When done well, upselling is a sales technique that can benefit both parties. On one side, a business makes more money. An upsell that is actually of use to a consumer can increase their loyalty to that brand in the future. On the other side, a customer benefits by owning a better product than the one they set out to buy.
What is Upselling?
Upselling is used to increase a customer’s spend. Upselling tactics aim to tempt a consumer to upgrade to a more expensive version of their intended purchase. It’s most effectively used with current customers who have already bought into your brand. They’re far more likely to trust the recommendations of your staff, as they’re already on board with your company’s philosophy.
How Does Upselling Work?
It’s important that upselling is only done in a way that genuinely benefits a customer. If there’s a certain product on the market that’s actually better than the one they’ve seen, most consumers will be grateful for this knowledge to be shared. We experience beneficial upselling techniques all the time, and if done well, we won’t even notice that we’ve been subjected to a sales pitch.
For example, imagine you’ve popped into a café and ordered a regular black coffee. The barista mentions that you can have an extra shot of espresso for an additional quarter of the price of the drink you’ve ordered. It sounds like a bargain, right? It’s almost two drinks for the price of one.
Or let’s say you’re shopping for some on-premises software from an online store. You’ve opted for a certain package when a shopping cart popup tells you that you can expand to a far more reliable SaaS (software-as-a-service) cloud-based system for just a little more money every month.
Maybe you’ve gone to buy holiday insurance. Instead of simply selling you the basic package, the customer agent advises you of the options available, each covering the different activities you may be partaking in whilst you’re away.
The basic sun-worshipper’s insurance deal may be the cheapest, but it won’t cover those who fancy windsurfing and rock-climbing as part of their break. It’s obviously beneficial to know this, even if you only had basic insurance in mind when you set off to make your purchase.
Upselling vs Cross-Selling
Cross-selling differs from upselling in that it concerns the promotion of completely different – but somehow related – additional products. The internet age has seen soft cross-selling thrive. It’s rare to make a purchase on an eCommerce site without the site attempting to cross-sell on its product pages.
Think of the last time you bought a book online through Amazon or a Shopify store. The chances are that you received a list of related titles from the same genre or author roundabout the time you were getting ready to checkout.
Websites use automation to cross-sell, but retailers employ similar tactics by displaying relevant items together in-store. Shops will do everything they can to provide a first-rate customer experience, from installing the best cloud phone systems to ensuring consumers are kept informed through upselling or cross-selling techniques.
Why is Upselling Important?
As we’ve seen, upselling can be of benefit to both parties when it’s done well. For businesses, there’s an increase in revenue, which of course, enables company survival. It also works as a less obvious part of a customer service strategy, strengthening customer loyalty over time.
The bottom line is that great service is essential to any successful business. Shoppers are far more likely to return if they’ve enjoyed a positive customer experience with a salesperson or service agent. They’re also more likely to recommend your brand to friends and family, thus advertising your services for free.
If they are upsold a product of genuine use to them, then a business comes across as dedicated, thoughtful, and caring. This is an invaluable impression for any brand to give. A customer will likely come back to you next time they need expert advice regarding a different product.
It’s also much easier for businesses to sell to their existing customer base – in any form – when compared to brand new consumers. It’s estimated that there’s as much as a 70% conversion rate when selling to an existing customer, compared with a maximum 20% chance of selling to someone new.
Examples of Upselling Strategies
Approaches to upselling can be loosely placed into three distinct categories:
1. Education
Customers rarely have the same knowledge about a business’ product offering when compared to an employee. A high level of brand understanding from employees can greatly enhance the customer experience. With most of us leading busy lives, we only have a set amount of time to search for the item we’re after. This is where the education principal comes in.
If marketers take the time to listen to their customer’s needs, they’ll be able to find out whether the product they’ve set out to buy is actually the best fit for them. Listening is one of many useful sales techniques that can make all the difference to the result.
If there’s a product that’s actually more suited to the customer’s needs, the agent has a perfect opportunity to advise them of this. Educating customers on your brand’s wider product offering is an important technique when it comes to upselling.
2. Comparison
Comparing two products or services to a customer shouldn’t feel like an attempted upsell. It’s actually a simple way of empowering a potential purchaser by offering them a choice. Presented with two or more options, the choice for the consumer is transparent. They can weigh up the pros and cons of each and decide which is better value for money.
Everyone likes to feel like they’re in charge of their decisions in life, and a comparison template puts the ball firmly in the purchaser’s court.
3. Upgrading
To give an example, let’s say a customer buys a state-of-the-art camera. It comes with a free carrying bag, but it’s made of soft leather. The upgrade technique could be used to promote add-ons, such as a hard carrying case.
After all, given the amount already spent on the camera, it’s worth an additional spend to keep it safe. Other upgrades to the product could be a professional cleaning kit or even an extended warranty.
How to Create an Effective Upselling Strategy
Upselling techniques can be employed during any interaction with a customer. However, when creating strategies, the most effective upsell will stem from having the following considerations in mind.
1. Utilise Your Customer Personas
Creating customer personas should be a part of any successful marketing strategy. Knowing your customers’ needs, wants, employment, hobbies, and financial capabilities are vital. Such information presents sales opportunities before they arise.
You can attempt to exploit such opportunities by using special offers and upgrades sent in the form of email marketing or social media activity. It also means your sales reps or customer service agents are better informed about direct contact with specific customers.
2. Compile Effective Data
Compiling effective data on customers is also a must for any effective upselling strategy. If you’re mapping the customer journey, you’ll have a range of evidence about the likelihood of a customer agreeing to an upsell.
With this in mind, you’ll have access to the average order value of each of your consumers and be able to segment them into groups. Higher-spending customers – and those you’ve consistently managed to upsell to in the past – can thus be targeted using different marketing methods to lower-spending customers.
You can also estimate customer lifetime value, informing whether you need to invest more in retaining existing customers or winning new ones. Good customer lifecycle marketing is also an effective way of retaining first-time purchasers for the long term.
3. Don’t Get Greedy
If an attempted upsell comes across as a sales pitch, you’ve already failed. All upselling should be of benefit to a customer and within their pricing range. The clue here is obvious – they’re already close to buying a certain product with a certain cost, so they’re unlikely to buy something that’s double the price.
Even if you stick to this rule and a customer says no, don’t push it. You’ve sowed the seed, and the good impression you’ve made by not coming across all sales-y will likely have positive connotations.
If a customer turns you down once, it doesn’t mean they’ll be so coy in the future. Keeping a customer onside is most important here – there’s every chance they will convert to more expensive items further down the line.
4. Identify Product Gaps
You can’t upsell if a particular product doesn’t exist within your product range. In the same way that you should scour your competitor’s websites to find gaps in your content offering, keep an eye on the market to identify higher-end, alternative products to those you already have.
Expanding on your current range by offering more choice to the consumer provides vital upselling opportunities.
We’ve seen here how upselling can be vital when it comes to providing first-rate customer service. Learn how to enhance your consumers’ retail experience even further by installing a business cloud phone system – it’s the communication platform of the future.
Originally published Aug 16, 2021, updated Apr 10, 2023
