or advice, rather than just a place to shop.
Advantages of Add-On Sales
Add-On sales can help a seller establish a rapport with a customer, which equates to planting a seed for future business. It is not a dirty tactic if it focuses on helping customers “win” with add-ons that will enhance their experience with the primary item. By delivering enhanced value and making them feel like they got a better deal, chances are good you’ll generate increased Customer Lifetime Value (CLV), which is the net profit contribution a customer makes to your company over time.
Increased CLV means each customer generates more revenue for your business without additional effort from you, which also means your company has more money to spend on acquiring new customers. Many consider CLV to be an extremely important metric for understanding customers because it provides data that informs important business decisions about sales, marketing, product development, and customer support.