Upselling

Upselling is the process of encouraging customers to upgrade or include add-ons to the product or service they’re buying. The product or service being promoted is typically a more expensive product or add-ons which can increase the overall order value.

Identifying Upselling Opportunities

In a nutshell, the ideal upsell customers are the ones who are most engaged with your products and services. The whole concept of upselling is based on growing relationships with existing customers, meaning that upselling inherently involves regularly following up with clients to asses their current status and needs. That can involve a variety of methods, such as:

• Ask open-ended questions and listen to customers when they talk about their needs.
• Consider whether a product or service exists on the market already. If so, how can you improve upon it? If not, would it be possible to develop one?
• Investigate whether there are ways to improve upon your own existing product. If you already offer a satisfactory version, can you also provide an extraordinary version?
• Analyze your revenue sources. Seeing where your company earns the most can help to identify your clients’ needs and how to best upsell strategically.
• Determine what your market segment can actually use and afford. For example, if you are selling a software package to college students, you may not spot many opportunities to upsell them the business suite. On the other hand, you could potentially offer a student discount on a more comprehensive package.
• Look at customer data across departments. Customers have different contacts within a company depending on what they need. All of those contacts will have information about them.
• Learn more about your customers through information available online. Such as customer reviews, interactions over social media, page views, shares, etc.

Upselling should happen almost organically as a means of solving a problem or filling a need. Staying informed about what customers need from a variety of angles is the most effective way of identifying upselling opportunities.

Upselling Vs. Cross-Selling

Upselling is the practice of encouraging customers to purchase a comparable higher-end product than the one in question, while cross-selling invites customers to buy related or complementary items. Though often used interchangeably, both offer distinct benefits and can be effective in tandem. Upselling and cross-selling are mutually beneficial when done properly, providing maximum value to customers and increasing revenue without the recurring cost of many marketing channels.

Cross-selling identifies products that satisfy additional, complementary needs that are unfulfilled by the original item. For example, a comb could be cross-sold to a customer purchasing a blow dryer. Oftentimes, cross-selling points users to products they would have purchased anyways; by showing them at the right time, a store ensures they make the sale. Upselling often employs comparison charts to market higher-end products to customers. Showing visitors that other versions or models may better fulfill their needs can increase AOV and help users walk away more satisfied with their purchase. Companies that excel at upselling are effective at helping customers visualize the value they will get by ordering a higher-priced item.

Cross-selling and upselling are similar in that they both focus on providing additional value to customers, instead of limiting them to already-encountered products. In both cases, the business objective is to increase order value inform customers about additional product options they may not already know about. The key to success in both is to truly understand what your customers value and then responding with products and corresponding features that truly meet those needs.

Upselling Examples

Here are some examples of upselling:

• A customer is looking at standard earbuds in an electronics store and the salesperson suggests a model with noise canceling.
• A client is looking for an email management platform and the website displays three packages. Each package shows what functions and automation are available, showing the customer how much value they can get from the more expensive packages.
• A client uses a website-building platform to build a free webpage. They receive an email from the platform when there are discounts on premium packages.
• A business owner visits a print shop for business cards. They intended to use a basic design, but the salesperson helps them see the value in a professionally designed business card. The business owner chooses a glossy finish to best display the colors.
• A diner visits a restaurant and orders an iced tea. The server offers to add raspberry or peach flavoring for a small fee.
• A customer is buying a new smartphone. The salesperson learns they use their phone to take pictures of their family events and outings, so they suggest a phone with a higher-end camera and more storage space than the customer was originally considering.
• A customer is buying a new laptop and the cashier offers to add a protection plan. When the customer asks for details, the cashier gives him two options and outlines what each plan covers.
• A client is looking at publishing packages and chooses a print-on-demand package. The client orders a professional book cover design added to the package for an additional fee.
• A customer orders a suit from a retailer. The salesperson lets the customer know that they have a tailor on-site that can alter the suit within the week for a discounted rate.

Types of Upselling

• Premium Versions. Offering premium versions of products such as flower arrangements that are sold at several levels of quality.
• Options. Optional features such as a catalog of options for a car.
• Customization. Allowing the customer to customize a design or look for a product such as color.
• Services. Services such as support or professional services. For example, software may be sold with consulting services. This allows the vendor to establish a close relationship with the customer than may lead to extensive future business.
• Risk. Risk related products such as extended warranty or insurance.
• Financing. Offer to finance a purchase with a credit option.
• Complementary Items. Cross-selling items that complement the product. For example, offering WIFI plans with mobile devices.
• Popular Items. Offering popular items that aren't exactly complementary to the product. For example an ecommerce site may suggest a best selling book as an add-on with the purchase of strawberry jam.
• Priority Items. In many cases, upselling may be focused on selling items that are a strategic priority for the seller. For example, a store credit card which may be difficult to upsell but which may be priority as it allows the firm to establish a long term relationship with the customer.

The Importance of Upselling

Although sales techniques tend to invoke negative feelings in us, when done right, they can actually improve our shopping experience. Online retailers rely heavily on upselling and cross-selling techniques for several reasons:

• Upselling helps retailers build deeper relationships with customers: Upselling is not a dirty tactic if you put it into perspective. If it focuses on helping your customers ‘win’ by suggesting premiums, upgrades or add-ons that will eventually deliver more value and make them feel like they got the better deal, it will turn out to be a customer happiness tactic that also generates additional revenues.
• It’s easier to upsell to existing customers than to acquire new ones: Lead generation is an expensive practice. It is much easier and cheaper to optimize the sale to a customer who already trusts you and has bought something from you in the past or is about to make a purchase now than to sell to a new prospect who has never heard of your brand. As we mentioned before you have a 60-70% chance of selling to an existing customer and only a 5-20% chance of selling to a stranger. It’s an easy win for a lot of eCommerce businesses on a mission to accelerate their growth and improve the bottom line.
• Upselling leads to increased Customer Lifetime Value (CLV): Customer Lifetime Value is the net profit contribution a customer makes to your company over time. You can split your customers into three main categories: not profitable, profitable and very profitable. Higher CLV means each customer generates more revenue for your business without you having to invest anything extra, which also means your company has more money to spend on acquiring new customers. Upselling is one of the most effective ways to turn shoppers into very profitable customers and keep them coming back.
• Customers come back for more: Upselling is unique in the way it adds value to customers that makes them want to come back for more. By creating an easy way to make life straightforward for customers you are ensuring that they will return in the future if they need more of what you are selling. Be sure to offer great customer service along with your upselling efforts to guarantee happy customers no matter what happens.

Upselling Best Practices

Upselling can help a business generate additional income when done properly. Best practices include:

• Avoid recommending a product or service that is significantly more expensive than the product being purchased.
• Don’t be too pushy or aggressive. Accept “no thank you” as a response.
• Focus on the customer’s needs and how the value-added offer will help meet those needs.
• Upsell when possible and appropriate so no opportunity is missed.
• Offer side-by-side comparisons so the customer can see the value in the premium version.
• Educate the customer as part of the upsell so the customer understands the risk of not taking advantage of the offer.
• Offer an in-the-moment-only discounted price to encourage the customer to make an immediate decision.

Successful in-person upselling might require training or coaching in appropriate techniques. Understanding how to upsell effectively can generate additional income, but doing it the wrong way could alienate the customer.