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What Is Upselling? Plus Why It Boosts Revenue

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If you’re wondering, What is upselling? you may be new to marketing your business.

Upselling is a clever little sales technique that every eCommerce or online store uses to get existing customers to upgrade or purchase a premium product or service.

And before you think it’s all about making more money (although it’s a happy byproduct), the practice of upselling is to elevate your customer’s experience and improve relationships.

It focuses on delivering more value to your customer and getting them faster results.

For example:

  • Would a little extra 1:1 coaching help them implement your product better? 
  • Would a nutritional plan and your training program help them achieve a stronger and healthier body faster?

Upselling helps you increase your customer lifetime value and your profitability.

So take a look at your price strategy, and instead of offering a discount, can you upsell a related service as a limited offer?

And remember, when your customer is in the buying mode, they’re more open to spending on things they wouldn’t normally consider purchasing. This is the time to upsell to your customers—to get them to upgrade to a higher-tiered product.

But how is it different from cross-selling?

The difference between upselling and cross-selling

Upselling is a sales technique that entices customers to buy a premium or higher-end product or service than what they originally intended to purchase. Most companies implementing upselling as a strategy will include a comparison chart, showing the different features and benefits of each product and service.

Loomly chart showing different products for customers

Airlines are a great example of companies that are always upselling.

While booking your next vacation, you might be encouraged to upgrade your economy-class ticket to a business-class ticket.

The business-class fare is 110 pounds more expensive, but then again, it comes with certain perks such as more legroom, a guaranteed window seat, extra baggage, access to business-class lounges prior to takeoff, AND the privilege of being a business-class flyer.

Upselling is a strategy airlines across the world use

Cross-selling encourages a customer to buy a complementary, but non-competitive or related product. For example, let’s say you’re browsing Amazon, and suddenly you see a product you like. Maybe it’s that new Canon camera you’ve been lusting over. You read the reviews, check out the product specs, and add it to your checkout cart.

But then you notice that most shoppers who bought the exact product you’ve just added to your checkout cart also purchased the tripod you’re currently eyeballing. After mulling it over for a bit, click. You add it to your cart.

Congratulations, you’ve just spent $500 more than you had originally intended, and it feels good.

That, my friend, is the power of upselling and cross-selling

Upselling is a sales technique that entices customers to buy a premium or higher-end product or service than what they originally intended to purchase. The goal is not to make more money but rather enhance their customer's experience.

Why is upselling important?

Upselling is crucial because it enhances your customer’s experience. It’s not something that entrepreneurs and businesses do selfishly. It’s not about encouraging customers to purchase more to increase revenue. (Although it’s a nice benefit…)

It’s about making the original product BETTER.

For example, imagine you purchase a shiny new VR headset online. When it gets delivered, you slash open the seal, and carefully remove it from its box. Only, hang on, where are the batteries? Surely, there must be batteries?

What do you mean batteries not included?

Now you’re stuck with a brand new toy that you can’t use. Maybe the shops are closing soon, AND it’s rush hour traffic.

You’ll have to wait until tomorrow to get batteries and finally use that headset you’ve been waiting for.

And that good feeling you had, well, it’s rapidly deflating. Consider it gone, crushed under a weight of disappointment and frustration.

If only they’d asked if you wanted to add batteries to your purchase.

That’s why you should be upselling. It increases your customer lifetime value and adds dollars to your bottom line, making your venture more profitable.

Using Upselling In Your Sales Strategy

What are the benefits of upselling products or services?

  1. Both increase customer retention because you’re selling value, not features and benefits.
  2. Cross-selling and upselling increase the transactional value, which generates more revenue for your business.
  3. You attract a more premium customer, one that doesn’t buy on price.
  4. You deliver a more personalized service, which ultimately improves customer relationships.

So let’s look at three ways you can use upselling to get your customers to buy more, more often.

Three ways to use upselling or cross-selling in your business

1: Consider bundling add-on items to your primary product or service.

McDonald’s is a great example of bundling add-on items. Asking customers, “Would you like fries with that?” has made them hundreds of millions of dollars every year.

So take a closer look at your products or services and determine where you can deliver extra value. Where can you offer an item that will enhance their overall experience?

McDonald's adding on other items to enhance the dining experience

2: Utilize the contrast principle.

Say you need to buy a new suit. If you’ve ever bought a suit, you know it may cost hundreds, if not thousands, of dollars. So you find one that fits. BUT then the salesperson asks if you’d like to buy a new tie. It’s $100.

Usually, you’d balk at that amount of money, but because you’re paying $1,000 for the suit, the $100 tie seems reasonable. Then you’re asked to look at shirts and socks, and by the end of the transaction, you’ve doubled what you intended to pay.

So how did you get here?

Well, the contrast principle made you feel like these items were reasonably priced, whereas if you were shopping for them separately, you’d think they were expensive. Remember, when someone is in the buying mode, that’s when you want to get them to buy more.

3: Create social pressure by selling a complementary but non-competitive product.

And really, Amazon has mastered this process. So, while you’re browsing their eCommerce store, you’ll notice that most customers who bought X also bought Y. The intent is to create social pressure and convince you that you won’t get the same experience without product Y. The thing about people, we’re a lot less price-sensitive to add-ons when it enhances our overall experience.

3 Examples of Upselling

1: Limited-time offer

Specify the urgency of an offer. Adding a time limit to an offer can increase sales, but timing is everything. Again, you want to think through your customer’s journey.

Let’s analyze the process after a potential customer has opted into a lead magnet. You’ve just given something for free that’s going to help them level up. So they’re feeling good about your company and upselling a related product that delivers added value could actually save them dollars in the long run.

You’re also creating pressure because if the customer doesn’t act now, it could cost them in the future when they would have to pay full price for your package. So don’t be afraid to upsell to a new email subscriber.

Upsell when your customer is in a buying frame of mind

2: Upgrade to a higher-tier option

Technology companies do this really well. For example, do you have multi-tiered products—an entry-level, an advanced, and a pro version?

You want to specify the difference between each version and the benefits of each. Most eCommerce and online businesses use a comparison table.

And think about personalizing your offer. For example, would your current customer be better served if you upgraded them to a higher-tier account? Or would it be a good idea to reward existing customers by upgrading them without charging them a higher fee?

So spend time reviewing your company model. Are there opportunities to double, even triple, revenue? Where can you deliver more value for your customers?

Pipedrive breaks down the features and benefits of each product

3: Bundling Add-On

As good practice, you should always bundle add-on items to your online offer. And specify the added value you deliver. For example, in the offer below, you can see that Rachel Pedersen lists the current value of the package you’re purchasing.

So your current purchase costs $28.50, but the real value is closer to $200. And now she’s upselling 50 content ideas which could be super helpful in your marketing strategy. It’s only $13, so you grab it now. The point is to over-deliver and make the value seem more than the current sale price.

It makes the decision to spend a little more a lot easier. So strike while the time is right. Upsell, upsell, upsell.

eCommerce upselling products in the check out phase of a purchase

Can you use upselling in your business?

So instead of investing all your energy, money, and resources into attracting new leads, is there the potential to upsell or cross-sell to existing customers? 

Take a moment to think through your customer’s journey. How can you deliver more value and enhance their experience?

Because if you’re not implementing ways to increase your customer lifetime value, you’re leaving money on the table. 

A lot like the guy who sold his farm to search all over the world for diamonds, but as it turned out, he actually had a massive diamond field in his backyard. There are acres of diamonds in your backyard (existing customers). 

You just need to mine them.

If you enjoyed this, then you might be interested in learning how to reactivate past customers. Check out the link to discover our top tips.

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