What is upselling?
Upselling is a sales technique that aims to increase the revenue from a transaction by offering a higher-value product or service to the customer (and, consequently, a higher margin). Moreover, it involves offering the same type of product for which the customer has already expressed interest.
Although the term “upselling” is the most common, you may also encounter the terms “upselling” or “complementary selling.”
How does it work? If a visitor is browsing cell phones in an online store, the algorithm may offer him a slightly more expensive model – thus increasing the chance of completing a more profitable transaction. If you run a car wash and a customer comes to your business to have his car washed from the outside, you can offer a higher package that also includes interior cleaning and upholstery washing. Online service companies also often use upselling – offer more expensive packages, enticing potential customers with discounts, priority service or a wider range of services.
Upselling is often handled by customer advisors at electronics store chains. People interested in buying a camera can be tried to convince them to slightly increase the amount spent in exchange for a better, more technically advanced model. This is particularly effective when the customer comes to the store knowing only that he or she needs a camera, but without having a specific dream model in mind.
When and where can this technique be used?
As we indicated in the examples above, upselling can be successfully applied to both offline sales and online stores. In the case of offline sales, all that is needed is (or as much as) a talented salesperson. In the context of online store sales, it will be necessary to use algorithms that will be able to offer customers a matching product or service. However, appropriate modules are very often built into e-commerce platforms, which are most often used by people running online stores. Thanks to them, it is possible to automate many processes – for example, displaying a more expensive variant right after adding a product to the shopping cart, or notifying about the possibility of upgrading to a higher plan at a promotional price right after finalizing the purchase of a cheaper subscription.
Importantly, upselling does not only apply to hypothetical sales. We can successfully apply this method to customers who already use products and services from our catalog. This is how Netflix, among others, operates, offering customers of lower plans the opportunity to upgrade to a 4K plan.
What are some examples of upselling?
It’s time for examples of how upselling is used in practice. In online sales, we often deal with upselling in the form of links to other products, placed at the bottom of the card of the one currently viewed. Often such a module is described as “Customers who were interested in this product also viewed”. – followed by several suggestions, each slightly more expensive than what we are currently viewing.
Upselling can also be applied as early as the shopping cart stage – just because a customer has decided to add a product (for example, a TV) to his cart, doesn’t mean he is 100% decided. This is a good time to suggest that he change to a larger or more advanced model.
In sales conducted in a physical store, the salesperson plays a big role in upselling. However, the idea is not to offer the latest iPhone, which is several times more expensive, in place of a Xiaomi smartphone – such an approach will quickly alienate the customer, who will feel that the advisor does not want to respond to their needs, but only to upsell. The trick in dealing directly with a potential customer is to ask the right questions. If the customer is interested in an expensive consumer electronics or home appliance, a few more questions can draw a more detailed picture of the needs – this in turn will allow you to match the right product that will actually be more attractive to the customer, while not ruining his budget.
Also learn the difference between cross-selling and up-selling!
Summary
Upselling is a technique that should not be overlooked – it offers tremendous opportunities to increase sales with little effort and resources. A successful sale using upselling is a win-win: the store sells more, while the customer gets a better product than the one he was initially interested in. A well-executed sale is also a chance to gain a loyal customer – if the customer feels taken care of, he or she will appreciate the high quality of service, and the chances of him or her returning or recommending the store to others increase.