The word “upsell” may be one of the most polarizing marketing jargons there is, depending on which side of the spectrum you are on. If you’re the seller, it spells easy profit. If you’re the buyer, it smells fishy.
But no, it’s not as black-or-white as that. Upselling can be practiced in a way that would be mutually beneficial to both camps. But first, let’s define it.
Upselling is simply getting your customer to make a higher cost purchase than he or she originally planned. Upselling, though, should not be confused with “cross-selling.”
According to Len Markidan of Groove,
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. An example, he says, is if he’s buying a 27” TV and the salesperson offers him a 32” TV or an extended warranty, then that’s an upsell.
Cross-selling, meanwhile, is a strategy to sell products that are different — but possibly related — to the product the customer already has (or is buying). If a customer is buying a TV and the salesperson offers him an Xbox360 or a Playstation, that’s a cross-sell.
But why is Upselling important?
Of course, it is important because it’s easy money. But other than that, when used properly, upselling can actually bring you closer to your customers and create additional product awareness. Upsells are usually small purchases that the buyer doesn’t have to put a lot of thought into. The bonus is they can be extremely profitable for you as the salesperson and for your company.
Consider this example by Jeff Mowatt of Customer Service Articles.
A customer buys a car with monthly payments of $395. With that size of investment, there’s very little resistance to adding $2 to the monthly payments for upholstery protection. For you, however, that additional sale is significant, as over 48 months it adds up to a $98 sale, with a huge profit margin.
Some would say that a $98 sale on a $25,000 vehicle is only a minimal increase in the overall sale. Why waste your time? But, if it only takes 30 seconds to make that extra $98 sale, then you’re making more money for the company than with any other activity you do. If your salary is $20 per hour, then doing the math, the 30 seconds you take to upsell costs the company about 17 cents. If it only costs the company 17 cents to make $98! That’s a huge return on investment. And guess what? If the customer ever uses the “upholstery protection”, he’ll thank you for offering the service. Good for the company, right?
So the fact that that $98-add-on is attached to a $25,000 sale is completely irrelevant. Clearly, upselling is one of the highest and best uses of your time.
How to upsell
In a multi-channel platform, you have to take advantage of all opportunities, be it through voice, email, social media, or mobile.
- Make the Upsell AFTER the original purchase
Wait until your customer has decided to purchase, then offer additional products. If you try to upsell an item before you close on the original item, you may scare off your customer. For some customers, trying to hard or doing a hard sell is a complete turnoff. In this case, wait until the purchase has been made and take advantage of your multi-channel platform to upsell. The customer bought a laptop and you’ve thrown in a lappy bag, a protective case, and a nice laser-mouse already? Call a week after to check how the customer is enjoying his new laptop and offer a 2-TB portable hard drive. I’m sure his memory’s bleeding from all those movies already. Read this Statistical Proofs Show That You Should Invest In Multi-Channel Marketing
- Make the upsell relevant to the customer’s original purchase.
A classic example is this very familiar line at the most popular fast food chain in the world, McDonald’s: “Do you want fries with that?” Fries go perfectly with burgers. But sometimes, the person at the point-of-sale counter doesn’t stop there. “Would you like (a) large (serving) fries?” “How about a 20-ounce Coke to go with that?” Their upsell is relevant to your original purchase.
Whether you’re selling burgers or phones, the rule is constant. When you’re selling phones using a multi-channel platform, one way to upsell is to offer the same product but with bigger RAM capacity. Via voice, you can pitch the product you’re offering. To make the prospect better understand the benefits of a bigger RAM, send an email complete with the product’s specifications including the advantages of a bigger RAM. On social media, you can site positive user reviews. Then follow up on mobile.
- Make your upsell discounted.
Customers can smell an upsell. From afar. And they are going to look at the upsell from one main perspective: it’s an additional expense. If your upsell is too expensive, they won’t bite. If, however, it’s a discounted upsell, they’re likely to part with their hard-earned cash.
As per Neil Patel of Quicksprout:
Here’s a rule of thumb: The upsell should be half the cost of the original purchase (or less). The customer is trying to rationalize the price. They’ll think, “Well, I’m already buying this, which costs $100. I might as well buy this, too. What’s another $50 anyway?”
Remember that 2-TB portable hard drive? Call your customer and tell him it’s originally priced at $150, but he can have it for $99 because he bought a laptop a week ago. Isn’t it amazing?
Another kernel of wisdom from Neil:
If you want to make a higher upsell, be sure to break it down into a payment plan — e.g., only $33/month for three months — to create the illusion of a lower price.
- Sell something that solves a problem. (Think of customer needs first)
Here’s the interesting thing about most purchases. Even though they are intended to solve a problem, they also introduce additional problems. It’s a marketer’s paradise.
Case in point:
* You buy a phone. You don’t want scratches on it. You want a protective case.
* You buy a software. You need to learn it. You buy training.
* You buy a car. You want drive like a maniac. You get the most expensive insurance.
Neil Patel, via Forbes, advises: Think carefully about the product you sell, and try to understand the new challenges or problems that it introduces. Then, upsell the customer on the solution to that new problem. If nothing comes to mind, you can always introduce similar items. For example, Amazon offers customers a whole series of upsells and cross-sells.
* “Frequently Bought Together”
* “Customers Who Bought This Item Also Bought”
* “Sponsored Products Related to This Item”
* “Compare to Similar Items”
* “Special Offers and Product Promotions”
My take: Sell peace of mind to protect the customer’s investment. It’s a bestseller.
Upselling, at first glance, may seem more beneficial to the seller than the buyer. But the great thing about upsells is not higher profit margins. It’s genuinely giving the buyer a fair value of what he or she deserves. And through a fair upsell, you also retain the customer longer. A customer who stays longer, buys more. The more he buys, the more opportunities for an upsell, so… you get the picture.
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