Upselling: Definition, Tactics & Examples in Small Business

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The word “upsell” doesn’t exactly have the best connotations. It generally conjures the image of a used car salesman trying to hawk accessories that a customer doesn’t need, but upselling’s definition is nothing of the sort. In fact, if it’s done properly, it can actually make your customers happier than they would have been and can also increase your revenue.

Whether you’re running an e-commerce store or a brick-and-mortar shop, there are a lot of ways you can successfully implement this sort of sales technique. The main thing is that upselling should always give consumers an additional value rather than an overpriced impulse buy that they later regret.

What Is Upselling?

Upselling is one of the most popular sales strategies. Basically, you try to get customers to buy upgraded or premium versions of a product they’re already thinking about purchasing. For example, a salesperson at Apple will always try to sell you an extended Apple Care plan when you buy an iPhone, even though you already get a year-long warranty and 90 days of tech support with your purchase. This also goes for the computer salesperson who tries to sell you a computer with upgraded RAM or a better graphics card.

Upselling vs. Cross-Selling

Upselling and cross-selling are often confused, but these two sales techniques are definitely different. Upselling generally has to do with selling a better version of a product that an existing customer is already going to purchase. Cross-selling is all about selling related products or additional products to new customers and existing customers alike.

For example, e-commerce stores typically have links at the bottom of their product pages that say something along the lines of, “Customers who bought this item also bought …” This is cross-selling. They’re trying to sell you additional items that other customers who were interested in the same purchase you’re thinking about making have already bought.

If this same scenario played out using an upselling strategy, that product page would have upgrade add-ons. For example, there’d be an option that says something like, “For $100, upgrade from 20GB to 100GB.”

Upselling Examples

Upselling is fairly common across all types of retail businesses, but every type of B2C business has different strategies. What they all have in common is that customers are getting something for an additional value. For example, you might see:

  • A car salesman recommending that a customer upgrade from cloth to higher-end leather seating.

  • A restaurant menu that lets customers add chicken or shrimp to a salad for an additional fee.

  • A speaker salesman offering an extended warranty.

  • A free app that has additional features for a price.

  • An airline offering an upgrade for additional foot space or baggage.

  • An online store offering complimentary products at checkout to people who opt for premium upgrades.

  • A cloud-based tech company selling storage upgrades.

Of course, upselling is an art. If you’re too blatant about it or the upgrade isn’t worth the money, customers are going to be angry.

How to Land the Upsell

There’s a certain way that a small business should attempt upselling. Basically, you always need to keep the customer’s needs in mind. When it is done correctly, you’ll increase a customer’s lifetime value and see more happy customers, but when it is done incorrectly, you may lose the entire sale. Upselling best practices include:

  • Don’t be pushy: You can suggest things to customers, but if they start to feel like they’re being forced into buying something, they’ll be angry.

  • Make sure the item adds value: It should be something that customers purchasing an item would want.

  • Lead with education: If you’re upselling something like a protection plan or extended warranty, make sure the customer knows the risks of not taking the upsell.

  • Discount: If you’re trying to upsell an expensive item, a discount might just sway the customer.

  • Upsell after initial purchase: It’s a bit risky to try to upsell before checkout because it can turn off customers. Upselling after they’ve already put in their credit card information feels less forced. Plus, you’ve already made the sale, so there’s no risk in losing it.

  • Bring in the professionals: You may want to train your employees on the art of upselling so they can utilize the strategy most effectively. 

Upselling Tactics for E-Commerce

Upselling tactics are largely dependent on the industry, but e-commerce stores generally use some of the same types of strategies, and a lot of it is found in the UX design. There are tiny tweaks you can make to your online store’s design that will solicit upsales and cross-sales. This includes:

  • A “frequently bought together” section: This is one of the major tactics used by Amazon. You may wish to list upgrades or items that go together on product pages.

  • A “special offers and product promotions” section: This is similar but allows you to offer upgrades rather than just cross-selling.

  • A “compare to similar items” section: This lets consumers compare regular items with higher-end items and gives you a greater opportunity to upsell.

  • Color strategy: Putting the price of a feature or product you want to upsell in a red font will make people think they are getting a discounted price.

  • Display customer reviews: This increases the chances that a new customer who is on the fence will make the purchase.

  • Add pop-ups for upsells: Customers can opt to click out of a pop-up, so it's not that intrusive.

  • Offer upgrades in the shopping cart stage: If people are already in the process of checking out, they may be more likely to consider one final upgrade.

Upselling Tactics for all Retail

Beyond changing your online store’s design, the crucial part of an upsell is making customers think they’re getting a deal that they absolutely need. This is why discounts often help upsell features. For example, if you can convince a customer that he may eventually need more cloud storage, he'll likely purchase it on the spot with a discount because he thinks he'll never get that deal again.

Another way to make consumers think they're getting a deal is to offer products at a base price. This is common across the tech and food industries. For example, Chipotle offers burrito bowls with a select number of ingredients, but premium ingredients always cost more. Who doesn't reach for the guacamole upsell (unless you're allergic to guac)?

In the world of tech, this is often seen in a series of hardware, software and storage upgrades. For example, Google gives out 15GB of free storage to all customers, but it upsells that once storage is low with constant reminders that you can buy 100GB for $1.99 per month. At that price point and with that much added space, consumers are likely to buy rather than endure the hassle of consistently deleting emails.

Remember to Always Solve a Problem

If there’s one upselling tactic to take away, it’s that the most successful upsells and cross-sells always solve a problem. For example, if you’re buying a knife, you’ll probably need a knife sharpener. Sell this as a discounted package. If you’re buying a salty popcorn at a movie theater, you’re probably going to need a drink. Upsell these items as a combo for a lower price than if they were bought separately.

Even upgrading for a higher-end model can be seen as a problem of sorts. Does the upgraded model last longer? Will it be able to do more and quicker, or is it an overall better value for what you get? Think about why customers would want the upsell and let them know in your sales pitch.

References

About the Author

Mariel Loveland is a small business owner, content strategist and writer from New Jersey. Throughout her career, she's worked with numerous startups creating content to help small business owners bridge the gap between technology and sales. Her work has been featured in publications like Business Insider and Vice.