Upselling doesn’t have to be a dirty word. In fact, it can help you make your customers happier.
What comes to mind when you think of the word upsell?
For many of us, it might bring up images of sleazy salespeople trying to line their pockets by selling us extra stuff we don’t need.
And, unfortunately, sometimes that does happen.
Anyone who’s spent time buying a car from a dealership can attest to that.
But when used properly, upselling can actually bring you closer to your customers, while bringing you more revenue, better retention and lower churn.
Three Reasons Why “Upsell” Isn’t a Dirty Word
Note: often, people use the term “upselling” when what they really mean is “cross-selling.”
A quick explanation of the differences:
Upselling is a strategy to sell a more expensive version of a product that the customer already has (or is buying), or to add extra features or add-ons to that product. If I’m buying a 32” TV and the salesperson offers me a 40” TV or an extended warranty, that’s an upsell.
Cross-selling is a strategy to sell products that are different — but possibly related — to the product the customer already has (or is buying). If I’m buying a TV and the salesperson offers me a PlayStation, that’s a cross-sell.
Both methods are useful, and both essentially do the same thing: help the customer get more value from your business, and help your business get more loyalty and revenue from the customer.
Let’s look at the three biggest benefits of upselling and cross-selling.
1) When Done Right, Upselling Builds Deeper Relationships with Your Customers
Putting up selling into perspective you can describe it as helping your customers win.
Here’s an example: a few months ago, I checked into a hotel on a weekend trip with my wife. As we were checking in, the clerk offered me an upsell: would I like to add breakfast for two — normally £29 — to my room rate for “just” £15?
I accepted without hesitation, and I was happy to do so. At £14 cheaper than the standard rate, I felt like taking the upsell offer was an easy win.
From the hotel’s perspective, they upsold me on additional services that I otherwise would not have purchased, made extra profit, and built a deeper relationship with me, as that breakfast is one more opportunity that they’ll get to serve me.
A clear win for them, too.
Takeaway: Upselling isn’t just a sales tactic; it’s a customer happiness tactic that can help you build deeper relationships with customers by delivering more value.
2) Upselling Is Easier Than Selling to New Customers, and It Helps You Grow
In the book Marketing Metrics, the authors share a fascinating finding from their research: The probability of selling to a new prospect is 5-20%. The probability of selling to an existing customer is 60-70%.
That’s a big gap.
But when we think about it, it really shouldn’t surprise us.
Wouldn’t we much rather buy from a company we already trust than one we’ve never done business with before?
Not only is upselling easier than selling to a customer for the first time, but it can help you grow faster. So many e-commerce companies focus all of their efforts on getting new customers, when an even bigger opportunity often lies untouched in front of us: making our existing customers happy and selling more to them.
Takeaway: Upsells are an easy win for growing your bottom line and accelerating your path to profit.
3) Upselling Increases Customer Lifetime Value (CLV)
Here’s a great example of a well-done support upsell a friend shared with me when they called for roadside assistance.
After providing them with my location and arranging to wait for the recovery truck, the dispatcher told me, “From looking at your account, it looks like you’re now eligible for a big discount on our comprehensive coverage. Since you’re going to be waiting for the tow truck anyway, would you like to hear more?”
15 minutes later, I had agreed to add additional coverage for my car and home, at a cost of right around £100 per year.
I’ve been a customer for 16 years already, so it’s not much of a stretch to speculate that I might be a customer for another 20 years. That means that they turned a costly customer service call into an incremental £2,000 in lifetime revenue.
Takeaway: Each upsell can increase the lifetime value of your loyal customers, paying off for many years down the line.
Upgrade Your Business with Upsells
Upselling is a valuable skill for anyone delivering customer service, because it can help you achieve your number one goal: make your customers happier and more successful.
It’s not always appropriate (never sell to angry customers), but often it can help both you and your customers win.
Up Selling Do’s
Be Prepared
To maximize your conversion rate, have a basic script planned out ahead of time and know how each product or service can be up sold. Knowing ahead of time which upgrades or add-ons are logical for a product or service will streamline the process and show customers you are knowledgeable.
Good Timing
Another integral part of this technique is offering the up sell at the perfect time. The best time is typically as soon as the customer decides to purchase, but before checking out. This is when they are ready to buy and are most open to suggestions for product or service enhancements. The exception is when someone is looking for a product and you point them to a higher-end model that’s better quality but more expensive. Asking a few questions to assess their needs should help you decide the ideal time to up sell.
Demonstrate Value
Tangibly demonstrate how a customer will benefit from the up sell you offer. In the instance of additional computer RAM, they would benefit from faster web browsing and more network capabilities. Clearly explain the problems that the up sell will solve or how a customer’s life should increase the likelihood of converting.
Up Selling Don’ts
Going Overboard
A common mistake sales people make is trying to up sell to the point where customers would be making another big purchase. Being too greedy and trying to drain customers for everything they’re worth is counterproductive and can even create resentment. That’s why a suggested up sell should increase the original sale by a maximum of 25 percent.
Closed-Ended Questions
Another mistake is trying to up sell by asking yes or no questions like, “Is that all for you today?” or “Would you like anything else?” Instead, guide the conversation and make sure a customer is aware of the possibilities they have. You might say something like, “Let me show you (product x) that will perfectly complement the product you are about to buy.”
Being Overly Aggressive
While a reasonable number of customers are receptive to up selling, some aren’t. For this reason, use discretion when making suggestions and recommendations. If a customer is in a noticeably bad mood, it’s probably not smart to push your luck and pound them over the head with upgrades and add-ons. Just be respectful and understand when no means no.
Mastering the art of the up sell takes time, practice, and intuition. Although your conversion rate might not be outstanding initially, some diligence and perseverance should optimize your ability and increase your odds for success. Once you get the hang of it, you can expect to increase the average sales from each customer considerably. Besides this, the added value customers receive from up sells can build rapport and lead to repeat sales.