What Is Upselling?
Upselling is a sales technique aimed at persuading customers to purchase a more expensive, upgraded, or premium version of the chosen item or other add-ons for the purpose of making a larger sale. eCommerce businesses often combine upselling and cross-selling techniques in an attempt to increase order value and maximize profit.
The probability of selling to existing customers is 60-70%, while the probability of selling to a new prospect is 5-20%.
Why Is Upselling Important?
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.
The Difference Between Upselling and Cross-Selling
In eCommerce, both techniques are employed to optimize revenue by increasing the amount a customer spends with your business.
Upselling aims to convince the customer to buy a more expensive version of the product, while cross-selling focuses on making personalized recommendations of related complementary products.
Upselling: The customer has added a pair of sneakers from last year’s collection to their shopping basket. Exposing them to images of similar but more expensive sneakers from the most recent collection could lead to an upsell.
Cross-selling: The customer has added a pair of sneakers to their shopping basket. You could display related product recommendations on the checkout page (e.g., socks, insoles, or shoelaces) to prompt them to buy additional items that increase the value of the purchase.
Upselling Best Practices
You can use upselling tactics in three steps:
- Before purchase: display recommendations at the bottom of the product/category page or in the sidebar (sometimes both).
- During purchase: display recommendations using pop-ups, in the shopping cart, on the checkout page, or in the abandoned cart emails.
- After purchase: use personalized follow-up emails to entice customers to come back for more.
Successful upselling is based on understanding your customers’ needs and making the shopping experience more enjoyable. Remember, a good upsell always leaves the customer feeling like they won. Here are some of the best practices to try:
- Incentivize upsells and reward customers for spending more money on your site (e.g., offer free shipping or a discount on future purchases).
- Use side-by-side comparisons to demonstrate the value of the more expensive version of the product.
- Ensure the product you’re trying to upsell is within a reasonable price range. Customers will rarely pay more than 25% of what they planned to spend.
- Don’t be pushy. Showcase available alternatives but allow your customers enough space to make up their minds on their own.
- Create a sense of urgency by communicating real-time updates on your stock (“only 2 items left”) or reminding them that the offer will be available for a limited time only.
- Use customer data to personalize the offers as much as possible and suggest products that genuinely add value to the purchase.
- Educate customers on the risks, or missed opportunities, of not taking advantage of the offer.
- Use the right language to communicate the benefits of buying or the risks of not buying the recommended product. A value proposition is key.
- Show a good range of similar products but don’t overwhelm your customer with too much choice.
Great Upselling Examples
The Dollar Shave Club place some restock options on their product pages to remind customers to buy extra razor blades, or moisturizers if they are running low. These are useful reminders to customers to top up on things that they will need in the future, as opposed to annoying sales pitches for unrelated products.
Sky, like many other TV bundle suppliers, offers a basic package to customers, alongside various add-ons that create different values depending on the customer. Families might enjoy the cinema or kids' add-ons, but young couples might enjoy On-Demand, and sports fans might enjoy Sports. Because there are many variables in play when it comes to what channels customers want, Sky provides great value in giving customers the choice while placing their order.
Want to Learn More?
- 10 Ways to Increase Average Order Value
- What Should You Sell Online?
- How to Market a Product: 18 Effective Marketing Tips to Skyrocket Sales
- 10 Online Stores to Use as Inspiration for Your First Store
Is there anything else you’d like to know more about and wish was included in this article? Let us know!