[vc_row][vc_column][vc_column_text]Upsell marketing is one of the oldest methods of maximizing profit and comes in many different shapes and colours. Here, a seller tries to sell more products or higher-priced products to his existing customers. The seller’s goal is to increase the company’s profits. Thus, upsell marketing is very similar to cross-sell marketing. We will show you how you can optimally use upsell marketing to maximize your company’s profits.
In order to give you a comprehensive overview, we will tell you in advance which questions about “upsell marketing” will be answered in this article:
- What is upsell marketing?
- What is the difference between upsell and cross-sell marketing?
- What is the goal of upselling?
- Are there risks in upselling?
- What are successful examples of upsell marketing?
- When should I place my offer?
- What strategies can I use for upsell marketing?
Definition: upsell marketing
By definition, upsell marketing or upselling describes the process of a seller attempting to sell a higher quality or higher priced product to their customer. The aim is to offer the consumer additional products or services that are intended to improve, expand or simplify the actual purchase or experience with the product.
This practice is important because it is easier to sell something to a customer who is already in the mood to buy than to offer something to a completely new customer. These additional sales are absolutely essential for some companies.
A well-known example of the use of upselling is provided by the fast food industry. Here you are almost always asked whether you would rather have your order as a menu or whether you would like to have a drink with it. It is much more likely that the customer will maximize his order than offering a menu to a passer-by on the street who didn’t want it anyway.
However, fast-food restaurants are not the only ones using upselling and profit maximization tactics. On the contrary, any company can apply these strategies to any product and any industry.
Upsell and Cross Sell Marketing: What’s the Difference?
In addition, to upsell marketing, there is also what is known as cross-sell marketing. This is about offering the customer a product that goes with the product that has already been selected.
For example, if a customer buys a new coffee machine, it is very appropriate if they are also offered the right coffee beans or a descaler for the machine. Amazon states that 35 percent of its own sales are due to cross-selling. The industry average is around 10 percent.
As you can see, upselling and cross-selling are very similar and, if used in a targeted manner, can make a significant contribution to increasing a company’s sales.
The goal of upsell marketing: profit maximization
Profit-maximizing offers are there to increase the average transaction value per customer. Profit maximization is one of the basic sales strategies were offering additional features, more options or complementary products entices customers to spend more money. It’s a way to encourage customers to buy additional items and increase your profits.
The idea of tricking customers into buying more than they initially intended is not as unethical as it might sound. Upselling often even brings added value for the consumer, but he does not expect it immediately.
Popular products for impulse purchases have long been positioned directly at the checkout in supermarkets, such as classics such as chewing gum, tobacco products or confectionery. The purchase price per product may not be particularly high, but many small transactions or additional sales quickly add up.
Another example is the last mobile phone purchase. Did you also buy a case, screen protector, car charger or extended warranty? These are all specific profit maximization offers designed to enhance the shopping experience.
So it’s not really surprising that many fast-food companies make little to no money off of their core products. So the hamburger is not really profitable for Mcdonalds’, money is mainly made with fries or soft drinks. Even cinemas do not earn their money from tickets, but almost exclusively from popcorn, sweets or drinks. Similar to funnel marketing.
Risks of Upselling
Of course, upselling also comes with risks that you should be aware of. Because here there is a fine line between maximizing profit and alienating customers. Of course, it is not particularly difficult to offer the customer a more expensive product if it has enormous additional benefits.
However, if the customer has a fixed budget that he cannot exceed under any circumstances, there is a risk that he will neither want the more expensive nor the cheaper product. After all, he knows at that moment that there is a much better product and may not want the cheaper one anymore. As a retailer, you always take a certain risk when you decide to upsell.
Successful upsell marketing: well-known examples
While upselling also maximizes your own profits, the focus lies elsewhere. Rather than trying to complement the core product offering, an upsell strategy attempts to replace the core product entirely. The actual product is to be replaced by another, more expensive and higher-quality product.
Mcdonalds’ would start an upsell attempt by enlarging the order, for example by combining the order into a menu or replacing the hamburger with a Big Mac.
A cinema would try to turn a normal ticket into a 3D ticket. The amusement park, on the other hand, is trying to turn the day pass into an annual pass that only costs €50 more but offers immense added value.
For example, Dropbox offers three business subscriptions, but only highlights one, the most expensive standard product, in a different colour and places it in the middle of the web page. Thus, an attempt is made to highlight this offer and thus take more money.
Of course, the same also works in retail. For example, if a customer enters an electronics store with the intention of only buying a specific camera, the sales representative can of course use this intention to his advantage and convince the customer of the added value of the next higher model, and also offer a large memory card for as many photos as possible without the Having to change the card, as well as optimally protecting the new achievement by purchasing a protective cover.
Although the customer actually only wanted to buy a specific, inexpensive camera model, he left the store happier because he bought a better, albeit more expensive, camera model and took the right accessories with him, so that he could benefit from the new purchase for a long time. This was also a great success for the sales consultant because he was able to convince the buyer of the sensible additional purchases and both parties are happy.
Upsell Marketing: Choosing the Right Time
Of course, when using upsell marketing, it also depends on the right moment when you present your offer to the customer. It is not so easy to say which moment is the best. An upsell can make sense before, during and after the purchase. Here it is important to find the right moment that makes the most sense for your own product.
BEFORE THE PURCHASE
Even before the customer has even selected a product, upsell marketing can already work. In an online shop, one possibility would be to start directly with somewhat higher-priced offers in the product view. In this way, you can set a price anchor in the mind of the customer and show that there are even better products. In addition, your other products will look much cheaper compared to the expensive product.
If you don’t run an online shop but a stationary trade, you should also show the customers the expensive products that you offer. The same principle applies here as before: You set a price anchor in the mind of the customer and thus present the other products as very cheap.
DURING THE PURCHASE
You should start getting your upsell marketing off the ground now at the latest. After all, your customer has now decided to buy a product and you know what he is interested in. Here you can, for example, offer a complete package of different products that go well with the customer’s selected product. For example, show him a bundle of two other products and give him a discount.
In this way, he is more likely to be tempted to buy the two products than just the individual product. In terms of price, you should start here slightly above the estimated price limit of the customer.
AFTER THE PURCHASE
Even immediately after purchasing a product, you still have the chance to offer your customer an upselling product. The customer has now not only decided on a product but has already made the purchase. With an online shop, you can offer another product directly after the completed one, if this matches the previous product. Here, too, discounts can be a good fit and once again tempt the customer to buy.
However, upselling can work well not only immediately after the purchase, but with a time lag. Since customers store their email addresses when they buy a product, you can send them follow-up emails a few hours or days apart and thus offer new follow-up products.
As you can see, the boundaries between upselling and cross-sell are often blurred. Basically, the two are pursuing the same goal: to sell the customer more products and thus maximize profits.
10 strategies for successful upsell marketing
There are different approaches to upsell marketing. It is only important that you think in advance about a strategy that you can pursue and with which you can win over your customers. In the following, we will show you eight strategies on how to implement upsell marketing, similar to cross-selling.
1. FIND OUT YOUR CUSTOMERS’ ASKING PRICE
In order not to make offers to your customers that are completely unsuitable in terms of price, which tend to deter them rather than win them over, you should find out what your customers’ asking price is. For example, if your customer paid $35 for a product, they’re probably willing to spend $40. Therefore, you should offer him a product that is in this price range. On the other hand, if you suggest a product that costs around 100 euros, you risk losing the customer immediately.
2. FIND OUT THE NEEDS OF YOUR CUSTOMERS
The better you know your customers and their needs, the better and more targeted you can use your upsell marketing. Here it can help to use market analyzes or surveys. The questions you ask your customers don’t even have to be product related. It’s simply about getting to know the customer better and making him an offer that addresses his problems and wishes. If you fulfil these wishes, there is hardly a product that is too expensive for the customer.
3. CHOOSE THE RIGHT PICTURES
The first impression also counts when buying a product in an online shop. Here it is particularly important to use an optimal product photo. The customer must be able to visualize the product in practice. When the customer scrolls through the product lists, an image has to convince him immediately so that he takes a closer look at a product. Even if it’s already on a specific product’s page, the upsell products that appear below or next to the main product must have perfect product photos. For example, you can display the product that the customer is currently looking at in other colours. This gives the customer a better idea of what product they want.
You should also offer the customer a suitable product. For example, if he is looking at a new smartphone, you can show him matching cases that match the colour and model of the smartphone exactly. He is more likely to be convinced that the case fits his smartphone if the smartphone is shown in the picture in the colour he has chosen.
4. ENSURE RELEVANCE
Online retailer Amazon is a pro at showing relevant products to customers. Surely you also know the section at the end of a product “Customers who viewed this item also viewed”. This lists the products that are very similar to the item being viewed, but also the higher-priced ones. As mentioned before, this sets a price anchor for customers and they see how cheap the product is compared to the others.
5. SHORTEN YOUR OFFER WHEN UPSELLING
Another good tactic to entice customers to buy is scarcity. In some shops, you can see how many of each product are still in stock in the product list. This puts pressure on customers to make a quick decision about the product. After all, they don’t know how quickly the product will be available again. If the product is still relevant for the customer, their buying resistance decreases.
However, you have to be careful here. For example, if you offer digital products, i.e. products that can theoretically be reproduced infinitely often, this can scratch your credibility. Here you have to approach scarcity differently. For example, due to a shortage of time, for example, that a certain special offer is only available for eight hours. Scarcity can be created in different ways.
6. OFFER SETS
For sets, Amazon is also a good example of successful upsell marketing. In addition to the products that other people have looked at, there is also the category “Customers who bought this product also bought”. A set of different products is then offered here, which matches the main product. For a smartphone, for example, the set consists of a case and an additional charging cable. It can be helpful if you offer this set with a discount of five to ten percent, for example. This gives the customer one more reason to buy these three products together.
7. ALSO OFFER HIGH-END PRODUCTS AS AN UPSELL
Even if you think you’re going to scare customers, by all means, offer them high-end products as well. Of course, as mentioned before, you should consider the customer’s price expectation, but that shouldn’t stop you from offering high-priced products as well. After all, the customer’s own assessment can always be wrong and the customer may be better off financially than you might have thought. Therefore, do not waste the opportunity to sell one of your high-priced products. As long as you also offer the customer products that are probably more within their price range, you will probably not deter them. A nice side effect: You present the other products as cheaper.
8. USE SOCIAL PROOF FOR MORE TRUST
The majority of customers who are considering buying a product first look at the customer reviews. After all, they want to know what other customers who have already bought the product think of it. So you get the opinion of other customers who were once in your situation. This is called “ social proof ”. As a seller, no matter how nice you talk about your product, the customer is more likely to trust other customers.
A good way to build trust with social proof is to use testimonials. This is short, positive feedback from a customer that you can include in your upsell or cross-sell. For example, such positive testimonials look particularly good in the product description. This is how you convince your customers once again that you are offering them a good product that is worth buying.
9. EXCEED EXPECTATIONS
Exceeding customer expectations create further trust and convey a sense of happiness to customers. Because they get more than they expected at the beginning. An example of exceeding customer expectations is offering free shipping. Customers are often put off when they see the price of a product and then the delivery costs are written next to it. They calculate directly how much the product would ultimately cost them and have doubts. However, if they see that delivery is free, they are more likely to decide on the price of a product since they are getting something “for free”.
With additional gifts, you can always trigger a positive feeling in your customers. If your products are books, you can, for example, enclose a free reading sample with your customers. This exceeds the customer’s expectations, he is happy about the gift and associates the purchase from your company with something positive. That way, he’s more likely to shop with you again.
10. USE FINANCING
Using different forms of financing, like credit or leasing, can help you tremendously to sell higher-priced products. Many retail providers are already using financing very successfully, for example, electronics stores, to sell more expensive televisions. Car dealers also often use this strategy to sell their customers a more expensive model. If you calculate the total price of a car down to the monthly instalments, it often doesn’t differ much from the cheaper model. So many customers choose the more expensive product. You can also use this for your upsell marketing.
Conclusion: Focus on core products
When offering upsell offers and profit-maximizing offers, the rule of thumb is to offer related or better versions of products. If the customer is currently looking for a bathing suit, it would make sense to also offer sunscreen or beach towels. Because these are the products that the customer can really use. In this way, your own company can earn some money and the customer does not have to visit a second store but instead gets the feeling of satisfaction because all purchases can be made efficiently in one store.
In addition, the company must be aware that upsell marketing is a technique that does not always work and certainly does not work for every customer. On the contrary, some studies indicate that just 4 percent of all buyers accept an upsell offer. Thus, the majority of their own market is probably not interested in an upsell or cross-sell and accordingly only buys what they actually wanted to buy.
However, this does not mean that upselling is not profitable, but rather that the company has to think about how to properly approach the four percent of customers who are willing to upsell. Because these are the customers who are comparatively happy to pay more money for additional or higher-quality products. To do this, however, the customer must also be convinced by a good salesperson.
A company must recognize that not all products need to be sold, but that the focus should be on the core products. Because these are the best to sell, are the most profitable or require little maintenance. Success is not necessarily measured by the quantity or variety of products sold, but by how efficient they are. It is also important to ensure that the customer is offered products that are as compatible as possible when upselling or cross-selling, in order to provide the customer with a high-quality offer and improve your own profit margins.
Frequently asked questions (FAQ) about upsell marketing
What is upsell marketing?
Upsell marketing or upselling describes the process by which sellers try to sell their customers a higher quality or higher priced product. The aim is to offer the consumer additional products or services that are intended to improve, expand or simplify the actual purchase or experience with the product.
What is the difference to cross-sell marketing?
Cross-sell marketing is about offering the customer an additional product that goes with the product they have already selected.
What do I have to consider with upsell marketing?
Upselling marketing is risky. Because here there is a fine line between maximizing profit and alienating customers, especially when the customer has a fixed budget.