A couple days ago, I stopped by McDonalds on my way to a work meeting. I was just gonna swing through the drive-thru to grab something off the dollar menu. I was dead set on having the McChicken and a small Diet Coke. $2.14 would be my total, it always is.
As I pulled up I had the typical underage girl at her first job taking my order. She did the customary “How are you today?” and then asked, “What can I get for you?”. I gave her my order and put my car in gear to pull ahead. Then she threw me a curve ball.
Before she gave me my total, she asked “Would you like fries with that?” No, I didn’t want fries. I just wanted my McChicken and small Diet Coke for $2.14.
But wait, fries sounded good. Those salty, under baked, greasy potatoes sent down from heaven would really hit the spot. So I said, “Sure, fries sound good.” I got my fries. This brought my bill to a whopping $3.21.
I had just been up-sold by a teenage girl.
I knew I was being up-sold, but I didn’t care. Fries sounded really good. I had no intention of buying fries, they weren’t even on my mind until that girl brought them up, then I had to have them. This whole scenario made me think, so I did some research.
The Numbers
According to this, McDonalds serves 47,000,000 customers around the world daily. Up-selling everyone is a near impossible feat. Even up-selling 50% of their customers would be tough. Lets imagine McDonalds could up-sell 1 in 5 customers globally, per day. That’s 7,833,334 customers. So, what this tells us, if McDonalds successfully up-sold 1 in 5 customers, even $1.00, they would make almost 8 million dollars in additional daily revenue. Up-selling the customers $2.00, say by selling an order of large fries, would then bring in an additional $15,666,668 per day.
Smaller Scale
McDonalds’ numbers are astronomical, but that’s to be expected from a goliath with a customer base the size of McDonalds. Let’s look at a smaller, more typical example.
Right now, I’m working at a brand new hotel. It’s a relatively nice hotel, which offers rooms ranging from $100 per night, up to $150 a night. We’ve only been open for a month, so business is really slow. We’ll exaggerate our numbers for this example.
We offer four main price points. Two queen beds for $109, one king bed for $99, the whirlpool king bed for $149. The fourth option we have, is what we call the “Lake View”. We charge an additional $5 per night for a view of some trees and a man made lake, other than that, the room is identical to the rest.
The Smaller Numbers
Since business is slow, we’ve only been averaging about 10 check-in’s per day. We have 84 rooms, so let’s fast forward to when we’re close to capacity, and doing 20 to 30 check-in’s per day. We only have ten rooms that are considered “Lake View”, and four Whirlpool rooms. We get an additional $5 for each Lake View, and $50 from each Whirlpool room, for a grand total of $250 per night in upgrades, a little different than McDonalds.
Like we did with McDonalds, let’s look at it realistically. Let’s say we can realistically up-sell three check-in’s per night to Lake Views, and one to a Whirlpool. Even that would be good, considering a $50 jump in price isn’t easy for everyone to make. But theoretically, let’s say we did. That’s 3 Lake Views for an additional $15, plus 1 Whirlpool for $50, that’s $65 of additional revenue per night. $65 doesn’t seem like much, but when you stretch it out over 30 days, that becomes $1,950. Over a year? Up-selling only 4 rooms per night for a year can bring you in an additional $23,400 of annual revenue.
Summary
The task of up-selling is a pretty painless process. You don’t need to get all “used car salesman” on anyone, you don’t even need to mention the upgrade cost. In the original story about the girl at McDonalds, if she had said “For another dollar, I can give you fries…” I probably wouldn’t have bit on the deal. Leaving the cost out of the pitch, she put glowing golden french fries on my mind, not dollar bills. It all comes down to the delivery, how you bundle it.
Look at it from a door-to-door vacuum cleaner salesman’s point of view. No one’s waiting at home for someone to show up at their door with vacuum cleaners. If they want a vacuum, they will go buy one. But, if the salesman can sell himself first, then he can sell the vacuum cleaner.
Look at it like the vacuum cleaner salesman. Sell yourself first, sell the Lake View room second.
