What is Upselling?

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Upselling is a sales strategy that involves encouraging customers to buy a higher-end version of a product than what they originally intended to purchase.

Because acquiring new customers can be far more expensive than selling to existing ones, companies will often employ techniques like upselling to increase sales revenues. For example, a salesperson could show a customer the luxury model of a car side by side with the basic model or point out the benefits of an upgraded computer with a faster hard drive.

Upselling is often confused or used interchangeably with cross-selling, which is the practice of offering customers additional products to compliment an existing purchase. An example of cross-selling would be to recommend speakers to go with the computer, rather than an improved version of the computer itself. Both upselling and cross-selling are methods of increasing sales to existing customers, but use slightly different approaches in doing so.

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Steps Involved in Upselling

CRM helps users focus on their organisation’s relationships with individual people including customers, service users, colleagues, or suppliers.

1) Building Customer Trust and Loyalty

Upselling should function as a two-way street: customers gain added value in exchange for their loyalty and trust. Often, when people think of being upsold, they imagine a used car salesman trying to trick them into buying a sports car when all they needed was something practical. That is not how successful upselling works.
Instead, sales personnel should be working to build reciprocal relationships with customers and encourage long-term customer loyalty. To start with, this can be done by taking on the role of a consultant instead of a salesperson:

Know your product inside and out.
It’s important to be well informed about the product or service you are selling and prepared to help customers and offer individualised support as needed. If you are unable to answer questions or address individual issues, they could lose faith in your company or product.

Make suggestions based on customer preferences.
Customers can easily be alienated if they feel like they are being pushed to buy something that they don’t need. Instead, it should be clear that making the purchase provides them with a real added value.

Make customer service a priority.
Overall, a positive customer experience can be the deciding factor in whether or an offer is accepted, while indifference accounts for more than half of lost customers.

2) Get to Know Your Customers and Their Needs

Thorough knowledge of your clients is essential to upselling. Understanding customer wants, needs, and preferences increases their trust in your relationship. One way this is done is by listening to prospective buyers: often, customers will contact sales staff themselves and inquire about specific features and benefits – this is the exact information you want, being handed to you voluntarily. It can also be helpful for the sales team to have personal experience with the products and services they are selling. This will allow them to put themselves in the customers’ shoes and better anticipate customer needs.

Another way to acquire more information is to gather and analyse all relevant customer data and history. Using software for sales automation and analytics can help with this process and make it easier to engage with and understand existing customers. This information can be used to optimise customer service, providing individualised offers and information based on customer needs. In fact, one Salesforce survey found that customers are not only happy to share personal data in exchange for personalised deals and offers but that they also tend to be more loyal to companies that use this practice.

Learn how a CRM can help discover customer needs

3) Making the Right Recommendations

As mentioned above, customers can start to lose interest if you offer them products and services that they don’t want or need. Making the right recommendations is key to successful upselling and should be done using the knowledge you’ve acquired about your client.

Understand the customer’s wants and needs.
Whatever you are upselling should somehow reflect the customer’s overall needs. While it may seem to be in the company’s best interest to make as many offers as possible, recommendations should be limited to avoid confusing or overwhelming the customer with too many options.

Upsell, don’t oversell.
Additionally, recommending upgrades that are too expensive in proportion to the original purchase could drive the customer away. The general rule of thumb is that an upsell should not increase the total price by more than 25%. Using available data from CRM and marketing automation, appropriate recommendations can be tailor made to best suit a customer’s needs.

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How to Identify Upselling Opportunities

In a nutshell, the ideal upsell customers are the ones who are most engaged with your products and services. The whole concept of upselling is based on growing relationships with existing customers, meaning that upselling inherently involves regularly following up with clients to asses their current status and needs. That can involve a variety of methods, such as:

Ask open-ended questions and listen to customers.
When they talk about their needs.

Consider whether a product or service exists on the market already.
If so, how can you improve upon it? If not, would it be possible to develop one?

Investigate whether there are ways to improve upon your own existing product.
If you already offer a satisfactory version, can you also provide an extraordinary version?

Analyse your revenue sources.
Seeing where your company earns the most can help to identify your clients’ needs and how to best upsell strategically.

Determine what your market segment can actually use and afford.
For example, if you are selling a software package to college students, you may not spot many opportunities to upsell them the business suite. On the other hand, you could potentially offer a student discount on a more comprehensive package.

Look at customer data across departments.
Customers have different contacts within a company depending on what they need. All of those contacts will have information about them.

Learn more about your customers through information available online.
Such as customer reviews, interactions over social media, page views, shares, etc.

Upselling should happen almost organically as a means of solving a problem or filling a need. Staying informed about what customers need from a variety of angles is the most effective way of identifying upselling opportunities.

Upselling Techniques

Upselling opportunities can arise out of a wide variety of situations. Because of that, companies employ a wide variety of techniques to ensure customer satisfaction and maximise success. Some suggested techniques include:

Make sure you deliver what you promise.

Customer satisfaction is critical to upselling and fulfilling any promise you’ve made – whether it be writing an email or resolving a service issue – is a major part of that.

Communicate the value to everyone involved.

It’s easy to overlook stakeholders that aren’t your main contact. Even if you have communicated the value to some of the stakeholders, you should make sure that everyone on the client side is aware of the benefits that have been created for them.

Upsell as part of the solution to a customer service issue.

Once an issue has been resolved, upselling (and cross-selling) can be used to improve the situation further.

Nurture existing customers.

No matter what type of selling you are doing, it is always important to nurture and maintain relationships with existing customers. This is part of building trust and loyalty.

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Take away the risk.

When a free trial or money back guarantee is available, customers are more likely to make purchases and have confidence in your product or service.

Consider time-based issues.

Remind customers of issues they had in the past or how your products and services can prevent or improve issues in the future.

Use sales automation and analytics.

Sales and analytics software is designed help you interact with customers and keep track of any relevant information.

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It’s All About Customer Relationships

Upselling is an effective sales strategy for increasing revenue while continuing to build relationships with clients. It should be a give and take scenario, in which customers gain added value in exchange for making a larger purchase or commitment to a company. For upselling to be successful, it is particularly important to know your customers well, earn and maintain their trust, and make appropriate recommendations. While there are a number of upselling techniques and ways to identify upselling opportunities, understanding the customer’s needs and experience is at the core of all of them.

That’s a lot of info!

Here’s what you should take away from this article:

What is upselling? Upselling is the process of recommending a more expensive or higher-end item or service when a customer is making a purchase.
What are the steps involved in upselling? Upselling starts by building customer trust and loyalty, identifying needs in the customer, and then addressing those needs through the right product or service.
How do you know when to upsell? To identify upselling opportunities, analyse your customer data, look for gaps in the market, gather customer feedback and identify unmet needs.
What are some upselling techniques? Upselling techniques include communicating value, delivering on promises, identifying and solving problems, and using analytics to address personal needs.
Can upselling help build customer relationships? Yes. Upselling involves understanding customers and their needs, and then providing value. This in turn builds trust and stronger relationships.

Frequently Asked Questions

What is upselling?

Upselling is the practice of selling a customer a higher-end version of an item they’re interested in. For instance, an electronics retailer pointing out the benefits of a better TV, a faster laptop or a more durable tablet would be an example of upselling. For many businesses, upselling is an important technique for driving revenue.

What is the difference between upselling and cross selling?

Upselling is the practice of offering a higher-end version of a product to a customer, while cross-selling is offering customers additional products that are compatible with their purchase. For example, if a customer were buying a laptop, offering them a case would be cross-selling, while offering them a better laptop would be upselling.

Why is upselling important?

Upselling is important because it adds value for both businesses and their customers. Successful upselling addresses customers’ needs or solves a problem by offering them better or more relevant products or services, which in turn builds trust and loyalty. This not only leads to higher revenue, it leads to better long-term relationships.