f you’ve ever headed into a store with a product in mind and wound up convinced to buy the next newest model or the higher quality version, you have been the target of an upsell.
What is an upsell in ecommerce?
Upselling is a sales technique that focuses on existing customers and offers them a more expensive product than they initially searched for with the goal of convincing them to select the more expensive option. Rather than focusing on attracting a new customer, the goal is to optimize the sale to the existing customer. On average, existing customers make up 65% of a company's business.
Why should you upsell?
When it comes to ecommerce, upselling is an effective way to increase revenue with minimal effort. Upselling can increase revenue by 10-30% according to Sumo.com. You don’t have to hunt down more customers and by employing some simple techniques at scale upselling can have a significant impact on profit.
For example, if a customer purchases the basic version of your product priced at $37/month they provide $444 worth of revenue for the year. If you can convince them to choose the upgraded or premium version instead, priced at say $45/month they now contribute $540 worth of revenue per year, nearly $100 more. If you upsell your premium version to fifty customers who intended to purchase the basic version, your annual revenue increases by $5000 without any effort put toward finding other customers. Upselling leads to more revenue and greater order value.
What are some upsell techniques?
One way to upsell is to present your customer with the option to purchase a higher-end product. This takes us back to our example comparing the basic version of a product to the premium version.
Finding success in this technique requires careful consideration of how much value your customer will see in that higher-end product. In other words, how much more money are they willing to spend for the upgraded version?
Sales experts vary widely when recommending how much of a price increase a customer would be amenable to, recommending anywhere from a 25%-40% total price increase.
Offer a Deal
Another upsell technique is to offer your customer a deal. This could be a bundle and save opportunity or a free trial on a premium version.
An example of this would be a company offering a discount when you buy in bulk. BumGenius sells reusable diapers and if you purchase one diaper it costs $21.95 but if you purchase 6 the price goes down by $1 per diaper and if you purchase 24 it goes down by $2 per diaper. This type of deal is great for products where the customer would likely buy more than one of the items.
You can upsell a product by offering added features for an additional cost. Remember that the customer must see value in the features and the increase in cost must be within a reasonable range.
It will help to think of this as similar to upgrading from a basic to premium version of a product but instead of focusing on upgrading the customer's experience entirely, we can take that basic version and encourage them to add features to customize their experience.
An example of this is VistaPrint’s business card options. You can purchase the standard version or you can customize with more features and options with the premium version. You can even upgrade to specialty cards where you can add embossed gloss or foil accent. Each version increases in price and features. These upgrades start at a certain price point and go up depending on what customization offers the customer chooses.
When and how do you present the upsell?
A good salesperson uses their sales pitch, body language, and knowledge of human interactions to present their upsell at the most opportune moment in person-to-person interactions. There are no handshakes or body language cues when it comes to ecommerce sales, so how do we find the perfect moment to make the virtual upsell sales pitch?
There are many options of when and how to present the customer with upsell options and it might take some trial and error to find the most effective technique for your business.
A tried and true moment in both in-person sales and ecommerce sales is at checkout. Think about standing in line at the grocery store. Those shelves of candy and magazines aren’t just there as decoration. You can use your checkout page to present an upgraded version, ask if a customer would like to add a feature or offer them a one-time deal.
Product pages can also be an opportunity to upsell. You have the customers' attention, now you provide them with their options using your copy and images to convince them the upgrades are worth their investment.
While a customer is browsing your products, you can utilize pop-ups to present products to them. You can think of this as the salesperson who comes up to you as you're browsing a department store to ask if they can help you find anything. Pop-ups tend to have lower conversion rates, but if you learn when and how to employ them, they can be effective.
Generally speaking, email upselling can be very effective. An email upsell is made following a sale by sending a personalized email that highlights what the customer purchased and offers them ways to enhance their purchase by adding features, taking advantage of a deal, or upgrading their purchase to the premium version.
Pop-ups, post-purchase email, and at checkout offers all aim to capture the customer’s business immediately following a purchase by promptly offering them an enhanced experience. Implementing these strategies as part of your ecommerce checkout platform has been shown to boost sales by 18%.
Upselling versus cross-selling
Remember the example of standing in line at the grocery store and being surrounded by shelves of candy and magazines? That’s technically not an upselling technique but rather a cross-selling effort.
Upselling focuses on selling a customer the same product but with additional features or a higher-end version. Cross-selling is a sales technique that presents the customer an entirely different product that relates to the product they are already purchasing, hence the offer of candy and gum as you finish buying food.
Like upselling, cross-selling targets an existing customer rather than finding a new prospect. You can combine upselling and cross-selling by presenting both options throughout your ecommerce store.
Amazon provides a great example of this combination in action. After you select an item, they cross-sell by encouraging you to “buy it with” an accessory or two that relate to the item, and present upsell options by showing you highly rated items matching your search terms and comparing the item you selected with other options.
You can create these sales opportunities on your own checkout page or at other points in your sales process.