Upselling
Have you ever been shopping for a product and the salesperson suggested a higher-end version of it? Maybe a more pricey one or one more unit of the same product at a discounted price? That’s upselling. It’s a common sales technique that, when done right, can benefit both businesses and customers.
By strategically upselling and suggesting higher-tier products or add-on services, you can increase the average order value of your sales and boost your profit margin.
In this comprehensive guide, you will learn all about
- Upselling
- Importance of it in your business
- Upselling examples that you can replicate
- Stages of upselling
- Upselling strategies that you can implement in your business
So, let’s start with the basics.
What is upselling?
Upselling is a sales technique that convinces a customer to buy a more expensive version of a product or service than the one they initially considered. The goal is to increase the order value of the sale and increase the business’s revenue.
Therefore, many businesses, both online and offline, use upselling strategies to encourage customers to buy more. Since customer interest is valuable, it’s important to motivate them to purchase the most profitable items available.
For example, while looking for laptops for your work, the salesperson might try to upsell you from a basic model like Dell to a higher-end one such as a Macbook that has a faster processor, more security or easier adaptability. They’ll likely highlight the benefits of the upgraded version to convince you it better suits your needs.
Why is upselling important?
Certainly, every sale benefits your business, but why is upselling so crucial? Some benefits include:
Increase in sales & revenue
This is the most straightforward benefit. By convincing customers to spend more, upselling leads to a direct boost in sales, average order value and overall revenue for the company.
Increase in CLV
Upselling can lead to more satisfied customers who are more likely to return for future purchases. This increases their customer lifetime value, which is the total profit a customer generates over their relationship with the business.
Increase in customer satisfaction
When done correctly, upselling can actually improve customer satisfaction. By offering products or services that better meet a customer’s needs, you’re ensuring they get a more valuable solution.
Maintains competitiveness
Upselling can help businesses stay ahead of the competition. By offering a wider range of products and services, you can cater to a broader customer base.
Builds customer relationships
When upselling is focused on value and building trust, it can strengthen customer relationships. Customers appreciate salespeople who understand their needs and offer solutions that can genuinely benefit them.
Reduce customer acquisition cost
By effectively upselling to existing customers, businesses can capitalize on the established trust and relationship with these individuals, thereby reducing the cost & need for extensive marketing efforts to acquire new customers.
Upsell Vs. Cross-sell
Upselling and cross-selling are both sales techniques that aim to increase a customer’s purchase value. However, they target the customer’s buying decisions in different ways. Here’s a breakdown of their key differences:
| Feature | Upsell | Cross-sell |
| Focus | Upgrades customer to a higher-tier version of the same product or a closely substitute product | Sells complementary products |
| Product Offering | Concentrates on selling a higher-tier version of the same product line. | Introduces additional products from different categories that complement the main product. |
| Customer | Shifts customer intent to a more expensive option | Expands customer intent with additional products |
| Selling Approach | Emphasizes the additional value and benefits the upgraded product offers, highlighting how it better addresses the customer’s needs. | Focuses on how the additional products can improve the functionality or enjoyment of the main product, emphasizing convenience and a complete solution. |
| Complexity | Generally simpler (pre-defined upgrades) | Requires more knowledge of product portfolio |
| Example | You are looking at a basic laptop. The salesperson convinces you to upgrade to a model with a faster processor and more storage, highlighting the benefits for multitasking and gaming. | You have decided to buy a new camera. The salesperson suggests purchasing a camera bag, memory card, and cleaning kit to complete your photography setup. |
7 Examples of upselling that you can relate
AppleCare+ with Apple Products
Upsell opportunity
AppleCare+ is an extended warranty program for Apple devices. When you purchase an iPhone, iPad, or Mac, Apple will often prompt you to consider adding AppleCare+ to your purchase.
Why it’s effective
AppleCare+ provides additional protection against accidental damage and repairs, which can be a significant concern for expensive electronics. It also offers priority technical support, making the upsell appealing to customers who value convenience and peace of mind.
Higher Storage Options with Smartphones (Samsung, Google)
Upsell opportunity
Many smartphone brands, including Samsung and Google, offer their phones in various storage capacities.
At the point of purchase, the salesperson or online store might highlight the benefits of upgrading to a model with more storage, especially if the customer plans to store a lot of photos, videos, or apps.
Why it’s effective
Storage limitations can be a major frustration for smartphone users. Upselling to a higher storage tier ensures a smoother user experience and avoids the need to constantly manage storage space.
Ink Subscriptions with Printers (HP, Epson)
Upsell opportunity
Printer companies like HP and Epson offer ink subscription services. When purchasing a printer, they might prompt you to sign up for a program that automatically delivers printer ink cartridges before you run out.
Why it’s effective:
Running out of ink at a crucial moment can be inconvenient. Ink subscriptions provide a convenient solution, ensuring a steady supply of ink and potentially offering cost savings in the long run.
Professional Installation with Appliances (Samsung, LG)
Upsell opportunity
Major appliance retailers often partner with brands like Samsung and LG to offer professional installation services. During the purchase process, they might upsell this service to customers who may not be comfortable installing the appliance themselves.
Why it’s effective
Professional installation ensures proper setup and avoids potential mistakes that could damage the appliance or void the warranty. This can be particularly appealing for complex appliances or customers who lack DIY experience.
Suite Upgrades with Hotel Bookings (Marriott, Hilton)
Upsell opportunity
When booking a hotel room online or by phone, brands like Marriott and Hilton might offer upsells to higher-tier rooms or suites. These upgrades often come with additional amenities, such as a better view, more space, or access to a lounge.
Why it’s effective
Upgraded rooms can offer a more luxurious and relaxing stay. The upsell is particularly effective for special occasions or customers who value comfort and amenities.
Integration Services with Business Software (SAP, Oracle)
Upsell opportunity
Complex business software solutions like SAP and Oracle often require integration with existing systems for a seamless workflow. These vendors can upsell integration services where they handle the technical aspects of connecting the new software with the customer’s existing infrastructure.
Why it’s effective
Integration can be a complex task. Upselling integration services saves businesses time and resources by allowing them to focus on core operations while the vendor handles the technical complexities.
Cloud Storage Services (Dropbox, Google Drive)
Upsell opportunity
Cloud storage services like Dropbox and Google Drive often offer basic plans with limited storage. During signup or when storage limits are approached, they can upsell customers to plans with enhanced security features like data encryption, user permission controls, and audit logs.
Why it’s effective
Businesses are increasingly concerned about data security. Upselling plans with advanced security features gives them peace of mind, knowing their sensitive data is protected.
Stages of upselling
Upselling can be broken down into several key stages to ensure a smooth and successful customer interaction. Here’s a breakdown of the common stages involved:
Stage 1: Pre-interaction – understanding customer needs
Before any upselling attempt, invest time in understanding your customer’s needs and budget. (You may follow the BANT structure here).This goes beyond basic demographics. Actively listen to their initial inquiries, review past purchase history (if available), and ask open-ended questions like “What are you hoping to achieve with this product?” or “What are some challenges you’ve faced with similar products in the past?”
The salesperson themself needs to have a thorough understanding of the product or service hierarchy. This includes not just the features of each option but also the specific benefits they offer to different customer needs.
Stage 2: Presentation – building value
Don’t come across as pushy. Instead, upsell offer into the conversation organically. This could be done by mentioning the upgraded option during the initial product explanation or after the customer expresses a specific need.
Simply listing features won’t resonate with the customer. Instead, translate those features into clear benefits that directly address the customer’s needs identified in Stage 1.
For example, instead of saying, “This laptop has 16GB of RAM,” say, “With 16GB of RAM, you can seamlessly run multiple programs simultaneously without lag, perfect for multitasking as you mentioned.”
Stage 3: Comparison & justification – transparent communication
Don’t just highlight the upgraded product; create a clear comparison with the initial option the customer was considering. Use charts, visuals, or simple explanations to showcase the key differences in features, benefits, and capacity.
Whenever possible, translate the benefits into tangible and measurable terms the customer can understand. Instead of just saying “faster processing,” quantify it. Say, “This upgrade boasts a 3.5 GHz processor compared to the standard 2.8 GHz. This translates to rendering video edits 20% faster, perfect for your creative needs.
Stage 4: Overcoming objections – addressing concerns with confidence
Common objections include price concerns, doubts about the necessity of the upgrade, or worries about the learning curve associated with additional features.
When objections arise, listen attentively and acknowledge the customer’s concerns. Avoid being dismissive or defensive.
Offer solutions to price concerns, such as highlighting long-term cost savings or financing options. For concerns about necessity, emphasize how the upgrade directly addresses their specific needs or future-proofs their purchase. For learning curve anxieties, offer tutorials or highlight the upgraded option’s user-friendly interface.
Stage 5: Closing the sale – A smooth transition
Once you have addressed objections and effectively communicated the value proposition, guide the customer toward a decision with confidence. Use clear closing techniques, such as summarizing the benefits of the upgraded option and asking if they’d like to proceed. We have discussed sales closing techniques in detail here:
Recommended Read: Sales 101: Mastering The Techniques of Closing Sales
Focus on offering a choice, not pressuring them into an upgrade. Phrases like, “Which option do you feel best suits your needs?” empower the customer and make them feel in control.
Stage 6: Post-sale – building long-term relationships
The upsell process doesn’t end with the sale. Ensure the customer feels satisfied with their decision.
If the upgraded product has additional features, take the time to explain them clearly. Offer demonstrations or tutorials to ensure the customer understands how to get the most out of their purchase.
A simple follow-up email or phone call a few days later shows you care and opens the door for further communication. This can lead to repeat purchases and positive word-of-mouth recommendations.
Strategies for successful upselling
Here are some of the fundamental strategies and principles that you can follow to create successful upsell opportunities –
#1 Focus on value, not just price
Don’t just highlight features of the upgraded product. Translate those features into clear benefits that directly address the customer’s specific needs and challenges.
Instead of saying, “This phone has a higher megapixel camera,” say, “Our upgraded phone captures stunningly clear photos, perfect for those nature adventures you mentioned.”
#2 Right time, right offer
Don’t rush into the upsell. Identify the right moment in the sales interaction to introduce the upgraded option. This is typically after you have understood the customer’s needs and after they’ve shown interest in the initial product offering.
Be cautious while trying to upsell. If you try to upsell too early in the deal-making phase, you can potentially kill the deal. (Thus, the word ‘pushy salesman’ originated in sales)
#3 Personalization is key
A generic upsell pitch won’t resonate. Customize your upsell offer to the specific customer. Use the information you gathered in the pre-interaction stage to recommend upgrades that genuinely complement their needs and budget.
#4 Offer choices, not ultimatum
Present the upsell as a valuable option, but don’t pressure the customer into it. Frame your questions in a way that empowers them to choose, such as, “Would you like to consider our upgraded option that offers…?”
#5 Show social proof
People are more likely to trust recommendations from others. Use social proof tactics like customer testimonials, positive reviews, or case studies to showcase the benefits of the upgraded product and build trust in its value.
#6 Use upselling tools effectively
Many businesses make use of website pop-ups, suggested product bundles, or on-screen prompts to upsell. Use these tools strategically to present relevant upsell options without being intrusive.
Frequently Asked Questions (FAQs)
Q. What is upselling?
Upselling is a sales technique that convinces a customer to buy a more expensive version of a product or service than the one they initially considered. The goal is to increase the value of the sale and boost the business’s revenue.
Q. Is upselling ever unethical?
Upselling can be unethical if it’s deceptive or pushy. The key is to prioritize the customer’s needs and offer upgrades that genuinely benefit them, not just increase your profit.
Q. Can upselling be used online?
Absolutely! Upselling techniques can be implemented through website pop-ups, suggested product bundles, or personalized recommendations during the checkout process.
Q. How can I measure the success of upselling efforts?
Track metrics like upsell conversion rate (percentage of customers who accept the upgrade) and average order value (average amount spent per customer) to gauge the effectiveness of your upselling strategies.