Upselling – What it Is and How it Can Increase Your Revenue

8 min read
Mar 23, 2016
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Increasing Revenue Using Upselling

One of the methods of increasing revenue that is often left unexplored by online marketers is upselling.

We often hear about all the new ways of bringing more traffic to your website or new lead generation strategies. However, there’s not much talk about upselling.

It’s basically making the most of the sales you are already getting. And it can be done with much less effort and at lower costs than generating new sales.

What’s not to love?

See how you can start using upselling to gain an edge over your competition and increase your revenue.

Upselling definition

Upselling is a technique of maximizing the revenue from each sale you make. Instead of wasting time and energy on leads that may or may not buy from you, you can target the users who are already ready to buy.

For example, an online shop can suggest an extended warranty for their products at an extra price.

This can sound a little pushy, but if it’s done right, it will bring a significant boost to you revenue.

Whenever you are offered additional services with your purchase or if you are offered a higher end version of the product you picked, it’s upselling. Most big retail electronics chains do this to maximize per customer profits.

Here’s an example of upselling:

What is Upselling

Don’t get me wrong: if upselling is brought to ridiculous levels, it will hurt your business. But if there’s value in what you have to offer, you only stand to gain.

The golden rule of upselling is offering extra value for the customer. As long as the additional value is worth the extra cost, you’re in the green.

Upselling and cross-selling difference

Now, when discussing upselling, we have to reference it’s a little less known brother: cross-selling.

It’s another revenue-boosting method that’s based around the same idea: a customer who wants to buy something may always buy more.

The difference is, with cross-selling you offer completely different products and not just upgrades to the customer’s initial pick.

Here’s how cross-selling works:

What is Cross-Selling

For example, if you bought brand new headphones, you might be offered an iPod if the shop is cross-selling.

This can be either a tailored suggestion for a specific product or an automatic one based on shopping habits of past customers. I bet you’ve seen the “Other customers who got X also got this” suggestions in online shops. That’s cross-selling 101.

What you can get from upselling and cross-selling

The short answer is more revenue.

However, the best part about upselling and cross-selling lays in the details. It’s revenue that you really don’t have to work for.

I mean there’s obviously a few tweaks here and there you need to do and it will require some work, but it’s requires far less effort than bringing new customers to your website.

For starters, you don’t have to work as hard with these customers as you would with normal lead that’s just looking around. These leads already made the decision to buy something. The question is if they want to buy more.

Another perk of upselling and cross-selling is the low, or even nonexistent, cost of acquisition. Normally, you would need to invest a set amount of cash to get a potential lead to your website.

You would need to invest into AdWords campaigns, SEO, content to just get someone to your website. You would then need to convince them to but something from you.

When using upselling and cross-selling, the hard part’s already done. With no extra cost.

I’m not saying that getting more people to your website won’t work if you want to increase your revenue. It’s a perfectly valid method. Just make sure you’re not missing out on some upselling and cross-selling opportunities.

Finally, as your customers’ lifetime value goes up, they will also become more loyal to your brand. They more they buy from you, the more they will trust you. And a customer who trusts you will come back for more.

It’s also worth mentioning that the loyalty will also come from the investment a customer made. For example, if they bought one product from you, it’s easy to replace it with a competitor’s product. However, if a customer bought an entire catalogue of your products and they all work together, it will be really expensive to make the change.

Upselling and cross-selling methods

Here’s a couple ideas on how you can start using upselling and cross-selling in your online business. Use them with car, and you will see your revenue skyrocket.

Shopping cart upselling

One of the most common upselling methods you can use is shopping cart upselling. You can suggest additional items or servicess for customers who entered the shopping cart to confirm their purchase.

One way you can do this is by suggesting items based on the content’s of customers shopping cart. For example, if someone is buying a new bicycle, you can make a suggestion that they should also get a helmet and a pump.

Your suggestion can be either set manually for specific products or set automatically using past transaction history from other customers. For example, if a lot of customers who bought a TV also got an Xbox, the next time someone buys a TV you should suggest that they should get an Xbox too.

Cross-selling Options on Amazon

Cross-selling options when buying a camera on Amazon

If a customer gets a product that may require additional setup, you may offer it as an additional service. You can use upselling like this to set up a brand new pc or install a wall-mounted TV.

Finally, any paid warranties or extended support for products the customer bought are also a good way to upsell in a shopping cart.

In-app upselling

You can use upselling directly in your application by offering additional services precisely when a customer needs them.

For example, if the customer’s license is about to run out, you can send a short notification to let them know that it is time to extend the subscription if they don’t want to loose access to the app.

You can also show features that are not available in the version of the app a customer is using and grey them out. This way, they will see that they are missing out on features that really could help them.

The key here is to offer such prompts at the right moment. If the customer has no need for a particular feature, there’s no point in upselling it to them. When the need appears, that’s the time where you should send the offer.

Just as I was writing the article, my Dropbox informed me that I ran out of space and I can upgrade to a plan with more space. That’s a great example of contextual upselling in apps. As soon as a problem arrived, Dropbox used the chance to offer a solution by upselling.

Example of Upselling from Dropbox

Payment plans upselling

If you are running a service with several plans, you can use the power of suggestion to upsell your more expensive plans.

Let’s say you have three pricing plans. Let’s call them cheap, normal and pricey.

You can slap a “most popular” or “top pick” badge on the normal plan to add some social proof and have the customer who was going to pick the cheap plan think twice.

Upselling in Kissmetrics Pricing

Upselling by highlighting the most popular plan by Kissmetrics

Having several pricing plans available is in its own a way of upselling your services. If you would have only one plan, customers would have no way of telling if it’s cheap or expensive. By adding a fairly cheap but basic plan to the mix, you make your normal plan much more appealing.

Providing a plan comparison is also a nice way to upsell your services. You can show your plans side-by-side to get the customers thinking. You wan’t to create situations where customers are thinking to themselves “maybe I should trow in the extra 5 bucks if I can get my hands on all the additional features.”

Seeing that there’s a lot to gain for a small bump in the price is a great motivator for customers.

Upselling through customization options

Another way to increase your revenue through upselling is providing paid customization options.

You basically allow the customer to fully customize the product to fit their needs exactly.

Think of dealerships and how they allow customers to pick the color, the interior materials and all the little details when buying a car.

Another example would be Apple providing customization options when someone is buying a Mac. You can get a faster processor, more memory or a bigger screen.

Mac Upselling Options

These paid customization options are not included in the price tag. However, if they are reasonably small, customers won’t mind them. If they are dropping $20,000 on a new car, the extra $300 to get a custom paint job doesn’t seem that big of a cost.

From a business standpoint, all these little increases in price add up and can significantly boost your margin.

Delivering value through upselling

What’s the secret to making your upselling efforts successful? What will make your offer irresistible instead of annoying?

The name of the game is value.

As long as your upselling or cross-selling makes sense in the eyes of a customer, it will work. The extra cost needs to come with extra value added to the original offer.

However, if you turn the dial a bit too much, you will start to annoy customers with pushy offers that they don’t really need. This won’t get you anywhere in terms of increasing your revenue. It’s also can put your relationship with customers at risk.

Use upselling with care and it will become one of your most powerful tools to increase revenue.

Already using upselling or cross-selling on your website? Make sure to share your results in the comments!

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