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What is upselling?

Upselling is a sales technique that focuses on convincing customers to purchase a premium, higher-end version of the product or service that they originally intended to buy. It involves exposing customers to other options that they did not know were available to them and showing them how these options are better and would give them more value.

Sellers use upselling techniques to sell more expensive products or to get existing customers to purchase upgrades and/or add-ons so that the customers get more value from their offerings and the retailers get increased order values and much higher profits. 

Upselling to existing customers is extremely effective because these customers have already experienced your product and are comfortable with it. Now, the question on their minds is not whether they should purchase your products or not, what they’re actually trying to figure out is which of your products should they buy. In this situation, it is much easier to sell them on a premium product and get them to pay more than it is to get a new customer to buy a premium product or to get a new customer to buy any product at all.

In fact, studies have shown that existing customers are 60-70% likely to buy new products from you, while new customers are only about 5-20% likely to buy anything from you.

Source: Marketing91

Why is upselling important?

Upselling is important because it helps you increase your order values and revenues with less effort. But that’s not the only benefit that you get from it. Upselling also allows you to provide your customers with more value by showing them how your premium offerings are better suited for their needs and will set them up for success. Think of it this way, if you engage in upselling, you’ll be able to give your customers a product that will help them achieve their goals, even if it costs them a bit more. But if you don’t do that, they might just look purely at the prices of your offerings and opt in for a product that does not give them all the functionalities that they need in order to do what they want to do. Now they’ll just have a bad experience and believe that your offerings are just substandard, and they won’t even bother trying the premium product, they’ll just go to your competitors and start doing business with them.

What are the benefits of upselling?


Here are some of the benefits of upselling for your business:

Increases your order value

This is one of the most obvious benefits of upselling. Getting your customers to buy a premium product increases your order value as compared to what it would be if they purchased a lower level (or worse, base level) product. 

Increases customer satisfaction

When your customers buy and use a premium product or service, they’re going to get more value out of it. It puts them in a position to succeed and achieve their goals. It also gives them a seamless experience, they aren’t going to get annoyed about not having access to certain features and functionalities because of opting for a lower-level product. They get what they’re looking for (and more), without limitations that would interrupt their work or spoil their experience. 

When you set your customers up for success and help them achieve their goals, they’re very obviously going to be more satisfied with your brand and your organization.

You’ll get referrals

If you convince your customers to buy a higher offering or opt for a higher-tier plan and your offerings give them more value, they’ll tell everyone about you. If anyone whom they know is looking for a product or service like the one you offer, these customers would be likely to tell them about yours, simply because it worked well for them. But, of course, the catch is that this premium offering should give them more value and help them achieve their goals, if it doesn’t work out for them after they paid a premium, they’re still going to be talking about you at every chance they get, but not in the way that you’d like them to.

Increases loyalty and customer lifetime value

When you provide more value to your customers, they’ll keep coming back for more even if they have to pay you a bit more. If you don’t upsell your products, these customers might buy a lower variant from you once and never do business with you again after the negative experience, but if you upsell them on an offering that works wonders for them, they’ll keep coming back for more. 

Your customer lifetime value depends on the order value, the frequency of purchases, and the span of time over which the customer does business with you. By upselling customers on products that are better suited to their needs, you get to influence the order value and the customer lifetime, so you’re increasing two important factors that the customer lifetime value depends on.

What are the upselling strategies and techniques that businesses can use?


Here are some upselling techniques that you could use for your business:

Understand your customers’ needs

Don’t pitch an upsell that does not align with a particular customers’ needs. You won’t be able to add any value to them and you’ll just come of as a greedy organization that does not care about helping your customers succeed.

Be helpful

Your aim here is not to simply make more money for your company, your aim is to help your customers get more out of your offerings and use your products and services to achieve their goals. You need to get your customers to see you as an advisor instead of a salesperson.

Offer a one-time discount

Many people will not try your premium offerings because of the high price tag on them. That means that these customers will never experience the value that they’ll get from these offerings. Give them a one-time offer to experience your premium offerings the first time and then let the Endowment Effect kick in, making them not want to give up the premium version and settle for a lower variant.

Create urgency

When you’re offering the discount or any sort of promotional offer, make sure it’s a limited-time deal so that your customers feel the need to take action and make the purchase.

Provide social proof and real-life examples

Stories are much more effective tools for persuasion than assertions. Give your customers real-life examples of how other people and organizations in the same situation as them succeeded by using your premium offerings.

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