Alan Gayle is a sales and marketing consultant specialising in the construction industry. In this column he offers advice on how to make an impact in the market. This time he asks: Would you like a drink with your meal, sir?

Following January’s article when I talked about selling more to your existing customers through up-selling and diversification, this month I want to explain the difference between up-selling and diversification and how they can work together.

Up-selling is intended to increase sales to your existing customers by getting them to buy additional goods / services that you already offer.

An example is BT trying to sell their landline customers attractively priced bundles for their broadband and TV services as well. Every eatery from fast-food joints to the most exclusive, Michelin starred restaurant tries to up-sell by offering you a drink to go along with your meal. The servers in my favourite coffee shop always try to up-sell by offering me an over-priced cookie or muffin to go with my over-priced cappuccino. Sometimes I buy one; sometimes I don’t. But if they didn’t offer it to me it wouldn’t even enter my mind to buy it.

Up-selling techniques are being used when the company tries to get you to buy something already offered as part of their standard range but which you had not previously thought of buying. Experience tells them that people buying one product will often buy the other when they are reminded of it. They are just trying to increase their sales by up-selling it to customers who wouldn’t otherwise have thought of buying it. That can be seen in each of the examples mentioned above.

Diversification, on the other hand, involves adding new products / services to your range to take advantage of the loyalty of your existing customer-base.

Diversification can make up-selling far more effective because you are offering customers something new; something they did not know you had. In fact, unless you want to explore completely new markets, there’s not much point introducing new products / services unless you let your existing customers know you have them. Who else would you expect to buy them?

Marks & Spencer now provide a range of banking services that can rival Barclays and the AA sell home insurance, travel insurance and even pet insurance on top of their car insurance. These are both examples of a company diversifying (and then up-selling), so they can sell more frequently to their loyal customers.

As we all know, loyalty in the construction industry is both rare and elusive but good working relationships between buyers and sellers do exist and these relationships often have a major influence on where an order is placed.

You can maximise the value of your well established relationships by adding new products / services to your range and using the relationships you have established to increase the amount you sell to your existing customers.

One final word of advice: Don’t go off half-cocked without a plan. You need to know exactly what you want to achieve and how you intend to achieve it. You also need a contingency plan because the consequences of getting it wrong could damage some of your good business relationships.

Next month I’ll by looking at some opportunities to apply up-selling and diversification in this industry.

Alan Gayle is a sales and marketing consultant specialising in the construction industry. He spent 19 years with some of the UK’s leading building product manufacturers and has worked in the stone sector for the past eight years. Alan now runs Gayle Associates, which provides a range of sales and marketing services for small and medium sized contractors and suppliers. His clients are seeking growth but the management are too busy to do it themselves and they don’t want the commitment of a full-time employee.