How to Upsell to Your Current Customers
Upselling is truly one of the most effective strategies out there for increasing your eCommerce revenue.
Some of the largest online retailers in the world, such as Amazon, Zappos and Walmart, have used this technique to grow their companies, not to mention a wide variety of small and medium websites.
According to Forrester Research analyst Sucharita Mulpuru, product recommendations account for an impressive 10-30% of eCommerce sites’ revenue.
In this post, we’re going to show you how you can use upselling to boost the revenue from your Shopify store, and exactly which apps you can use to make that happen.
But first, let’s take a little time to figure out exactly what upselling is.
What is upselling?
Upselling is a sales strategy that allows retailers to easily increase their revenue by offering more expensive products, upgrades and add-ons to customers that are ready to buy.
In other words, the seller shows the customer additional options that he’s never considered, with the aim of convincing him to spend more money in exchange for extra features and benefits. Smart, right?
Here are a few different types of upsells:
Offering a better model or extra features – this type of upsell just offers a more expensive item that has more features or benefits than the initial offering.
One company that does a great job of taking advantage of this type of upsell is Apple, which allows you to upgrade with a better CPU, more RAM, an additional USB superdrive, or even a Thunderbolt display.
Offering an add-on – another option is keeping the initial product, but offering additional items that are relevant to what the customer is currently buying.
So, when your customer is buying a camera, you can easily decide to upsell him some batteries.
You can upsell not only items, but services, as well.
For example, Amazon offers their customers two-day shipping and an additional warranty, a great way to add on a few extra bucks.
Why you should always try to upsell?
Here are a few reasons why you should most certainly always try to upsell to your current customers:
No need to reinvent the wheel – running an eCommerce business doesn’t differ much from an offline business. The only difference is that you’re selling your products online, instead of in a store.
This means that you can easily implement successful strategies that have already worked for your offline businesses in your online store.
There’s no need to reinvent the wheel! Just use what’s already working for you.
For years, upselling has been extensively used by brick and mortar retailers, but it has yet to be adapted by the majority of companies in the eCommerce industry.
The famous phrase “Would you like fries with that?” is one of the most successful strategies that McDonald’s has used for years to increase its revenue. It makes them millions of additional dollars in earnings each year.
It’s one of the easiest ways to increase your revenue – selling to new customers is way harder than selling to existing ones.
Your chances of selling to a new customer ranges between 5% and 20%. If you sell to an existing one, the probability of success is between 60% and 70%.
Why is that?
Well, simply put, customers prefer to buy from companies that they already trust with their money.
What’s also great about upselling is that you’re doing it at the moment of purchase.
The customer has already made the decision to buy from you. So, you make him feel like he’s already an existing customer.
In fact, you don’t even have to wait for him to come back your eCommerce store to buy from you again! You’re upselling him while he’s still on your website.
One big eCommerce site, Amazon.com, reports that an astounding 35% of their revenue comes from upsells and cross-sells.
So, there is absolutely no reason for you to put off upselling to your customers.
You make your customers happy – upselling is not a dirty sales technique with bad intentions. In fact, upselling can actualy make your customers happier to buy from you.
Sales guru Jeffrey Gitomer offers some great advice about upselling the following video:
According to him, if you upsell effectively, you are actually helping your customer understand the value of the upsell offer. In other words, how is the upsell better than the initial product?
And this is where the magic happens! If your customer thinks that he will get even more value out of the upsell offer, he’ll be even happier after his purchase.
Increased value = happier customers.
It’s that simple.
The golden rules of upselling
In order to upsell successfully to your customers and increase your revenue, you definitely need to be aware of how this strategy actually works.
Here are the golden rules of upselling that you should always keep in mind:
You can only upsell to a small percentage of your customers – the truth of the matter is that most people won’t change their minds, and will decide to stick with the original product.
In psychological terms, this is known as the the overconfidence effect.
A study carried out by Predictive intent showed that upselling is responsible for only 4% of sales.
But that 4% can result in a huge profit increase for your eCommerce store!
Here’s how it works:
Even if most people stick with their original choice, around 4% of them will say:
“Damnit! I deserve the better product!”
And then, they buy it.
So, if the original product was available for $699.99, and you manage to upsell the customer on a product that costs $749.99, that’s an additional $45 profit!
Now, imagine that you normally sell 1,000 of those original products per month. If you manage to upsell to 4% of your customers (40 clients), that’s equal to $1,800 in additional sales per month, or $21,600 per year.
And that’s just from one product!
If you upsell successfully on 100 products, that would be additional $2,160,000 in sales per year.
Upsell a product that costs ~60% less than the original – this rule is super important when it comes to upselling products other than the initial item chosen by your customer.
The time-tested 60×60 rule states that people will buy an upsell 60% of the time for up to 60% of the original price.
This means that, when someone buys a shirt, you should try to upsell them a tie, not a suit.
A tie will seem like a relatively small item compared to the suit, and it doesn’t seem like a big deal to add one small thing that’s already relevant to what they’re buying.
The suit would also be relevant, but, since it’s much more expensive than the shirt, it will end up making your customer feel frustrated and alienated.
Upselling works better than cross-selling – upselling is 20 times more effective than cross-selling, according to a study on Predictive Intent’s eCommerce customer base.
Their data proves that upselling drives 4% of sales, whereas cross-selling only accounts for 0.2%.
This study also proved that cross-selling can be far more effective when done on the check-out page, where it drives up to 3% of sales. But even then, it can’t beat upselling.
Upsell only relevant products – sometimes, it may seem hard to figure out what might be “relevant” to your customer. However, that will be way easier if you have already invested some time in developing a detailed buyer persona for your business.
Ask yourself the following:
- What is he going to use my product for? What are his goals?
- What kind of benefits/features is my client is hoping to get out of my product?
- Can I offer him a product that has more benefits/features?
So, if someone is searching for a gaming notebook, it doesn’t make sense to try to upsell him a business notebook.
Even if the products are relatively similar, your customer has a different agenda. He wants to be able to play the latest games.
Also, he’s looking for different features – more RAM and a stronger video card to support heavy graphics.
Most manufacturers have already figured this out, and they have created different versions of their products which you can then upsell.
Upsell the most popular products – most frequently, people buy products based on reviews. They just go to your website and search for products with the highest ratings and reviews, and then buy them.
In fact, 90% of customers admit that they make their buying decisions based on reviews.
So, if you offer your customer a more expensive product that has higher ratings and more reviews, he’ll be much more likely to buy it.
Upsell the best sellers – usually, your best-selling products will also be the ones with the most reviews. But not always.
If a product is selling really well, that means that it is doing a really good job of fulfilling your customers’ needs.
And if that product is your customers’ top choice, that probably means that the rest of your customers will prefer it, as well.
So, if you try to upsell your best-sellers – they will probably sell even better.
Automate the process of upselling
Most eCommerce owners understand the benefits of upselling, and they know that it will increase their revenue.
However, they continue to struggle with the actual technical implementation.
So, how should you actually present your upsell offers on your site?
Instead of doing everything manually, we suggest using a few plugins and tools that will help you upsell automatically to your clients.
Choose the right upselling plugin – the Shopify app store has some great tools you can use to implement upsell strategies on your store.
Here are our top picks:
Receiptful creates email receipts that you can use as a marketing tool. Inside, you can place tailored upsells to encourage your customer to purchase additional products from your eCommerce store.
With this tool, you can create the following upsell and cross-sell offers:
A discount for your customer’s next order to encourage him to come and buy again.
You can also cross-sell additional products right after purchase.
This tool provides you with advanced analytics you can use to track and optimize the performance of your campaigns.
Pricing: free – $5
The tool uses AI to select the most relevant products to show. To do that, it uses contextual information, click-through rate data and social interactions to determine the best items to recommend.
You also have the option of picking product recommendations manually to further increase your conversion rate.
Pricing: free – $70/month
- Boost Sales – Upsell & Cross-sell in one app
This app allows you to make upsell and cross-sell offers for your customers.
You can also create bundles and motivate customers to buy several products that match each other, like a dress with shoes and a bag.
You can also use the app to offer more expensive models of the same product.
Product recommendations for upsells and cross-sells are made automatically based on your customer’s browser history and the pages he has visited on your site.
Pricing: Free – $29/month
- Product upsell
This app allows you to offer add-on items relevant to the products your customer is currently buying.
You can upsell a single product or multiple products based on the item that has been added to cart.
If your customer is about to purchase a camera, you can upsell him a memory card, but if he’s about to buy a notebook, you can upsell him a laptop case, a cooler and a mouse.
Pricing: $9.99 – $59.99/month
Upselling is one of the most powerful ways to increase your eCommerce store’s revenue!
People have already decided to buy from you, so why not offer them a better product or an add-on that goes well with what they’re already purchasing?
And, honestly, it’s not hard to do, at all. Just get started now, and you’ll definitely start to see your income grow.
Do you currently upsell to your eCommerce customers? How effective are these strategies for you? Let us know in the comments below.