How to upsell: Techniques to increase sales

Today, the average ecommerce store leaves 10%-30% additional revenue on the table simply because they haven’t nailed the upselling strategy. It's critical to maximize every sales opportunity without coming across as pushy. 

Through a series of tested techniques, we'll explore how to upsell and lead your customers to preferred options that bring higher value to them and better profit margins for your business. 

Let's dive in!

• Upselling is a valuable technique for any business looking to boost sales by enticing existing customers to purchase higher-value items or additional products.

• Understanding the difference between upselling and cross-selling is key to implementing effective sales strategies in your business.

• Business examples from leading companies such as Apple, Amazon, and Spotify show the real-world effectiveness of upselling strategies like identifying high-margin products and utilizing strategic pricing tiers.

• Multiple upselling techniques can be applied, including offering bundled deals, leveraging customer purchase history, showcasing reviews and testimonials, and using precise language to influence purchasing decisions.

• Gelato's on-demand products and services can serve as a valuable tool for ecommerce businesses, helping them implement upselling strategies effectively and elevate revenue per customer.

Upselling is a sales technique in which a seller encourages the customer to purchase more expensive items, upgrades, or other add-ons in an effort to make a more profitable sale. This strategy aims to increase the value of the purchase, enhance customer satisfaction, and boost the seller's revenue.

Upselling and cross-selling are both sales strategies used to increase the value of a customer's purchase, but they differ in approach and focus.

Upselling involves encouraging customers to buy a higher-end or upgraded version of the product they are already interested in. 

For example, a customer looking to buy a basic smartphone might be persuaded to buy a more advanced model with better features. An upsell strategy increases the transaction value by selling a more expensive item that fulfills similar needs but offers enhanced functionality or benefits.

Cross-selling, on the other hand, focuses on selling complementary products or services that go along with the original purchase. This strategy aims to broaden the customer experience and drive more sales by suggesting related products that enhance the use of the original item. 

For instance, if a customer buys a camera, one can cross-sell a camera case or an extra lens. Through cross-selling, businesses can create more comprehensive solutions for their customers, often improving user satisfaction and loyalty.

Let's dive into the key benefits of this effective sales technique. 

• More revenue: This is the most obvious and immediate benefit of a successful upsell strategy. You're boosting your average order value by encouraging customers to purchase higher-end products or upgrades. 

• Customer loyalty: When done right, upselling can actually enhance the overall shopping experience. It shows you understand your customers' needs and you're offering valuable solutions, not just pushing for sales. 

• Optimizes marketing efforts: With upselling, you maximize the value you get from each customer interaction. Instead of constantly acquiring new customers, you're getting more from customers who appreciate your offers and will likely stay loyal. 

• Creates cross-selling opportunities: Effective upselling opens the door for you to introduce related items to your customers. As you learn more about their preferences, you can satisfy their needs better by suggesting relevant products and services. 

• Helps customers make decisions: Customers appreciate being guided through their purchases. Upselling isn't about tricking your customers into buying more; it’s about helping them see the added value and benefits that they might have missed otherwise. 

• Uses fear of missing out (FOMO): When customers see the benefits and fear missing out, they're more inclined to agree to an upsell. Offering limited-time specials or exclusive deals enhances this effect. 

With these benefits in mind, it's clear to see why upselling is a vital part of any sales process. But, to truly excel, you need to integrate effective strategies.

Let's dive into the heart of the matter - nine proven upselling strategies implemented by successful businesses that can increase your sales significantly.

1. Identify high-margin products for upselling

Start by asking yourself: what products or services do you offer that have high margins and could warrant an upsell? Recognizing these items is your first step towards successful upselling. It won't just drive your profits but add value to the customer's purchase, too. 

Here are some tips to keep in mind: 

• Identify your opportunities: Determine which products generate the most profit and can be logically upsold.

• Speak to value: Highlight the benefits of the higher-priced item over the base one to your customer.

• Segment your customers: Not all customers will be interested in every offer. Segment them to ensure your pitch is relevant.

Business example: Apple Inc. 

Apple Inc. has famously mastered the upselling technique with high-margin products. Just think about how often you've been tempted to buy the larger storage iPhone because it's 'only $100 more'.

2. Offer bundled deals to increase average order value

Bundling is an efficient strategy you can resort to when looking to increase both customer satisfaction and your average profit margin. When executed accurately, product bundling helps: 

• Limit decision complexity: Through bundling, you make the buying process simpler for your customers by combining complementary products.

• Improve customer contentment: Customers appreciate bundled deals as they provide a complete solution, increasing the overall value of their purchase.

• Boost sales: Bundling also allows you to sell more products at once, encouraging customers to spend more, thus raising your average order value.

Business example: Microsoft 

Microsoft has effectively leveraged bundling by offering its productivity software titles, such as Word, Excel, PowerPoint, and others, as a package deal through Microsoft Office. This not only increases their average sale price but also encourages continued use of their software ecosystem.

3. Use targeted product recommendations

Think about the last time you shopped online. Chances are, you were offered a selection of items that 'you might also like.' This is a perfect example of targeted product recommendations — a key upselling strategy.

Here's how it works: 

• Customer segmentation: Group your customers based on their buying and browsing behaviors. You can provide personalized product recommendations by understanding your customers' habits and preferences.

• Relevance: Offer products that are accessories to, complements of, or upgrades from products your customers have already shown interest in.

• Limit choices: Don't overwhelm the customer with too many options. Keep it focused and relevant.

Business example: Amazon 

Amazon, a global ecommerce giant, employs targeted recommendations masterfully. It uses algorithms that analyze customers' past browsing and purchase behavior and then provides personalized product suggestions on individual users' pages.

4. Implement time-sensitive offers

You've likely seen time-sensitive offers - sales that last only for a few hours or an exclusive limited-edition product. These offers create a sense of urgency that encourages customers to make a purchase. The key to successful time-sensitive upselling is: 

• FOMO fuel: Drive the Fear of Missing Out to capitalize on your customer's desire to seize opportunities.

• Authentic deadlines: Be honest with your time limits. Fake countdowns can dent your credibility.

• Effective promotion: Promote your offers through various channels like emails, social media posts, or app notifications.

Business example: Amazon Prime Day 

Amazon Prime Day is a prominent example of a time-sensitive offer that creates a powerful sense of urgency. This annual event is exclusive to Amazon Prime members and typically lasts for just 48 hours, during which a vast range of products are available at heavily discounted prices. The limited-time nature of the sale drives the Fear of Missing Out (FOMO), compelling customers to purchase quickly before the deals expire. 

5. Leverage customer purchase history

As an extension of personalizing your customers' shopping experience, let's dig into their purchase history. When you go beyond the surface and dive deep into your customers' past transactions, you get a goldmine of information.

Here's how you can leverage this strategy:  

• Understand customer preferences: By studying what products or services your customers have purchased before, you can align your upselling efforts with their interests and preferences.

• Personalized recommendations: Based on their past purchase history, offer upgrades or related items that contribute to their experience or benefit them.

• Boosted customer relations: Showing your customers that you understand their needs can enhance their trust in your brand, leading to stronger customer relationships.

Business example: Netflix 

Netflix utilizes a user's viewing history (their version of purchase history) to recommend shows and movies the customer might like. This tactic helps retain their current subscribers while encouraging them to consume more content, indirectly upselling their service.

6. Utilize strategic pricing tiers

Strategic pricing tiers remain a popular upselling technique. Here's why: 

• Value perception: Customers are primed to see the highest tier as the best value, effectively nudging them towards pricier options.

• Comparative pricing: Placing budget and premium options side-by-side makes the higher-priced product seem more attractive, particularly if benefits are emphasized.

• Segmentation: Multi-tier pricing meets diverse customer needs, enticing different customer segments with suitable features and pricing. Avoid complex plans with unclear benefits—confusion can lead to churn.

Business example: Spotify 

Consider Spotify's tiered subscription plan. The music streaming giant offers Free, Premium, and Family tiers, each with higher pricing and features, encouraging customers to move up the pricing ladder for increased benefits.

7. Offer free shipping

Free shipping is a powerful strategy for urging customers to finalize their purchases. It can significantly increase average order values. 

• Setting a minimum purchase level: In this strategy, free shipping is offered to customers only if they purchase above a certain amount. This encourages larger orders.

• Using free delivery as an exclusive reward: You can offer free shipping as a perk to exclusive club members or long-term customers. This helps retain customers and makes them feel valued.

• Limited-time shipping offers: Time-bound free shipping offers can spur immediate sales and boost revenues.

Business example: Zappos 

The shoe retailer Zappos has successfully implemented the free shipping strategy. By offering both free shipping and returns, Zappos discovered an increase in cart values and a drop in cart abandonment rates.

8. Display customer reviews and testimonials

Consider showing off those stellar reviews your product has amassed over time. Showcasing reviews can work wonders for your upselling strategy. It further builds trust and persuades potential buyers to make a leap towards the premium product. Here's why displaying customer reviews is important. 

• Build trust: Real testimonials from customers add assurance about product quality.

• Provide social proof: When others are seen enjoying a premium product, it paints a desirable picture.

• Highlight benefits: Let satisfied customers illustrate the extra benefits they received from the upgraded product.

Business example: Shopify 

Shopify, a popular ecommerce platform, does an excellent job of utilizing customer testimonials. Displays of glowing reviews make potential customers feel more comfortable in upselling to a premium plan, highlighting the success of those who've gone premium before them.

9. Choose your language carefully

It’s not about what you say but how you say it. The language and tone you use can shape the customer's perception and experience.

• Be clear and concise: Avoid industry jargon and ensure your offerings are easy to understand.

• Use positive language: Instead of saying, "If you don't upgrade, you'll miss out on these features," try saying, "By upgrading, you'll unlock these additional benefits."

• Show value: Explain how the customer can benefit from the upgrade or additional product.

• Use urgency sensibly: Words like "limited time" or "exclusive offer" can create a sense of urgency, but avoid overusing them to avoid sounding too salesy.

Business example: Everlane 

Everlane, an ethical clothing company, excels at wording upselling offers in a way that highlights the environmental benefits of purchasing higher-cost items. They clearly communicate the value to compel customers to buy, leading to successful upselling.

Gelato's extensive product line, including t-shirts, mugs, wall art, phone cases, tote bags, and photo books, offers numerous opportunities for upselling.

By integrating these products into your upselling strategies, you'll likely see an increase in average order values and customer loyalty. 

Ready to upsell more effectively? Sign up for Gelato today and choose a subscription plan that suits your needs and objectives.