Last Updated on by LAUNCHTIP
(Originally Published September 19, 2022.)
What is upselling?
Upselling is an extremely powerful sales strategy to help you increase your revenue, deepen your customer relationships and enrich your customers’ experiences.
In this guide, you will understand the definition of upselling, take a look at upselling and cross-selling examples, as well as exploring the best upselling techniques for your Shopify store.
So, let’s get straight into it.
What is upselling?
Upselling is a technique that encourages customers to spend more money by purchasing an upgraded or better version of the product they were originally going to buy. The goal is to get customers to buy a higher price item than the one they were initially going to purchase.
If your upselling is effective, it can help to increase your customer average order value or customer lifetime value. These can generate more revenue instantly, as well as long term.
Upselling increases your sales efficiency by using your existing customers to generate more revenue, rather than spending money on acquiring new ones.
Upselling vs. cross-selling
Although upselling and cross-selling will help to increase your revenue, they do it in different ways. Upselling persuades a customer to purchase a more expensive version of a product or service, whereas cross-selling encourages a customer to add complementary items to their existing purchase.
For example, if you own a business selling computer screens, you might encourage your customers to purchase the 21-inch screen instead of the 18-inch screen. This is upselling. If you use cross-selling, you would encourage your customer to purchase the 18-inch screen with a wireless mouse and keyboard. You can also add on other relevant products.
SellUp is the perfect tool that can help you achieve fantastic upsells and cross-sells for your stores.
Let’s take a look at some examples of upselling.
Examples of upselling
Upselling is common in business-to-business and business-to-consumer sales situations. Let’s take a look at some examples below.
- An airline may encourage a customer to upgrade their ticket from economy to first class during the checkout process
- A mobile accessories business offers a customer their tougher and stronger phone case instead of their slim and snap phone case during checkout
When best to upsell
A lot of merchants probably didn’t know, but you can upsell to your customers at all stages of the customer lifestyle. These include the following:
- Upselling before a customer purchases from your store. You can upsell to customers as soon they enter your store, whether this is online or in person. You can easily upsell to customers via product pages on your online store. Here you can encourage customers to purchase an upgraded version of the product they were going to buy.
- Upsell to a customer during the checkout process. The cart or checkout page are both good places to cross-sell other items to your customers. However, these are also great for upselling. Make your customers aware of options such as personalization, gift-wrapping or next day delivery.
- Upselling prior to a customer purchasing from your store. Post-purchase offers and upsells gives customers the chance to upgrade their order. A good example of a post-purchase upsell if offering an extended product warranty.
The best way to upsell to your customers
When upselling is done correctly, it will help you generate extra revenue for your business. Here are some examples of the best way to upsell to your customers:
- Don’t use upselling as a shortcut to increasing profits. You want to avoid upselling a much more expensive item, as this could leave customers dissatisfied. It may prevent repeat purchases and reduce your customer lifetime value.
- Your goal is to build long-term lasting relationships with your customers, not just to increase sales. Stay focused on your customers’ needs and how upsells will help to achieve this.
- Teach your customers about upsells so they understand. You can educate your customers about the disadvantage of not taking up the upsell offer. Use comparisons to customers can see the value in the upsell product.
- If you decide to use a discount alongside your upsells, it can create urgency for the customer to purchase quicker. Discounts will put a dent in your revenue, but the upsell means you would have made more money anyway from the higher priced item.
To make your upsells successful, it can take a little time. Once you get it right, you can use upsell techniques to generate more income.