We’ve always come across people wondering: “what does upselling mean?” Well, we hope that by the end of this post, you’ll have grasped the upselling definition and how to apply it in your business. At the very basic, upselling is the act of convincing a customer to upgrade their purchase to a larger one or to include some extras to end up with a sale.
In the eCommerce space, businesses tend to combine upselling and cross-selling approaches to boost order values as well as profits.
Why is upselling crucial for an online business?
Even though they tend to invoke negative feelings in some people, when executed well, sales techniques could prove beneficial to businesses and improve the overall shopping experience. With that, here’s why eCommerce companies rely so much on upselling:
- Businesses can build lasting relationships with customers. Contrary to what many might imagine, upselling is not a dirty business tactic. If put into perspective, it helps your customers get value for their money by suggesting add-ons and premium items that will add far greater value to them than what they had initially settled for. In the end, the customer “wins” as the business revenue increases.
- Upselling works best with existing rather than new clients. Generating new leads can be tough for your eCommerce business. This is why it is much easier to sell new or additional products to a customer that already knows your brand. The truth is that you stand a 5-20% chance of upselling to a new customer and a 60-70% chance of doing the same to an existing customer. So if you’re thinking of upselling, be sure to engage your current clients first even as you chase new leads.
- Upselling augments Customer Lifetime Value. Customer Lifetime Value is a net profit brought by a customer over time. Businesses can segment their clients into non-profit, profitable, and highly profitable. A high Customer Lifetime Value means that your customers are generating more revenue for your business without necessarily having to invest anything extra. With upselling, businesses can concentrate more on generating extra revenue from existing clients while channeling extra resources towards engaging new customers.
- Existing customers give you repeat business. Upselling adds more value to your clients, increasing their chance of coming back for more. By creating real value for your clients, they understand that you genuinely care about them, which means that any time they need one of your products, you’ll straight away come into their minds.
Every craft has its best practices and upselling isn’t any different. To get the most out of your upselling strategy, be sure to employ the following guidelines.
Best practices for Upselling
- Before a customer purchase. Set up a daily recommendation section below a product or at the sidebar.
- During a purchase. Put in place pop-ups with recommendations in the cart section, payment section, or abandoned carts.
- After a sale. Leverage customized emails to entice customers to come back for extra products or add-ons.
Is there anything else you’d like to know about upselling? Be sure to reach out!