According to email marketing software provider Sumo, upselling increases revenue by 10-30% on average. In addition, up-sells are 68% more affordable than acquiring a new customer.
However, customers often perceive upselling as a cash grab. As such, ill-thought-out upselling strategies may harm loyalty and risk revenues in the long run.
Therefore, it is crucial to approach an upselling project with caution and take on a shrewd approach that will allow the business to achieve the possible long-term revenue rewards.
What Exactly Is an Up-Sell?
An up-sell refers to an interaction where a brand or customer service executive persuades the customer to purchase a higher value product than the one they originally intended to buy.
The up[sell typically replaces the customer’s first intention and does not add to it. As such, the customer buys the more expensive or higher value product instead of the lower value one and does not buy both.
Also, the higher value product is related to the lower value product somehow. Typically, it belongs to the same product category, offers similar benefits, or caters to a similar audience.
A well-coached agent will first understand customer needs, probe for an opportunity, and link the higher value product to those. It is not a shot in the dark, which often appears to exploit the customer.
The following video explains this concept excellently:
Yet, even if a company takes all this advice on board, there is still scope for mistakes. For example, many brands impose an upselling quota on agents and service executives. Doing so increases pressure on the team and may have a counterintuitive impact on performance. After all, if agents make upselling an intrusive experience for the customer, this strategy is likely to fail.
Type of Up-Sells
There are many ways that a company can engage in upselling. Some excellent examples include:
- Custom Editions - The customer pays more to get a personalized version of the product, from custom cakes to custom cars.
- Additional Services - Whether it's for a warranty, insurance, or something else, the customer signs up to receive extra services in addition to the core offering.
- Premiumization - Purchasing a premium version of the product, the customer acquires further capabilities.
- Convenience - The customer pays for the same product, but there is an extra charge for greater convenience. Perhaps this may include additional support or express shipping.
- Products at a Discount - The customer may buy a bundle of products at a discounted price instead of a single item, so the company earns more cumulatively.
- Priority Up-Sells - The company tries to push products or services based on internal priorities, such as the specials menu at a restaurant.
Typically, a sales executive or customer support agent will approach a customer with an upselling offer. Yet, in some cases, the digital customer experience is designed to drive automated up-sells.
For example, if a customer’s card value is a little short of a round number, the e-commerce app or website may recommend an upgraded product to make up the balance. Similarly, shopping carts will often nudge customers towards an upsell based on historical data.