Like cross-selling, upselling is a way to get your prospects to purchase an item of higher value, thus increasing the overall revenue for your store. It’s been in use for quite a while—we see examples of it all around us.
When shopping online, you’re often shown products that ‘customers also bought’ when purchasing items similar to what’s in your shopping cart. At the movie theater, the cashier says, “You could upgrade to a medium-sized popcorn for just 50 cents more!”
The point of upselling is to offer the shopper a product which either offers increased functionality and/or more value. Unlike cross-selling in which you attempt to sell another related or unrelated product to your customer, upselling means trying to sell the same product your customer has already expressed interest in, but with increased functionality.
In traditional retail, upselling was something sales personnel did routinely with every customer. How many times have you walked into a store to buy something and a salesperson has offered you an upgrade option for a product you are considering buying? Probably more than once.
Upselling in physical stores is very easy and straightforward. A salesperson can talk to you and present you different options, and based on your reactions, adjust the offer. Ultimately, their goal is to sell you a more expensive and functional product.
For example: A car salesperson will talk to you about your needs, desires, and driving habits, and then using that information, will offer you different options for vehicles, all while striving to upsell the luxury model with more features.
The interaction with another human is a natural process and a brick-and-mortar store holds this advantage over any ecommerce store. But since upselling is such a potent, revenue-increasing technique, ecommerce needs to evolve the mechanics of upselling and replace human interaction with its own substitute.
But how do you do that?
As in the case of brick-and-mortar stores, you need to rely on customer engagement to motivate customers to spend more on your products. Since you can’t depend on your customers finding out about all of the potential different options by themselves, you need to nudge them by sharing offers at the right moments.
The Impact of Upselling on eCommerce
Upselling is so effective because it taps into human psychology. Often times, this psychological impact comes in the form of what’s called the Monty Hall Problem.
Monty Hall was the host of a popular TV show in the 1970s called “Let’s Make a Deal”. During the show, the contestant is presented with a choice of three options, one of which contains a reward, and two of which are worthless.
When the contestant makes a choice, one of the other options are revealed to them, and they are then asked if they would like to revise their choice and switch to the other option. In these types of experiments, the majority of responders remain loyal to their initial choice—and only 4% to 5% change their mind.
How does this translate to an eCommerce?
Well, Predictive Intent, a company producing and conducting behavioral and customer research, found that these results are consistent with the responses of people in an ecommerce context as well. This is important because if you can get 4% of people to buy a higher value alternative, it can make a major impact on your business revenue.
For example: If you have 100 customers spending on average $100 and you offer an upsell that’s $20 more, the result in a revenue increase of 8-10%. Not bad, right?
Next, let’s look at how you can use this information to engage prospects and upsell within your eCommerce store.
Engaging Prospects & Upselling
As a part of your selling and marketing strategy, you likely want to engage visitors the moment they reach the website. The primary goal here is to motivate them to get to know more about your products and offerings (and convert).
So how can you do that while promoting upsells? Here are a few specific ideas.
One of the first things you can do to upsell your products is to influence your prospects through your blog posts. Addressing prospects in the research phase makes it more probable they will remember your offer later on due to a phenomenon called anchoring bias, which is a tendency to place increased value to the information we found out first. It also plants a seed for later upselling during the shopping process itself.
For example: You can use blog post to compare different versions of the same product and point out why the more expensive one is a better fit for prospects. This works especially well in case of software products.
By creating a blog post that showcases advanced options in a more expensive solution, you can help your prospects justify the increased costs of the more advanced solution. Just keep in mind that honesty is essential here. In most cases, you will lose your customers entirely if you try to upsell a product that has features they are unlikely to use or need. Always think about the needs of your various customers and position your product so it fits those needs.
Video content represents one of the best ways to interact with your prospects. According to Forbes, using video, you can spotlight your products and point out upselling opportunities at the same time with real-time demonstrations. Prospects will be 95% more likely to retain any information received in video content.
According to FanBase.com, there are three major types of videos stores can use for upselling purposes:
Customer service videos
By presenting superior customer service via instructional videos, you can make the case for an upsell—especially if one of your upselling features is better customer service. Customer service is a feature sometimes even more important than any other feature. Good customer service makes retaining an existing customer 60% to 70% more likely to return.
Take for example this video by Steve Jobs, which provides insights into how much the head of Apple valued customer service—even beyond the technology they built. Apple made customer service a trademark of their brand...and it paid off in a big way.
For SaaS companies or companies selling other types of services via the subscription model, onboarding videos are a major opportunity to upsell from the basic level service. You can use these videos to point out the features your users get when they subscribe or opt-in for a more expensive plan or option.
Cintas uses video to let prospects know how their business process works. Watching this video enhances prospects’ trust and appeal. This a very effective use of video by an ecommerce store.
You can solve the problem around lack of interactivity in video content by integrating a live chat feature on your site. Research proves that visitors who use live chat are more likely to convert and that it provides valuable insights into your customers’ common problems.
Live chat also represents a great way to upsell, as you can explain features of the products directly to prospects in a one-to-one environment (much like the salesperson does during an in-store experience.)
What’s more: Live chat applications (such as Intercom, Drift, Olark, etc) allow you to activate live chat at specific points during a site visit, or using timers or action sequences. This way, if you notice your customer struggles (for example spends a long time on a product page, or frequently presses ‘back’ in the browser), you can use live chat to engage them and proactively offer help.
Forms and funnels
One of the best ways to upsell is to use an opportunity when your customer has established a purchase intent. When you know what your prospect is buying, you can guide them to buy higher value items and better match their needs.
For example: Look at the computer company Lenovo and their website. On the site, when you visit with intention of buying a laptop, for example, you will find that they ask you to select what you are going to use it for.
Once you select your intended use, you can then select the main activity you will use a laptop for.
When you click on ‘work’, for example, Lenovo offers you laptop types that are best for that particular task.
Using the ‘View’ or ‘Customize’ buttons will lead you to a configuration screen, where you can upgrade the performance of your laptop. It’s within the configuration screen that Lenovo attempts to upsell by offering different configuration options.
You can get a faster processor, more RAM, etc. Each of these choices increases the functionality and value of a product to a customer.
Email is most likely used with returning customers who have already made a purchase on your website. You can use email to offer different upgrade options if they already use a product you sell.
One of the best use cases for this is when you sell a service and you notice that a customer needs more options than their current plan allows. With this knowledge, you can use email to point out that they can upgrade to a plan that has more options and, thus, upsell.
If you operate an ecommerce site and notice a returning customer has placed a product into their cart and abandoned it, you can also use email not only to try to recover the customer but also to upsell the product they left in the cart.
Product and category pages
You also might consider using product pages to upsell your products and offer your prospects increased functionality. Doing so via a comparison tool allows buyers to evaluate their options and decide on which is best for their needs.
Notice for example, how Lenovo (again) uses a comparison feature on its product pages:
This makes it easy for your prospect to understand the differences between the options offered and makes it easier for them to make an educated decision on what to buy.
Last, but not least: Let’s talk about landing pages for upselling.
Landing pages, by themselves, are usually used to sell a specific product. However, you can use copy, imagery, or videos on them to upsell a product offered on the landing page. As the goal of landing pages is to start prospect’s route down the conversion funnel, you can assume the prospects who reach the landing page will already be somewhat motivated.
A good example is landing pages providing prospects with reports. You can use a landing page to offer access to a free research paper, but then upsell them to a subscription or full format paper with more detailed information.
If you operate a large and diverse ecommerce store, manually creating upsells is impossible to scale at the size. Of course, there are tools that make upsell easier to achieve. A good example of this is Adobe Marketing Cloud. Using it you can automate the upsell process and offer your customers right upsell options at the proper time.
Conductrics, an A/B testing tool also provides an ability to conduct upselling using A/B testing and optimizing for the best performing upsell option.
Marketo offers a way to personalize upsells and offer your customers products that fit their previous purchase. This advanced suite offers many other options too, so for a large ecommerce store, it can be a useful addition to the toolbox.
Tools such as those, enable ecommerce sites to conduct upselling with efficiency and increased likelihood of success.
To recap: While cross-selling means selling additional items to your prospects, upselling means selling a more valuable (and expensive) version of the product.
Upselling, unlike cross-selling, can be effective in any part of the purchase process. You can offer upgrades to a product from the moment your customer first starts researching it on your website.
It is not unheard of that companies have managed to increase revenues by 35% or more using upsell techniques. According to this research, getting new customers through upsells is cheaper. In some cases, upsells accounted for 90% of all revenue for some stores, and only up to 30% from an initial sale.