What is Upselling? Upselling Definition, Examples and Guide

Businesses all over the world are consistently adopting and trying out several strategies to maximize their marketing and sales patterns in order to generate more profit, advance their businesses and a lot more. Upselling is one valuable sales skill that must be mastered by every entrepreneur and business owner. It doesn’t only helps accumulate more profits but also helps retain more customers and offer them a high quality, upgraded and satisfying offer.

While upselling is an important skill that must be mastered, there are tricks to making it work. Foundeck in this guide explained what upselling is, examples, tips to upsell, etc.

What is Upselling?

Upselling is a sales strategy which involves a business owner or entrepreneur offering an upgraded or more sophisticated product or service to a buyer rather than what they intend to buy. Adequate Upselling helps businesses generate more revenue while also helping consumers derive more benefits or enjoy more features from a product or service. Apart from that, it helps the buyer and seller build a healthy relationship.

An effective upselling process identifies customer's needs, problems or situations and thus offers more valuable products and services to them to meet up with their needs. So for every business, either large or small scale, inculcating upselling strategies is important.

Upselling vs Cross Selling

While upselling and cross-selling are both sales strategies that help businesses increase their revenue, they are quite different. Upselling involves introducing or persuading customers to buy an upgraded or expensive version of an item, while cross-selling involves convincing a customer to buy other complementary products or items together with the one they intended to buy.

For example, if a customer wishes to purchase a smartphone and you as the seller introduce a better version of the smartphone with more features to the customer, then you've upsold. If, on the other hand, you encourage the customer to also purchase a screen protector and other phone accessories that will complement the phone, then cross-selling has occurred.

Examples of Upselling

Here are some examples of upselling

• If a marketing coach offers a video course that teaches the audience digital marketing and he or she offers another that contains a one-on-one consultation together with the initial video course and recommends it to the audience even when they intend to purchase the previous course, then upselling has occurred. In essence, he introduced a better offer with more value and which is more expensive.
• A real-life example is that of Tesla. Tesla allows buyers to customize their cars before making a purchase. Apart from that, buyers can also upgrade several parts of their automobile, including the wheels. All of these carry extra fees while the user enjoys upgraded features and benefits.
• If a company also offers the basic version of an online tool to the audience for free but also encourages them to pay for a premium version with many features and value attached, then upselling has occurred.
• Many airlines are also fond of upselling to customers. They offer many amenities and resources that aid convenience and comfort for an extra charge. Easyjet, for example, allows customers to select the seat they want for an additional fee.
• DollarShave Club, another company that offers personal grooming products, encourages the audience to purchase a package of their shaving and grooming essentials rather than buying the items separately. Although buyers can still decide on what to buy, the company has made the more expensive packaged essentials appear on top of their listings.

Tips to Upsell

To effectively satisfy your customers and generate more profit through upselling, then the right strategies must be followed. The tips below will guide you through the proper upselling process.

1. Consider your Customer's needs

While upselling could help you maximize profits as a business owner, considering or factoring in your customer's needs and situations is key to selling effectively and most importantly, building a healthy relationship with new and existing customers. By considering their needs, you would be able to offer products that meet up with their needs and not otherwise. You would therefore need to be selective with choosing the upgraded version of the product you will be offering to them. If on the other hand, you will be selling a bundled product, then you need to be sure that these products are actually of high-value and they meet up with customers’ needs. Consumers usually won’t mind purchasing a high or upgraded version of a product as much as they are getting more value from it.

2. Educate the consumers

As a business using the upselling strategy, then you should understand your offer properly. In most cases, shoppers usually know what they want when they visit your store. So as a business owner intending to sell a new or upgraded or more expensive version of what the customer wants, then you must be able to educate them on your new offer. Educating usually would involve providing information about the new offering, telling them how they are different from the other ones and analyzing the numerous features and benefits that make it more expensive. Proper education makes it easier for you to win with the upselling strategy, especially when a consumer does not already know about your offer.

3. Use the right urgency technique

To effectively maximize the use of upselling techniques, then business owners should create the right urgency when selling their products or services. By offering an upgraded product and offering discounts for a period of time, you stand a high chance of generating more profits within this period. While offering discounted products together with upselling could lower the profit margin generated per each product, it would generally help increase your revenue and multiply your sales within the shortest possible time.

4. Determine an appropriate pricing for your upsell

Upselling will be more great and effective if you offer your product or service at a reasonable price. This means upselling should be able to give you more profit without also suffocating your customers with outrageously high prices. Since consumers are sure they will be getting more value with an upgraded or new version of a product, they will be willing to buy, however, if your product prices are too high compared to what they used to buy, it could scare them away. So in all, putting your consumer into consideration while upselling a product is key.

5. Create bundled product

Apart from offering an upgraded version of a product to a consumer, another way to win their heart through upselling is to offer your product as a bundle. With this, they will be getting more value and items while you also generate more income. To properly offer a product as a bundle, then you should always consider what these customers’ needs would likely be. If you are selling female kids’ dresses, then offering items like kid’s shoes, dresses, socks, hair accessories etc as a bundle will do well. 

6. Provide social proof

When you offer an upgraded or a new version of a product, customers would most likely want to see what previous buyers have said about the product. Since they aren’t familiar with your offer, providing social proof to them would help them make a better decision. If you sell your product or services online, then displaying previous customer's reviews and testimonials on the product page would help you make more sales. And even if you sell in a physical store, requesting and displaying customer reviews is key.

7. Be Transparent with product price

Preferably, you should have a breakdown of the cost of your product. If you offer two or more bundled products, then you should be able to outline the features or items that are contained in all each of the bundles. There should be no extra charges whatsoever in your offer as this may discourage consumers. With each offer or bundle you wish to upsell, you should be able to analyze the features, items contained, and the benefits of the product.

8. Offer free shipping

Your offer must be convenient to consumers as much as possible. To lower the burden of customers and to make your upsell as attractive as possible, then you could offer free shipping to them. Research has shown that most customers who purchase items online are bothered about the delivery cost of their purchase and as such, you can always lower the delivery cost, add it to the product price and present to consumers with free delivery. Alternatively, you could decide to offer them a discounted shipping fee instead of the free one.

8. Don’t be too pushy or salesy

In as much as you want to generate more revenue from upselling products, you should avoid being pushy or salesy. Customers do have the right to say no when you offer a new or upgraded product. While you could persuade them to buy your offer, they have the chance to decide what they wish to buy. This is why understanding the use of powerful words in marketing is important. You should be able to help them understand the upgraded offer and how much it is valuable compared to the other ones. You should also be able to let them know what they would miss out on if they didn’t purchase this upgraded offer. All of these must be done without being too pushy or salesy.

9. Imbibe the use of three options

Rather than offer just one upgraded offer, you should consider providing 3 options for consumers to choose from. With this, they would be able to select one offer if at all they aren’t comfortable with one. And as such, you would always make sales as there are more options available. This option could contain an upgraded product each or a bundled item. Either way, you should be able to clearly highlight the features, unique benefits or items contained in the 3 options. As time passes by, you will observe the most performing option cherished by consumers and you can make your plan accordingly.

Benefits of Upselling

Upselling your products or services is important in the following ways

1. Generates more revenue for businesses

By upselling to customers, you would generate more profit. Since upsold products are usually quite expensive than customers intended products, you would be able to generate more profit from product sales. In the long run, you would also accumulate much more revenue than using your other sales strategy.

2. Helps consumers acquire good quality products

Apart from the fact that sellers generate more revenue from upselling, consumers also receive a high-quality, valuable product from using this sales strategy. By introducing consumers to an upgraded or better version of what they requested, they will be able to enjoy more features and benefits from the upsold item.

3. Helps build customers trust and loyalty 

It is easier to build customer's trust and loyalty when you offer them an item that they are satisfied with than otherwise. By upselling a high-quality and upgraded product, customers would easily build trust in your brand when they’ve eventually tried out your product. As such you must always render high-quality products or services that offer great values and features that you’ve initially expressed to them. With this, consumers are most likely going to stay glued to your brand and refer others.

4. Optimizes marketing strategy

Marketing to new individuals could be potentially more tasky than upselling to consumers who had already shown interest in the brand. Since this set of consumers already intends to buy a product from the brand, closing a deal through upselling is much easier than engaging new audiences and turning them into customers. So upselling helps optimize marketing strategy since you have to spend less to get customers.

5. Offers cost-effective products to consumers

When you upsell items or products as a bundle, you are most likely going to offer a fair price than when the items are purchased separately. With this, consumers could get all the products they need at a relatively lower price than when they buy individually. This strategy doesn’t only help consumers minimize costs but also helps businesses increase sales.

Conclusion

As a business owner aiming to improve sales and generate more revenue, you should constantly be utilizing the upselling marketing skill. While there are many tricks to making this strategy work, as explained in this guide, it is important that you offer better, high-quality and upgraded products that will satisfy your customer's needs when you upsell.