January 2021

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Upselling: What Goldilocks Teaches Us John DeRosa, Director of Contractor Training, SRS Distribution

Not Too Hard, Not Too Soft, Upselling Customers Needs to be “Just Right”

For those of you unfamiliar with the famous children’s story, Goldilocks and the Three Bears retells the story of a home invasion conducted by an unsupervised, hungry child. Over the course of her journey, she finds herself faced with the need to make several choices. Which bed do I sleep in? Which chair do I sit in? Which bowl do I eat out of? In every case, Goldilocks made her decision based on the options that were not too hard or too soft, but the option that was “just right.” She demonstrates a cognitive effect that people, when presented with similar choices, tend to gravitate towards the more moderate of those choices. In sales, the Goldilocks principle describes the practice of providing a premium as well as a budget option alongside a regularly priced option to make the latter seem more appealing. A good example of this is present in most liquor stores where you’ll often see a $45 bottle of wine next to a $15 bottle and a $90 bottle on the other side. In this example, you might assume the store wants us to buy the $90 bottle, but their positioning is actually priming us to buy the $45 bottle.

Why Goldilocks Pricing Works for Roofing Contractors

Often referred to as the “good, better, best” strategy, the Goldilocks principle is a sound pricing strategy because it helps buyers make a smart decision by exploiting their psychological aversion to extremes. The method is incredibly effective and the vast majority of buyers will justify their decision to go with the middle “silver” option because they see the “gold” option as too expensive and excessive and they perceive the “bronze” option as risky. In other words, they feel good about choosing the middle “silver” option because they’re not being too frivolous or too cheap. They, like Goldilocks, see this as “just right.” This strategy also works because it shifts the buyers from a “buy/don’t buy” mindset to consideration of incremental value and spending. This works in two ways: ■ Buyers don’t like ultimatums, so three differently priced options can give them a sense of empowerment – satisfying our inherent need for choice. ■ Buyers tend to decide more quickly whether they are going to buy something, using the remaining time to focus on “which option is best for me?” If there was only one option, the buyer would simply decide to buy or not buy. But by presenting them with multiple options, you shift their mind to operate within those three choices. The option of not 42

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buying at all becomes side-lined, which renders them more likely to buy in the first place.

One Final Thought

A few years ago, I was doing a sales seminar at the IRE in New Orleans. During that seminar I mentioned the importance of upselling and referenced the need for storm-restoration contractors to take advantage of this awesome opportunity to boost profits. At the end of my talk, one of the participants approached me to tell me he thought I was delusional to suggest contractors try and upsell in a storm environment. When I asked him to explain why he said, “Ninety percent of my customers are only going to want what the insurance company is going to pay for.” When I agreed he asked, “So what’s the point?” I went on to explain that we don’t offer the upsell because 90 percent of the buyers will say “no.” We offer it because 10 percent of them will say “yes” and it’s with those 10 percent that we make significantly more money. Needless to say, it’s my strong recommendation contractors educate their clients on the different options available to them and bundle those options as a part of their “good, better, best” pricing packages. Offering options and giving clients the power to choose is an excellent way to differentiate yourself and further position you as the contractor of choice for the project. If you’re interested in learning more about sales and pricing strategies for your business, please email me at jderosa@srsdistribution.com. Also, be sure to check out my training videos in the training library on www.roofhub.pro.

FRM

John DeRosa is the Director of Contractor Training at SRS Distribution. John has a wealth of experience in contractor training and helping contractors maximize their sales opportunities. Over the course of his career, John has facilitated more than 2,000 seminars throughout the United States and Canada. In his twenty years of experience, he has authored several educational programs including The Contractor Survival Program, How Gross Is Your Net? and Sales Dynamics for Contractors. He guarantees captivating, high energy presentations that will make an immediate and enduring impact on your organization.