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 (and therefore a higher margin) to the customer. What’s more, it’s about offering the same type of product that the customer has already expressed interest in.
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 suggest a slightly more expensive model to him – thus increasing the chance of completing a more profitable transaction. If you run a car wash and a customer comes to your business to wash the outside of the car, you can offer a higher package that also includes interior cleaning and upholstery washing. Online service companies also often use upselling – offering more expensive packages, enticing potential customers with discounts, priority service or a wider range of services.
Upselling is often handled by customer advisors at consumer electronics chains. Those 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 especially effective when a 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. With offline sales, you only need (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, the relevant modules are very often built into e-commerce platforms, which are most often used by those running online stores. They make it possible to automate many processes – for example, displaying the more expensive variant right after adding the product to the shopping cart, or notifying the user of the opportunity to upgrade to a higher plan at a promotional price right after finalizing the purchase of a cheaper subscription.
Importantly, upselling is not just about hypothetical sales. We can successfully apply this method to customers who already use products and services from our catalog. This is how it works, among other things. Netflix, offering customers on lower plans the opportunity to upgrade to a 4K plan.
What are some examples of upselling?
It’s time for examples of how to apply upselling in practice. In online sales, we often see upselling in the form of links to other products, placed at the bottom of the tab of the one currently viewed. Often, such a module is described as “Customers who were interested in this product were also watching.” – 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 to the cart (for example, a TV) does not mean that he or she is 100% decided. This is a good time to suggest he change to a larger or more advanced model.
In sales conducted in a physical store, a big role in upselling is played by the salesperson. 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 hype up the sale. 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 their budget.
Summary
Upselling is a technique not worth overlooking – 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 they were initially interested in. A well-executed sale is also an opportunity 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.
