The Art Of Upselling : Essential Tips For Increasing Your Revenue

By definition, upselling is a sales tactic that tries to get customers to purchase an upgraded, more expensive, or premium version of the item that they are already considering purchasing.

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“Would you like to supersize that?”

A seemingly innocuous phrase - one that you have probably heard most times you placed an order at any McDonald’s – the majority of times in which you probably ended up getting the larger size, right?

However, this phrase is more than what it appears to be – in fact, what it is, is an example of a loaded sales tactic known as upselling. But what does upselling mean?

What is upselling?

By definition, upselling is a sales tactic that tries to get customers to purchase an upgraded, more expensive, or premium version of the item that they are already considering purchasing.

It is often considered a risky technique, since it can come off as being pushy or demanding too much from a customer. The last thing you want is to either jeopardize the chance of closing the sale or lose the opportunity to create a long-term customer. However, upselling, if done right, can be an extremely valuable tool in the marketer’s arsenal.

What is an example of upselling?

Many companies successfully incorporate upselling into their sales strategy. For instance, offering a customer buying a flight ticket the chance to upgrade to Business Class, selling them a premium version of a software vs. the basic package, or suggesting that they buy a higher model mobile phone with increased storage – these are all examples of upselling in action.

Why is upselling important?

The objective of upselling is to increase the order value and bring in more revenue for your business. There are a few reasons why upselling is so important for marketers:

  • By providing customers with superior products that offer increased value, you make them feel that they are getting a better deal, which makes for happier customers who are more likely to return to you in the long term.
  • Existing customers are much easier to sell to. Hubspot[1] estimates that the probability of closing a sale with an existing customer is 60-70%, whereas for a new customer, you have only a 5-20% chance of success.
  • Increasing customer retention means increasing your profits in the long term. A study[2] by an analyst from Bain showed that a 5% increase in customer retention could lead to an increase in profits of up to 95%.
  • Upselling increases customer lifetime value without increasing the cost of sales, leading to more profitability in the long-term.

How is upselling different from cross-selling?

While both, upselling and cross-selling aim to achieve the same objectives, i.e. helping customers get more value from your business, and helping your business to increase revenue, the main difference is that upselling tries to convince customers to buy an upgraded version of the same product, while cross-selling focuses on selling related products or services.

So, with respect to the McDonald’s situation – “Would you like to supersize that?” would be considered upselling, while “Would you like some fries with that?” is an example of cross-selling.

The terms are often used interchangeably, but in reality, upselling is actually considered the easier of the two tactics to pull off, since it is easier to sell something related to what the customer is already considering buying, versus something related, but still different to what they are buying.

What’s the best time to upsell?

To increase your chances of upselling, you can incorporate meaningful product recommendations at every step of the purchase funnel.

  • Before the purchase : You can display the different versions of the product or service, highlighting the additional features that the customer will get by buying the premium version. Tech and software companies, like Spotify, WordPress, and Salesforce do this very well.

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