a supplementary product or service sold to a customer alongside the main item they meant to buy.
Add-On Sale Details
Add-on sale is a sales strategy originally invented by fast-food chain restaurants when they offer additional drinks or snacks on top of the main order. Since then, the practice has been imitated by other businesses in numerous industries as a great way to increase revenues. A salesperson or sales register clerk is usually the one who will suggest the supplementary item to buy. Alternatively, they can also offer a more expensive product to the customer replacing the initial one, known as “upselling.”
For add-on selling to be effective, a business needs to keep in mind the customer’s needs, not just focusing on profits. For instance, if a customer were about to purchase a printer, it might be a good idea to offer an extra ink cartridge on top of the included one. This type of add-on provides a solution to a potential problem the customer has. Many businesses, however, fail to implement this mindset and often offer a product with little to no relevance or use to the main item.
Successful add-on sales can increase the company’s bottom line and its customers’ retention and loyalty. These customers are spending more money out of their pocket, but they won’t mind if they consider it worth the extra cost. A good shopping experience will make them willing to come back in the future. In a way, the business is a place for them to shop and receive advice and suggestions.
Add-On Sale Example
There are numerous instances of add-on sales you can find in real life. Depending on the situation, some are appropriate (or at least harmless), while the others are straight-up bad deals. One example of an okay-ish add-on is an order of ice cream on top of your fried chicken. Ordering the extra food might not hurt your wallet too much, but it can drain your money over time if you do it continuously.
An instance of a redundant add-on is screen protectors for modern phones. Sometimes, a salesperson may offer to install a screen protector for every purchase of a new smartphone. Plastic screen protectors are not as effective as they used to be. Adding a plastic film on top of your Gorilla Glass screen (which is very sturdy) will not protect it from scratches and may only disturb your convenience.
An ideal scenario is if an add-on sale turns out to be just what the customer needs. An extended warranty for electronic products may be worth it for peace of mind. Another example is a service plan discount for products installed in your house or workplace. The best add-on sales are those that provide a win-win situation for both customer and seller.
Significance of Add-On Sales
Add-on sales may give business owners quite a few advantages on top of the added income. One upside is it can help build a good track record with customers. Add-on sales can add extra value to the main product, making customers feel like they got a decent deal. At the same time, some companies will only irk their customers with supplementary offers.
Add-on sales may improve customer lifetime value (CLV)—the accumulated profit contribution a customer makes to a business over time. Higher CLV means that you get more revenue out of one customer without putting in additional effort. To improve CLV, you can implement strategies such as offering multiple options for add-ons. Keep in mind that these add-ons need to be relevant, and a salesperson may need to explain the value for each one.