Downsell

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A Downsell is a sales strategy in which a seller offers a cheaper option to a customer who doesn’t want the first offer.

It means showing the customer something that costs less or has fewer features to try and make a sale that was about to slip away.

Here, the seller presents a cheaper or simpler version of the original product or service, hoping to make a smaller sale instead of losing the sale completely.1

Visual Representation:

Downsell Visual Representation

Purpose:

The aim of a downsell is to win over potential customers who aren’t ready or can’t afford the main product or service.

By showing a cheaper or more straightforward option, businesses can still make some money and start a relationship with the customer.

This can open the door for future opportunities to sell more expensive items (upsells) or different products (cross-sells).2

Types of Downsells:

  1. Simpler Version: Offering a product or service with fewer features or functionalities.
  2. Payment Plans: Providing an alternative payment plan that makes the product more affordable over time.
  3. Related, Lower-Priced Products: Proposing a different product that is cheaper but may still appeal to the customer’s interests.

Example:

A customer visits a website to purchase a $1,000 software package.

After adding the software to their cart and proceeding to checkout, the customer is offered a downsell for a $500 software package with fewer features.

Customers are more likely to purchase the $500 software package than the $1,000 software package, which results in a sale for the business.

Application in Sales Funnel:

In the sales funnel, a downsell typically occurs after the initial sales pitch, usually in the Desire or Action stages.

If a customer hesitates or declines the main offer, the downsell is a secondary strategy to encourage them to purchase, even if it’s of lesser value.

This can be particularly effective in online sales processes, where automated downsell offers can be presented immediately after a customer declines the initial offer.3

Contrast with Upsell:

While a downsell offers a cheaper alternative after an initial rejection, an upsell is aimed at offering additional value (often at a higher price) to enhance the original purchase.

For example, if a customer agrees to buy software, an upsell might offer them advanced features for a higher price.

Benefits:

  1. Increased Conversion Rates: Offering a more affordable option can help in converting hesitant buyers, thus increasing overall conversion rates.
  2. Customer Acquisition: Downsells can help acquire customers who might not have purchased otherwise, potentially leading to long-term customer relationships.
  3. Revenue Maximization: While the revenue from a downsell is typically less than the original offer, additional revenue still helps maximize the overall revenue from each lead.
  4. Enhanced Customer Experience: Providing alternative solutions to meet customers’ needs and budget constraints can enhance customer experience and satisfaction.4

Related Terms:

References:

1. Team, E. (2023, September 26). What is a Downsell & How to set up Post-Purchase Downsells. FunnelKit. https://funnelkit.com/downsell/

2. Hopman, D., Koole, G., & Mei, R. v. d. (2017). Single-leg revenue management with downsell and delayed decision making. Journal of Revenue and Pricing Management, 16(6), 594–606. https://doi.org/10.1057/s41272-017-0097-x

3. Brunson, R. (2022). Dotcom Secrets: The Underground Playbook for Growing Your Company Online with Sales Funnels. Hay House Inc. https://www.amazon.com/Dotcom-Secrets-Underground-Playbook-Growing/dp/1401970591/

4. Parkes, J. (2022, January 5). What A Downsell Is & Why You Should Be Using One. ClickFunnels. https://www.clickfunnels.com/blog/what-is-a-downsell/

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