The term “upselling” tends to conjure up images of slick, high-pressure salespeople plotting to bilk customers out of their cash. But the truth is that upselling is a powerful and legitimate sales strategy for deepening customer relationships, enhancing the customer experience, and increasing revenue.
In this guide, you’ll learn the definition of upselling, see examples of upselling and cross-selling in the wild, and explore best practices for using upselling techniques to increase both revenue and customer satisfaction.
What is upselling?
Upselling is a sales technique used to encourage customers to purchase a higher-end, more expensive, or upgraded version of a product or service they are already interested in. The goal of upselling is to increase the overall revenue and profit margin by offering additional features, benefits, or premium options that enhance the customer's experience or satisfaction.
Effective upselling can help a business increase its average order value or customer lifetime value, generating more revenue immediately or over the long term.
Upselling vs. cross-selling
While upselling and cross-selling are both sales techniques that increase revenue, they do so in slightly different ways. While upselling convinces a customer to purchase a more expensive version of a product or service, cross-selling encourages them to add related or complementary items to their existing purchase.
For example, say you run a business selling computers. A salesperson looking to upsell would steer customers away from the mid-tier laptop they were eyeing initially and toward a top-of-the-line machine with cutting-edge specs. By contrast, a salesperson cross-selling to the same customer would encourage the customer to buy the mid-tier laptop, along with a protective case, a wireless mouse, and other add-ons that enhance the experience of using the device.
Upselling is a sales practice that’s common in both business-to-business and business-to-consumer sales situations. Here are a few examples:
- An airline prompts a passenger flying coach to upgrade to a first-class seat as part of the airline check-in process.
- A restaurant menu gives diners the option of adding chicken or shrimp to a salad for an additional cost.
- The checkout process for an online book retailer offers an option to add the audio version of a print book or ebook for a discounted price.
- An auto salesperson recommends that a driver purchase a vehicle with a more expensive trim package that includes amenities such as leather seats or an upgraded stereo system.
- An online tool or resource is available in its most basic version for free, but unlocking premium, desired features involves paying a fee.
When to upsell
While most of us are familiar with pre-sale upselling, opportunities to upsell exist at every stage of the customer lifecycle.
- Upsell prior to initial sale. Whether you’re online or in person, successful upselling begins the moment a customer enters your store. Use product pages for cheaper or more basic products to recommend premium or improved versions via comparison charts. For a brick-and-mortar business, get buyers’ attention and tee up a conversation by placing upsell products on the shelf next to a more basic product.
- Upsell at checkout. While a customer’s cart or checkout page is a great place for cross-selling related products, it can also be an effective tool for upselling. Try using your checkout page to inform buyers of offers that enhance their purchase, including volume discounts, personalization options, expedited shipping, gift-wrapping, or enhanced protection.
- Upsell after purchase. Post-sales upselling allows customers to add upgrades to their order. This is especially effective for software or digital assets, where it’s easy to add features or functionality. If you’re upselling a physical product, one way to upsell after a transaction is by offering customers an extended warranty or premium support for their purchase.
Upselling best practices
Upselling can help a business generate additional income when done properly. Best practices include:
- Don’t get greedy. While upselling is a great way to increase revenues, it shouldn’t be treated as a shortcut to big profits. Avoid recommending a product or service that is significantly more expensive than the product being purchased. A huge upsell in the short term may leave buyers unsatisfied, preventing repeat purchases and reducing customer lifetime value in the long run.
- Focus on the customer's needs. Always remember that your ultimate goal is not increasing sales, but building long-term relationships with both new customers and existing customers. To do that, you need to stay focused on your customer’s needs and how the added value of the upsell will help meet those needs. Don’t be too pushy or aggressive. Accept “no, thank you” as a response.
- Educate the customer. One of the best ways to ensure customers don’t feel pressured in an upsell situation is to approach the conversation as a teaching moment. When you know your products inside and out, you can educate customers about the risk of not taking advantage of your offer without being overly salesy. Offer side-by-side comparisons so the customer can see the value in the premium version.
- Create urgency. When you combine upselling with another sales technique like a discount, you can create an incentive for customers to act on your upsell quickly. Try offering an in-the-moment-only discounted price to encourage customers to make an immediate decision. It may cut into your revenue, but you’ll still make more money than you would have otherwise.
Successful upselling and cross-selling are skills that take training in appropriate techniques. With experience and coaching, you can use upsell and cross-sell techniques to generate additional income without alienating your customers.