What is upselling? The definitive guide

Many companies have resorted to upselling to help increase their revenues and meet specific sales goals. Upselling is a very effective sales technique that is common in the marketing industry. People readily upsell to existing customers because it is more feasible. The chances of selling a product to a customer you already have are between 60 and 70%. Whereas, the chances of selling the same item to a prospective customer is between 5 and 20%.

What is upselling?

Upselling is a very common technique in sales whereby a seller advises a customer to buy items that may be superior or expensive to what they just bought. Upselling is used to create more revenue for the company. It can be in the form of an upgrade or purchasing other add-ons for a product that you already bought.

Upselling usually involves selling products or services of a more profitable company. It can also mean exposing the customer to other services or products by the company which they have not considered. Upselling is combined with cross-selling (another sales strategy) to help the company maximize its revenue.

Examples of upselling

When it comes to upselling, there can be various examples to detail this sales technique. Great examples of upselling include:

1. A customer visits an electronics shop and is trying to buy standard earbuds. However, the salesperson then approaches them to suggest air pods with noise-cancelling features.

2. A client gets a website-building tool to create a web page for free. Later, the client gets an email from the tool developers saying that they can get the premium version for a discounted price.

3. A customer buys a suit from a boutique. The sales representative informs the customer that there is an in-house tailor that can help them customize the suit at a discounted price.

What is an up-sell strategy?

Up-sell adopts a marketing strategy that helps the customer to sell a more expensive, superior version of an item that the customer has already purchased. This strategy usually relies on selling a superior product in comparison to the current one that you just purchased. In this case, the superior version of the product could be:

  • A similar product that offers more add-on features to increase the value offered or
  • A model with better performance and higher value.

Upselling is usually the reason many people end up buying 54 inches televisions rather than settling for the 48 inches that they have set out to buy. Upselling is also a common reason why you may end up with TV subscriptions that come with services you do not use or like.

Difference between upselling & cross-selling

Upselling and cross-selling are the two most important sales strategies that sales representatives apply to maximize revenue for their companies. People often find it difficult to tell them apart because of their similarities. Upselling involves the technique whereby a business will try to motivate its customers to buy a superior product or service. Upselling usually involves suggesting a more expensive item to the customer.

This could be an item with a higher feature, an additional item, or an upgrade. This way, the sales representative can help the company make a profit. For example, a sales representative could persuade a customer to buy the newest version of the iPhone rather than buy the current model which may be less expensive. The salesperson usually does this by pointing out its additional functions which the current model may not have. Upselling is usually executed using the words “new and improved,” “limited edition,” “premium version,” and so on.

Upselling is very different from cross-selling because it usually involves suggesting a more superior and expensive item to the customer. With cross-selling, the salesperson will usually suggest that the customer purchase more products which may go with the original product. For instance, A customer may decide to buy a pair of trousers and the salesperson may decide to cross-sell by suggesting that they buy a belt or a shirt to go with it. In this case, upselling may be suggesting that the customer buys a more expensive trouser or a higher-end trouser from the same brand. Upselling and cross*-selling are both important marketing techniques that can be used to increase profits for companies and businesses. Research has proven that upselling is usually more efficient and effective in helping increase revenue.

Difference between upselling & down-selling

An upsell happens after someone makes a purchase. It’s when you show them other add-ons that they can also get while they’re still in the buying mood. Each one needs to be presented in a persuasive way.

A down-sell happens when someone does not make a purchase. They might be trying to leave their cart or checkout page and the goal here is to quickly present them with a better “one time discounted” offer to get them back in to complete the sales process.

Why do we up-sell

Upselling is a useful strategy whereby a company can easily increase their profit margins. Upselling is a type of skill in sales whereby the salesperson has to be knowledgeable about the different products that they have on offer. People upsell for obvious reasons. Any successful upsell helps to increase profit and revenue. Also, sales departments and representatives, have to meet particular quotas regularly. This means that if they can upsell successfully, they will be able to meet these goals.

Additionally, upselling is important because it helps to improve the general customer experience. A well-executed up-sell means that you can easily enhance your relationships with your customer.

Primary purpose

The primary purpose of upselling is to increase the revenue of the company. It can also help enhance customer engagement.

Advantages and disadvantages of upselling

A successful upsell can help boost business revenue. Also, if the suggested products meet the needs of the customer, it can help increase customer satisfaction. Customers knowing that they were offered the best possible product will be very satisfied with what they have. Upselling makes it easier for customers to logically understand why they have to buy a more expensive item. Additionally, an upsell that is relevant can create an emotional connection between customers and a brand. This helps increase customer retention.

A great disadvantage of upselling is that if it is not properly planned, it can ruin the general customer experience. Any sales pitch that is executed aggressively will make the buyers see the business as too focused on sales and obsessed with profits. This could affect the trust that the customer has in the company.

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