In last week’s blog, we discussed how brands can work with discount stores without diluting their image. Discount stores make sense right now given how inflation is squeezing consumers’ budgets. However, if discount stores aren’t right for your brand, you could try a upsell strategy.
It may sound counterintuitive, but brands are positioning their premium products as ways customers can save money long term. The logic is that while quality costs more money, consumers shouldn’t waste their hard-earned money on inferior products that won’t work.
For example, a customer may save a few dollars with a cheaper brand of laundry detergent. But if the detergent has harmful chemicals that damage clothes, then customers are really losing money in the long run. Instead, they should invest in premium detergents to protect their clothes.
Market research company IRI defines “premium” products as brand-name goods that are more than 25 per cent more expensive than average. Premium products usually have better margins for companies. So, if brands can sell more premium products, they can protect profit margins in a tight market.
Upselling was very effective during the pandemic. In 2020 and 2021, sales of premium non-food items gained market share. But this was partly thanks to government stimulus packages that sustained consumer spending. Now, in 2022, growth for premium products has slowed.
Brands will have to work hard to convince consumers that premium products are worth it.
Advantages of an Upsell Strategy
In addition to providing higher margins, one of the advantages of a good upsell strategy is that brands don’t have to raise prices. Instead of passing increased costs onto consumers by raising prices across the board, brands can grow the average revenue per unit by moving customers to higher-priced products or services.
For example, in the US, AT& and Verizon recently raised their prices while T-Mobile did not. Instead, T-Mobile worked to organically grow the average revenue per unit by encouraging customers to self-select higher rate plans that offer better service.
As a result, their average revenue per unit is up 1 per cent year-over-year, and their average revenue per account is up approximately 2 per cent year-over-year.
Also, they can now take advantage of their competitors raising their prices as another marketing opportunity.
Upsell With Us
Marketsupport can help you with your upselling strategy. Our ambassador program will set you up with the right professionals to educate your customers on your premium products. We have nationwide coverage ready to grow your brand presence across Canada.
To learn more, call 1-905-847-6513 or visit our new website.
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