While eCommerce has changed throughout the years, basic marketing principles like upselling have not changed fundamentally and the pricing techniques and behavioural psychology principles have retained their validity throughout the years.
What is Upselling?
When a customer is being sold something more expensive than what he or she has already purchased, it is known as Upselling. Even though this sales technique is unique due to its ability to build a stronger customer and seller relationship. Another reason why sellers prefer upselling is that it is much easier to sell something to an existing customer. This is sometimes confused with Cross-selling, which stands for selling something that is already related to what the customer already owns.
Upselling aims to provide your customers with the feeling of having a “Win” by helping them to go for the best. Upselling is a customer happiness tactic that also generates revenue for the seller. It helps in improving the customer shopping experience. This can be practised widely in the dimension of eCommerce, where many tools can be utilized to deliver a generated revenue while delivering great customer experience.
Upselling Has Its Benefits
Apart from building a strong customer and seller relationship, Upselling can also result in increased Customer Lifetime Value (CLV) which is the net profit contribution that a customer makes to a company over time. A customer with a higher CLV can be considered as a person who helps your company generate more revenue without requiring any extra push. A company that has customers with higher CLV has the freedom to move on to new crowds looking for new customers.
Customers would always love to feel fulfilled by what they purchase. Upselling supports this factor since it pushes customers towards the best product. Therefore, this method also helps in creating happy customers. It also promotes customer loyalty, where customers who are satisfied with the product you offer will be a fixed group who will always choose your store first when purchasing a product.
Upselling also leads to increased word of mouth. Once a customer is truly satisfied with their purchase, he or she will let their friends and associates know about the excellent service they received at your store. This can also be considered a free promotion. But it is also important to note that word of mouth is not always positive. There can also be the negative word of mouth created by unsatisfied customers or rival competitors. Therefore, it is always important to stick to providing a good service that results in positive word of mouth.
When upselling, a merchant will always compare and highlight the importance of the product that is subjected to selling. This will give the buyer a certain understanding of the product and other related products. Most of the time, this may be a brand new product to the customer. Therefore upselling is also an opportunity for the other products to get known.
How to Upsell at an eCommerce Site
Performing sales tactics in a virtual space may be tricky since there is no face-to-face interaction with the buyer. But, a digital platform can always be moulded in the manner that it helps in performing these tactics with the motive of providing a good shopping experience. Here are some things that an eCommerce website can follow when performing the sales tactic of Upselling.
If someone purchases products in a row, companies often offer discounts to that individual. From the buyer’s perspective, this can be seen as a relief on the expenditure while the seller will see this as signing-up of a long-term customer. In eCommerce, this can further be applied as discount subscriptions. For example, if a customer subscribes to a recurring purchase of a product, he or she will be able to get these products shipped based on a discount rate.
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Personalizing the Offer
Giving the customer a personal touch is often practised by good salespeople. This takes away the doubts that the customer may have on his or her purchase. When upselling in eCommerce, this personal touch can be provided by suggestions. For example, if someone just purchased a pair of trousers, you can offer them a shirt on the page that appears after their purchase. This is a widely practised tactic in eCommerce.
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Limiting the Offer
Even though this sounds like an unhealthy technique, mentioning a limit on a certain offer will always help to create more from a sale. The urgency felt by the customer will speed up decision making. For example, if someone sees an offer of a 25% off from a surround sound system once after they purchase a TV, they will need to go for this offer. But they will be quick on this move once they notice the time limit that has been set on the offer.
Presenting Larger Products
This is a product-based strategy. Customers often admire products that easily justify their cost. For example, if you are purchasing an iPhone, there is always an upgraded version of that device which could be larger and better. A customer who identifies the value of this offer will not resist to throw in a few more bucks on it.
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Upselling Before Checkout
This is the practice of upselling before the customer has completed a purchase. This can be seen in most eCommerce sites. This is where customers see the pop-ups that mention “Customers also viewed”, “Customers of …. also like”, “Similar products customers bought”, etc. This technique also comes with a disadvantage where the customer might not be offered the best product since the seller is not aware of what the customer is planning to purchase.
Things to Remember
As mentioned earlier, Upselling is a sales technique that is focused on enhancing a customer’s shopping experience by offering the best product. But this task has to be performed very carefully since the chances of losing a customer can also be very high. Here are some things to remember if you are planning to upsell something.
Limit Your Recommendations
It is important to understand that more options do not necessarily increase your chance of making a sale. A lot of choices may also create a lot of confusion for the customer. The motive of a successful upsell is to bring motivation to the customer’s mindset. Not confusion. Therefore, when it comes to options, stick to a very few. This will maximise your shot at a sale.
Know Your Customers
Having a sound knowledge of your audience is important to achieve successful upselling. It is best to have a record on each client’s purchases and buying patterns. Through these records, you can use your website to track down and present products to customers based on their interests. Products subjected to upselling this way has a higher chance of being sold since they are presented to the most suitable customers.
25% Rule of Thumb
Never upsell a product that is 25% more than the original order. This way, the customer feels safe when considering the option that is presented to them. If the seller tries to motivate the customer into purchasing a really expensive product, the seller might not only lose the sale, but also the customer. Therefore, following the simple 25% rule of thumb, you will be able to avoid a lot of bad decisions.
Sell Products That Sell Well
Sometimes it might be hard to identify which products can be subjected to upselling. Therefore, you can always present products that are already doing so well on your website. The sales numbers and other sales metrics will help you recognize these products. This will save time for both you and your customer when reaching the point of another transaction.
Upselling is not an easy task. But a lot of pressure can be reduced by following certain strategies implemented by global eCommerce giants. According to Jeff Bezos, the CEO of Amazon, 35% of their sales are supported by upselling. The techniques and facts that relate to upselling do not have a limit. Therefore, keep on experimenting. Let us know if you find anything new. Good Luck!
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