What is Upsell?
Upsell (OTO – One-Time-Offer) – An offer that is presented after an initial purchase by a customer. This is a one time chance to get an upgrade, more valuable content, or a more valuable product that is only offered to those who purchased the first product and at this specific time.
Upselling is a sales technique aimed at persuading customers to purchase a more expensive, upgraded or premium version of the chosen item or other add-ons for the purpose of making a larger sale. ECommerce businesses often combine upselling and cross-selling techniques to increase order value and maximize profit.
Why Is Upselling So Important?
Although sales techniques tend to invoke negative feelings in us, when done right, they can improve our shopping experience. Online retailers rely heavily on upselling and cross-selling techniques for several reasons:
- Upselling helps retailers build deeper relationships with customers. Upselling is not a dirty tactic if you put it into perspective. If it focuses on helping your customers ‘win’ by suggesting premiums, upgrades or add-ons that will eventually deliver more value and make them feel like they got the better deal, it will turn out to be a customer happiness tactic that also generates additional revenues.
- It’s easier to upsell to existing customers than to acquire new ones. Lead generation is an expensive practice. It is much easier and cheaper to optimize the sale to a customer who already trusts you and has bought something from you in the past or is about to make a purchase now than to sell to a new prospect who has never heard of your brand. As we mentioned before you have a 60-70% chance of selling to an existing customer and only a 5-20% chance of selling to a stranger. It’s an easy win for a lot of eCommerce businesses on a mission to accelerate their growth and improve the bottom line.
- Upselling leads to increased Customer Lifetime Value (CLV). Customer Lifetime Value is the net profit contribution a customer makes to your company over time. You can split your customers into three main categories: not profitable, profitable and very profitable. Higher CLV means each customer generates more revenue for your business without you having to invest anything extra, which also means your company has more money to spend on acquiring new customers. Upselling is one of the most effective ways to turn shoppers into very profitable customers and keep them coming back.
- Customers come back for more. Upselling is unique in the way it adds value to customers that makes them want to come back for more. By creating an easy way to make life straightforward for customers you are ensuring that they will return in the future if they need more of what you are selling. Be sure to offer great customer service along with your upselling efforts to guarantee happy customers no matter what happens.