Upselling is a sales tactic that increases sales when done effectively by getting customers to purchase additional suggested products or services that are directly related to the original item of interest. Examples include offering extended warranties on laptops or premium features on a car as these items increase the sale value and complement their purchase.
When to Utilize Upselling
The best time to upsell a customer is at the time of the sale because the core product is top of the customer’s mind. For example, it’s easier to sell laptop accessories when selling your customer a laptop because they can look at it and consider what they need. You upsell by asking them if they need additional memory or accessories, such as a protective case, printer, webcam, monitor, keyboard, and mouse. But it can also take place after the transaction.
This sales tactic increases the revenue through add-ons or upgrades. However, it’s only effective when those add-ons also provide actual value to your customers so that you don’t create a negative customer experience. For instance, if you know that your customer travels frequently and is buying a new laptop because they dropped their old one, offering them an excellent warranty increases your profits while giving them additional peace of mind. This makes it a great idea.
When Not to Use Upselling
While upselling is an excellent way to increase revenue and create loyal customers, there are times when you should not try to upsell a client. If upselling may irritate the customer, and it doesn’t meet a need they currently have, stick to the primary purchase. Examples of situations where you shouldn’t consider upselling can include:
- When the customer has reached out with a problem. For instance, if they are having trouble getting your software to work properly, don’t try to pitch them an upgrade.
- When the customer makes it clear that they have a specific budget, it’s counterintuitive to try to make them spend more than they are comfortable with. Instead, you can mention other products or services they might find beneficial in the future.
- If the product or service you want to sell doesn’t meet their immediate needs. For example, you might be eligible for a bonus for selling a certain product, but if it doesn’t fit the primary purchase, don’t try it. Keep the customer’s needs top of mind.
Upselling vs Cross-selling
Sales management companies use upselling when offering customers add-ons, upgrades, and services like warranties during a current transaction. It can also occur shortly after the sale, but it’s a product or service directly related to that particular sale. Meanwhile, cross-selling is where you offer a different product or service because their preferences or history indicate that they would be interested in this type of product but is not a part of a specific transaction.
Cross-selling examples include offering similar products or services like offering a book about meditation to someone who bought a book about yoga because you think they’ll be interested in that topic. To learn more about how to use cross-selling more effectively, check out our article on the subject.
Examples of Upselling & Why They Work
Different types of upsells include add-ons, upgrades, and services. While most upsells occur during the initial sale, it’s possible to upsell a customer after a sale has taken place. For example, a customer may not truly recognize the value of a service like a subscription to tech support until after they’ve tried to load software or configure settings themselves.
Below are a few specific examples of different types of upsells and why they work:
Add-ons are products added to the main product or additional purchases independent of the main product. They work because buying the related product is top of mind, and it’s an ideal opportunity to make an offer, especially if there’s a unique, limited-time opportunity.
Upgrades involve offering your customers a better or more advanced product than what they agreed to purchase. This strategy is ideal when the premium product is a better fit for what they need. For example, if a customer tells you that they store many files on their computer rather than in the cloud, encourage them to upgrade to a laptop with additional storage.
Complementary services should be something that saves your customer time and money. Types of services include product warranties or work, such as hiring a calligrapher to handwrite addresses on party invitations for a special event, in addition to the purchase of the main product of custom stationery.
Upselling Best Practices
When upselling is done right, it generates more revenue while increasing customer value and satisfaction. When this sales tactic is done poorly, not only can it ruin your initial sale, but it can also make customers angry by making them think you aren’t putting their needs first.
To implement upselling the right way, there are a few best practices to consider:
- Make sure your upsell offer is related to an initial purchase
- Offer your upsell product or service while you’re in the process of the initial sale or shortly afterward
- Make an offer that complements the primary purchase
- Get to know your customer and offer something they want or need based on what they tell you
- Offer your upsell product or service at a price your customer can afford
- Offer adequate sales training on how to present and close an upsell offer effectively
- Offer upselling incentives to sales reps to increase the likelihood of all customers being made an offer
Adhering to these best practices will improve your chances of gaining additional business. It will also ensure you upsell properly and strengthen your relationship with customers because you’re providing more value.
How to Measure Upselling Success
Once you’ve incorporated upselling into your sales process, it’s essential to measure its effectiveness. The best way to do this is to compare the number of core product sales made with and without upsell products. You can do this by tracking core products and upsells manually with a spreadsheet. It can also be done with automation using a customer relationship management (CRM) tool that tracks all product sales.
CRM systems like Pipedrive allow you to track deals and sales opportunities. However, unlike many CRM providers, Pipedrive also enables you to track sales by product so that you can see how many upsell products you’ve sold compared to core products. This makes it an excellent tool for measuring results against goals:
Upselling is a sales tactic for increasing the value of a sale while increasing the value for your customer. It’s ideal for companies offering complementary products and services that align with customer needs closely. It’s also excellent for increasing customer lifetime value, leading to decreased customer acquisition costs. Finally, upselling typically makes buyers more loyal customers likely to purchase additional products from you and provide customer referrals.