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Upselling: what is it and how can you successfully upsell?
Upselling means adopting sales strategies aimed at encouraging your existing customer base to spend more on your e-commerce site. How does this happen in practice?
illustration of Izhar Cohen
Acquisition of new customers is for sure one of the most complicated and costly tasks for businesses.
Retaining customers becomes easier if you have a clear understanding of the techniques serving this purpose and, among others, upselling is the most effective one.
When upselling tactics are applied, they lead to an increase of the revenues from each order and each acquired customer, who is offered a higher-value version of the item they initially intended to purchase or have already purchased.
Upgraded, high-end or premium versions of the desired product fit in a range of strategic add-ons that e-commerce owners will display for the purpose of upselling and optimizing profits generated by each order.
What does upselling really mean and how is it used in practice? What is the difference between upselling and other sales strategies? How can you grant exclusiveness eluding intrusiveness?
In this article, we will answer all these questions!
What does upselling mean?
As mentioned above, upselling consists of a number of sales techniques aimed to prompt customers to purchase the item they initially set out to buy, though in an upgraded, more exclusive, or more abundant version.
For example, the ultimate version of the smartphone sought after by the customer or the premium version of a software, or an extra-large size of a detergent pack.
This strategy doesn’t include teasing customers with floods of advertising messages, quite the contrary. Its goal is to inform customers about the brand’s range of products, even with targeted discounts, so as to increase profits from each transaction.
Every time you utilize upselling strategies for your e-commerce site, you are striving to make your customers’ life easier by offering them, right from the start, the best solution to their problems.
Upselling means relying on well-structured strategies based on a thorough knowledge of the products you sell and the needs of your prospects: if you are not aware of your products’ revenue margin, the average value of shopping carts, your prospects’ problems and, as a consequence, the most appropriate solutions, then the implementation of upselling strategies may come with negative consequences!
Upselling versus cross-selling
Among the sales techniques used alongside upselling, cross-selling is often employed.
Cross-selling aims to get higher profits from each transaction and from existing customers as well, but in place of displaying an upgraded or premium version of the same items initially sought after by the customer, it focuses on complementary accessories.
Although upselling and cross-selling definitions are often used interchangeably, the methods they disclose entail distinct benefits and result in different applications for e-commerce sites.
Let’s take one example to clarify the difference between these two sales strategies: a potential customer visits your electronics e-shop to buy a mid-range laptop, planning to spend about € 800 on it.
After picking the preferred laptop, the customer will be displayed upgraded options, such as another model from the latest generation of laptops or a similar device equipped with more performing accessories: this is called upselling.
Instead, displaying complementary items such as laptop bags, a wireless mouse or a HD webcam refers to the cross-selling strategy.
Coupling these sales strategies together will help increase each customer’s average spending and prompt the purchasing of other products or services.
How do you upsell?
The ability to generate truly effective and useful upselling marketing strategies to increase your e-commerce sales comes from a deep knowledge of specific data and principles.
Always keep in mind that upselling is meant to be a win-win strategy: on one side, customers trust you and your products and on the other side, they will be rewarded with added values and more complete and effective solutions to their problems and necessities.
All of this stems from an in-depth analysis of your target buyer, in terms of their likes, wants and spending power.
A thorough knowledge helps build relationships and strengthen customers’ loyalty over time.
To develop successful and effective upselling strategies you should:
- know your product extensively: the concept underlying the upselling strategy is to help customers understand why they should opt to spend more; this will only be clear if you know the features of your product and the needs of your target very well;
- suggest valuable solutions to your customers: always remember to highlight the “extra benefits” they will gain by spending more money;
- avoid being too pushy: make sure the price of the product you are trying to upsell is just slightly higher than the one your customers intended to buy at first, with regard to your target market and the average price of the products you sell;
- use automation and insight whenever you can;
- cut down the number of options: according to a 2006 Bain research, reduced complexity and choice can increase revenues from 5 to 40%. It’s recommended to display two or three options only, highlighting the best one and making your customer understand the importance of buying something useful that brings benefits.
When do you upsell?
Not all products in your e-commerce are eligible for upselling strategies. Some are likely to generate more profits and interest than others, for example:
- most reviewed products;
- best-selling products (most likely the most reviewed, too);
If at this point you are asking yourself: when can I upsell and on which pages of my e-shop should I display my premium products?
We could briefly recommend to upsell as follows:
- on the product pages: so as to show the premium or updated versions of the products you sell;
- every time your customers achieve milestones: this is the right moment to offer them some kind of thank-you promo codes;
- at the checkout: many shoppers are impulsive buyers and are likely to be persuaded to grab more items just as they are about to complete the payment.
Yet, always keep an eye on the conversion rate of your e-commerce and your customers’ purchasing process!
Upselling best practices and success stories
In conclusion, we’ll mention some examples of successful upselling, tactics you can implement on your e-commerce to meet your customers’ demands, and tips to offer them the best options in terms of quality, shopping experience and results. A top-level upselling strategy will include:
- The latest versions of products or services: offer your potential customers the most recent version of the product or service they intended to buy.
- Product protection plan or warranty extension: ask the customer to extend the warranty coverage on the product or on any specific damaged parts. For example, for smartphones, you could suggest a warranty on screen replacement too.
- Customization: offer your customers the opportunity to customize some parts of the product they have picked for an extra fee.
It should be clear by now that upselling strategies need to be applied to your e-commerce not just to sell more, but also to increase the value of your customers’ shopping experience.