Do you want your customers to be happy and feel that you gave them a good deal?
Do you want your customers to come back for more? Do you want to increase your customer lifetime value?
These are the ideals that all marketers strive for. Fortunately, marketing techniques like upselling can help you to achieve these goals.
In this article, we will help you to understand what upselling is and how it can benefit your business.
Upselling is a sales technique that involves suggesting a more expensive or higher-end item or service to a customer, with add-ons or upgrades.
The aim is for customers to feel that they got a good deal, and for the business to generate more revenue.
Over the years, many effective upselling techniques have been developed. Buy two for the price of one is a common example we are all familiar with.
In this article, you will learn about many more, including offering subscriptions, offering multiple options, the rule of three, the decoy effect, and many more.
Small business trends
Upselling remains a quiver in the marketing arsenal for businesses of all sizes. Businesses are turning their attention to existing customers because they know that it costs more to acquire a new one than to keep an existing one. In fact, it costs around five times more.
One way to do this is to keep looking for opportunities to upsell to customers. It’s an easier sale to make because your existing customers have already made a purchase, and if you provided a good buyer experience, they will be happy to come back.
Most people prefer to go back to a business that has already given them a reason to trust them.
It is all about the customer
For upselling to work, you need to know your customer. You need to understand their needs, wants, and preferences to personalize your offer.
Upselling strategies only really boost income and average order value if it is combined with personalization.
There are two main aspects to personalization. The first is to gather as much data as you can about your users so you can get to know them.
The more you know about them, the better equipped you will be to sell to them.
Once you have gathered the information, segment your audience by dividing them into small groups sharing similar needs. This way it’s easier for you to provide different groups with offers targeted at them.
You can use VWO to segment your customers. Testing with this tool tells you everything you need to know about your customers. The platform segments customers in terms of element like
- Visitor type
- The source from where the visitor landed on your website
- Device used
- Geographical location
Actually, marketers don’t have much of a choice when it comes to targeted marketing.
Consumers have come to demand personal attention, with 80% being more likely to make a purchase when they have been offered a personalized experience.
Personalizing your offers leads to loyal customers and a boost in sales.
How to upsell using email
One way to get an upsell is to send an upsell email. The aim of the email is to encourage the customer to purchase more than they originally intended, for instance, buying an upgrade to a more expensive variant of your product or service.
The best time to send an upsell email is right after a sale. But for it to work you must provide context by reminding the customer of the sale just concluded, otherwise, the email can feel too pushy.
A key element here is to be personal and address the client by name. In addition to a personal address, you need an attention-grabbing subject line to ensure the email is opened
Secondly, remember emails containing graphics are more likely to be opened, so show images of the product or service the person recently bought.
Go ahead with upselling. Make some suggestions, including associated items, additional accessories, discounts, coupons, and special offers in your email.
The most suitable time to send an upsell email is
- When a client has reached a milestone
- With order confirmation emails
- When you launch a new product or service
- At the end of a free trial period
You can use MailerLite to create automated workflows for targeted upsells.
It is an email automation platform that online retailers use for their upselling campaigns, offering an upgrade, add-on, or more expensive item so customers are persuaded to spend more money to receive added value.
Upselling is all about your customers
Upselling makes pure business sense. In order to do it successfully, you must understand your customers by finding out as much as you can about their needs and preferences, so you can offer them the products and services they need and want.
If you succeed in this marketing goal, it builds trust and stronger relationships between your brand and its customers.
Customers who trust the business that they buy from, stay with the business, which boosts customer retention, which, in turn, boosts the bottom line.
Needless to say, an upsell by itself won’t lead to customer retention – upselling initiatives must go hand in hand with excellent customer service.
17 upselling techniques to increase your revenue
1. Use an app
An upsell app is a piece of software you install on your e-commerce store so you can offer upsells to buyers.
Frequently Bought Together is one such app. The app makes it easy for visitors to your site to add related products to their shopping carts.
This is similar to Amazon’s recommendation that you see when you have browsed around for a while on Amazon. The platform will show your this upsell message: “Frequently Bought Together”.
Frequently Bought Together uses data from buyers’ previous purchases to make product recommendations.
So, if a store owner installs this app, visitors to the store see a bundle of related products when they land on a product page.
Look for upsell apps on the Amazon app store.
2. Bundling products
This sales technique involves offering shoppers a variety of items bundled together rather than an upgrade or a complementary product.
What you do is put together a collection of related products that can work together, and offer it as a package.
The key is not to just put random items together; the bundles must work together and offer value.
Selling season tickets to sports or entertainment events is a good example. For example, this can entail offering fans tickets for some premium matches bundled with less exciting matches.
This way, you get to sell tickets to matches that some fans wouldn’t have attended because of the high price.
Merchants who run online stores can use a store app to help them create bundles to upsell to store visitors.
Vacation package deals are also a good example of bundling products and services to upsell to vacationers.
3. Offer clients complementary products
This is one of the most routine ways to upsell. Such an offer demonstrates to the clients that you know what they like or need.
They are more likely to respond positively to such an offer compared to a completely unrelated product or service recommendation.
Here is an example from the leisure industry.
- When the potential guest books, you can display a selection of upgrades available, for instance, different rooms at different prices with differing features.
- On arrival – The registration desk can again upsell your rooms, different activities, etc.
- During the stay – Notice boards and digital advertising can alert guests to restaurant and spa specials, day tours, etc.
- After the stay – A follow-up email can promote upcoming specials.
4. Offer a subscription option
This is an upselling approach often employed by SaaS (software as a service) companies.
Providing a subscription option is a kind of upselling because it keeps providing value to the consumer who keeps paying a monthly fee.
SaaS companies maintain a platform online and give users access to its functionality by letting them pay a monthly subscription.
Usually, three or four plans are displayed simultaneously, each an upgrade of the previous one and each subsequent version offering more features and functions.
So, these companies entice consumers to pay more for their top products by demonstrating the increased benefits they get for doing so.
This business model is spreading like wildfire across the internet because it ensures a regular, predictable income.
5. Offer discount products
There are many ways to use discounts in upselling. You can
- Use a pop-up to inform visitors that they qualify for a discount if they subscribe to your emails.
- Offer a discount on the next order if they buy now.
- Promote additional products at a discount.
- Offer discounted products when an individual has spent a certain amount.
- Offer a discounted price if an individual buys two items instead of one.
- Offer a discount rate if a person pays annually and not monthly.
Most people are familiar with this type of upselling as it is commonly practiced in all industries.
6. Offer optional extras
In the auto industry, it is common practice to offer optional extras as part of the deal when selling a new automobile.
The marketing strategy is to have a raft of add-on products ready to entice the buyer to spend more.
Car dealers typically use any combination of the following extras to sweeten the deal.
- Service plans
- Paint protection
- Extended warranties
- Vehicle tracking devices
- Leather seats
Upselling in the auto industry is something consumers have become used to and expect.
7. Create a sense of urgency
Creating a sense of urgency around an upsell is a trusted sales technique used in marketing.
Salespeople create a sense of urgency by insinuating looming scarcity, setting deadlines, using the fear of missing out (FOMO), making emotional appeals, and offering incentives.
A message is sent out that it’s best to act as soon as possible because the product or service might not be available in the future.
Countdown timers, flash sales, limited time offers are examples of this strategy, with these phrases typically featuring:
- Hurry — this offer ends soon
- Buy now before the price changes
- While stocks last
- For a limited time
- One day only
- Only until Monday
- Last chance
- This weekend only
- Grab one before they’re gone
- Low in stock
Be careful to use only one of these terms per upsell and don’t use this trick too often.
This marketing ploy has been used by marketers for decades, consumers tend to see through these messages and will move on to other sellers. Besides, if the same item keeps being the last one in stock week after week, you will lose credibility.
8. Use recommendation options
This is a proven upselling approach that marketers and sellers have been using for a long time for marketing purposes.
Online, using recommendation options is also successful, as site visitors find it helpful rather than intrusive.
Anyone shopping online is familiar with the tactic. Amazon is famous for it, as are online clothing stores.
Using product recommendations can lead to 20% – 30% conversion rates depending on the app and the type of store.
These recommendation widgets are so effective because they use data to make personalized recommendations to online shoppers.
For instance, Limespot is an AI-powered app that leverages large data sets to offer customers highly-targeted recommendations.
9. Leverage the power of reviews
Online reviews is great for marketing your company’s products and services by providing social proof.
The mere presence of reviews creates trust in site visitors. It’s an upselling technique, where you, the marketer, don’t have to say a word to promote your product or service – your satisfied customers do it for you.
Research shows that consumers consider reviews as the most important factor influencing their purchasing decisions. What’s more, reviews and ratings have more influence than loyalty to a brand or free shipping.
As soon as a product has five reviews, the likelihood that it will sell increases by 270%, according to Spiegel.
This is because reviews by other consumers help build confidence to make a big item purchase. Great customer reviews act as part of your sales team.
The number of reviews is a deciding factor: when two products have similar ratings, consumers tend to buy the product that has more reviews.
10. Offer multiple options
It is more effective to upsell more than one offer at a time rather than offering the same thing repeatedly.
In fact, combining upselling and cross-selling is highly effective and generates a better chance to generate more income.
One tactic that is often used is to upsell an item on the product page, and cross-selling another item on the shopping cart page.
This is a typical tactic used by Amazon, which is the most successful online store.
No matter what product you’re after, Amazon will show you similar products, all available at the click of a button.
Amazon’s “Frequently Bought Together”, “Similar items on Amazon” and “People who bought this, also bought ….” are all examples of upselling using multiple options.
Offering multiple options is great for marketing your full range of products.
11. Offer free shipping
Free shipping is one of ten small business trends for 2022.
Online shoppers have come to expect free shipping. In fact, 47% of online shoppers don’t like to pay for shipping. Merchants can use this expectation to their advantage by adding free shipping to an upsell.
Offering free shipping benefits online businesses.
Two-thirds of businesses that offer free shipping, experience an almost immediate boost in sales.
This is because saving on shipping incentivizes people to spend more. In addition, free shipping also decreases the instances of shopping cart abandonment, which indirectly boosts sales.
In terms of upselling, one of the best ways to implement free shipping is to set up a free shipping threshold, which means that shoppers must qualify for free shipping by spending a certain amount.
For example, you could offer free shipping, but only on orders over $80.
12. Use the Rule of Three
The Rule of Three is a sales tactic based on the fact that humans respond positively to patterns and offering things in threes is a familiar pattern for most people.
Research shows that people tend to respond positively to options, but three options are the best – more options lead to confusion for most people.
One way to leverage the Rule of Three when upselling is to offer three pricing options:
- The item and price the customer asked for in-store or searched for online
- A variant of the item that’s a little pricier
- The ultimate version of the item that’s the most expensive but offers the most benefits
For this tactic to work, you must be sure to be clear not only on the price but also on the added value of each increase.
An example from the entertainment industry is movie theaters that sell drinks in three sizes. Movie theatres were selling equal amounts of large and small drinks until they hit on the idea to add a third size.
Their goal was to sell more of the large size, so they added a jumbo size. Because most people will avoid such extremes, moviegoers chose the happy medium and bought large drinks.
The idea behind this upsell approach is to surround your target item with two other choices.
13. Implement the Decoy Effect
The decoy effect is similar to the Rule of Three. This is also a strategy to get consumers to buy a more expensive option but the pricing is done in a particular way.
This buying journey starts with two options, one priced low and the other priced high, both with an appropriate range of features.
However, it’s not clear which product provides real value for money.
Let’s take an example. You are selling a course for $300 that includes online classes and webinars.
You also offer a similar course for $600 that includes classes, webinars, and one-on-one instruction for the duration of the course.
You could introduce a more affordable course for $400, which includes one-on-one instruction four times during the course.
For $100 more, the client gets more value for their money. In this scenario, if the customer goes for the second option, you have succeeded in making an upsell.
The point of the decoy is to increase the attractiveness of one of the products. This strategy leads buyers to focus on deciding factors like features, pricing, and quantity, which helps them to come to a decision.
14. Use a referral program
Asking for referrals is a tried and tested marketing strategy.
Research has proven that people trust their friends and are four times more likely to buy a product if it was referred by a friend.
What’s more, a customer that was acquired through a referral has a 16% higher lifetime value than one required through other methods.
However, you need to put measures in place to ensure that a customer actually goes through with a recommendation that they agreed to. Research by Texas Tech has found that although 83% of clients are willing to refer friends, only 29% actually do it.
These people need a reminder, and for this purpose, you can use referral software.
For instance, ReferralCandy automates the referral process at checkout. The software encourages individuals to recommend your product or service, tracks when they make a referral, and sends a thank you email.
15. Use Product Comparisons
Help your clients do what they are already doing and, in the process, you’ll be doing some upselling.
Consumers surf the internet to compare products and prices and read reviews before they make a purchase.
Facilitate this process for your customers by showing them different products in the same category complete with prices, features, reviews, and notes on availability.
This approach is used by SaaS companies like Kartra, which shows prospects their different plans, complete with a list of all the features each one has, so consumers can easily see the difference between the different packages.
They don’t have to visit different pages or websites to gain all the information they need to make a purchase.
16. Take a data-driven approach to know what to upsell
To be able to predict what your consumers may buy next, you will need to know what they bought in the past or what they showed an interest in.
In order to know what to upsell, you need to gather data about your customers.
U need to gather data about shopping behavior, past shopping history, shopping frequency, and demographics to gain useful insights to guide you when upselling.
Technology like customer data platforms (CDPs) has made it possible for marketers to predict what a customer might be interested in next.
This tool uses customer insights to help companies understand their clientele.
The more you know about them, the better product suggestions you will be able to make for them.
17. Limit your pricing margin
This is a crucial principle to know about upselling.
When offering an upgrade to a more expensive item, the price of the upgrade should not be very high compared to the original product price.
It’s important to limit the maximum amount that you are going to upsell to a customer.
Salespeople have been criticized in the past for being greedy when upselling. Before doing an upsell, talk with the customer to get a better understanding of what they are planning to spend.
A customer who is planning on spending $100 dollars is unlikely to listen to your $1000 upsell.
Offering an upgrade or product add-on that exceeds a customer’s budget is a sure way to lose a customer.
As a general guideline, you should keep your upsell price within 20% of the original price and definitely not higher than 50%.
Amazon is great at upselling and doing it in a non-pushy way. Amazon’s “Frequently Bought Together”, “Similar items on Amazon” and “People who bought this, also bought ….” are all examples of upselling.
Upselling is a proven sales strategy that marketers and salespeople have been using for many years to increase sales revenue.
These strategies, and newer versions of them for online retail, are still very effective. The marketing approaches that we discussed in this article will help you to make build strong relationships with your customers and increase your profits.