eCommerce has changed dramatically through time. The old things have passed away; behold, the new things have come like new selling techniques or new marketplace. However, when it comes to growing revenue, some old selling techniques remain an enormous power.
A typical example is upselling.
In this article, we explore what upselling is and discuss the benefits of the sales technique and how you can harness the strategy to grow your eCommerce business.
What is Upselling in eCommerce?
When it comes to improving revenue, many companies are tempted to jump to marketing to generate new leads and encourage sales. But some have just found it’s not always a wise strategy to reach new customers and drive sales transactions from them.
The current customers, indeed, are the valuable market that is worth more effort in the eCommerce business.
So, what does upselling mean?
Upselling is a sales technique to persuade customers to purchase a more expensive, upgrades or premium version of the original purchase they have made or other add-ons aiming to create a more massive scale of sale. It is a common practice in both B2B and B2C businesses.
For example, when you use the free version of Spotify, a music platform, it suggests you upgrade your account to premium to continue streaming music with more functions like no advertising involving paying a fee.
Another example is Magento extensions, which are a great way to optimise your Magento store. These applications are usually developed with two versions: standard and professional.
The standard version with the most basic features you can buy at first, but the advanced features that your online store needs to maximise its performance is only available in the premium version. In this case, unlocking the premium one is unavoidable.
At a typical eCommerce website, it's common to see “Related Products” or “You may like this” blocks in which other items show up after you place the order of a product.
Online stores use this feature which is available in their store site or generated by an extension to upsell or cross-sell effectively to boost their revenue.
Upselling vs. Cross-selling
In general, both upselling and cross-selling are excellent sales strategies to increase revenue by retaining existing customers, providing additional value to customers.
Though the performing of each method is different, it’s easy to confuse upselling with cross-selling. You need to understand each type and their differences to implement them properly into your business.
Mainly, upselling is more about trading up to a better version of what is purchased.
With cross-selling, you offer customers related or complimentary items or services.
When adopted correctly, upselling and cross-selling are mutually beneficial, maximising the value of customers’ purchased products and driving revenue for stores without the additional cost of many marketing channels.
The most simple and easy-to-understand example to distinguish upselling and cross-selling is Mc Donald’s. If you ever come to Mc Donald’s stores, you may hear “Would you like to Supersize that?” which is a tried and tested upsell.
And, “Would you like fries with that?” is a cross-sell. The first one adds more to what you order, and the other offers a different but complementary product.
Besides this, another popular selling technique in eCommerce is bundling.
Bundling is the practice of combining main products and auxiliary items together in a package or combo usually used along with discounts. Bundling helps you raise the average number of the order value and generate more revenue for your eCommerce site.
There are two common types of bundling: pure bundling and mixed bundling.
Benefits of Upselling
Before diving into how to utilise upselling for your eCommerce store, let’s take a look at the reasons why you should use upselling.
The more products a customer buys, the more money your company earns, that’s no secret.
Upselling is not just to retain your existing customers. It is better to help customers win when purchasing from your website by offering premium, upgraded version, or useful add-ons that will maximise the value of original items.
This technique turns out to be a tactic that enhances customer experience and happiness.
Furthermore, it helps build a good relationship with customers, especially for retailers, to gain customers’ trust. Once customers trust you, they are willing to make a considerable investment with you. In other words, your upselling strategy is worthwhile for them. Eventually, it generates more revenues and profits for institutions.
Increase customer retention
Upselling is an effective way to increase customer retention, which is right for your business.
Research completed by Frederick Reichheld of Bain and Company indicates that a 5% increase in customer retention leads to a rise in profits by 25 - 95%. No matter what industry you’re in, it is easier and cheaper to upsell to existing customers who already trust you and bought something from you before rather than new ones.
Through upselling, customers who feel that the company listen to their concerns and take care of their needs by offering relevant, useful products will have more reasons to stay.
Increase the customer lifetime value (CLV)
Customer lifetime value (CLV) is one of the most important metrics to measure how valuable a customer to your company. Or, it is the prediction of the net profit a customer contributes to your company over their lifetime relationship with you.
Because it is easier and cheaper to retain existing customers than it does to acquire new ones, it is essential to increase CLV of your existing customers to stimulate growth.
The higher the customer lifetime value is, the greater the revenue you get without having to invest in extra things. By upselling, you will have more chances to convert shoppers into profitable customers and retain them.
Tips for Making Upselling Work in eCommerce
Limit customer’s buying options
When it comes to upselling, offering multiple options for customers will not help increase a sale more. Instead, customers might be confused and find it difficult to make a choice. It’s better to keep upselling recommendations limited.
In the end, customers only buy what can solve their particular problems.
So, if you suggest several products that overwhelm customers while not having any feasibly useful solutions for them, they will give up on your upsell.
Keep in mind, that to make it simple, you should focus on pitching just a few but relevant, well-targeted and problem-solving recommendations. You can start with two or three alternatives and see which one works best for your audience.
Upsell products that already sell well
eCommerce upselling is quite a feat, mainly because it’s sometimes difficult to identify what products are relevant and how to price them.
That’s why upselling products that already bring good sales is a wise strategy.
It is easier for you to pick up upselling products based on your website’s metrics and sales. You can choose products that have high sales or products that are trending in your store.
There are some other factors you could consider when upselling such as the time of the year, special events or holiday to suggest customers’ relevant selections. For example, winter is coming, and you could offer heavier coats or more Christmas-themed clothes in December.
The checkout page is a great upsell opportunity
Have you ever thought about what your customer are looking at before they decide to spend money on your site? Do you think they would buy additional things before whipping out their credit cards?
It is possible that customers will make another purchase at the checkout process if you upsell the right products. Remember to recommend products with reasonable prices based on your customers’ cart value.
Amazon is an example of eCommerce businesses that upsells perfectly during checkout.
The marketplace not only show you related products, sponsored products, or items you have recently viewed on the product page or shopping cart but also upsells at every step of the checkout phase.
Amazon's upselling alternatives come up in the “Customers Who Bought This Item Also Bought”, “Customers who viewed this item also viewed” or anything else. It even displays the ratings of each product being upsold, so that you can make the right shopping decision.
Present reasonable alternatives
It is vital to upsell products reasonably as relevance is the key to your upselling success.
At this point, don’t mistake upselling for cross-selling. It will lead you to choose the wrong products.
For instance, if someone is buying a romantic novel, there is no use of suggesting them a book on marketing. Instead, you could offer them an audio version of the book they choose, or books with the same genre but a different author.
Research from Accenture shows that 58% of customers are far more likely to buy from a retailer that recommend them options based on their past purchases or preferences.
You can show customers the benefits of your products, that’s good for making the sale.
Sometimes, just bringing in products doesn’t make your upselling turn out well. Show customers why they should spend more and entice them to buy by your words. Remember always to keep your alternatives complementary but straightforward.
Run a/b tests
If your upselling strategy works well the first time, great. But if not, don't worry about it. Every successful process requires testing and optimising - and time.
Try two different upselling strategies and see which creates better results for your store, then stick with it for a while and monitor its success.
There are many advantages of A/B testing.
First of all, you will find the answers to questions raising when you start forming your upselling approach, like “Does the price satisfy buyers?” “Will this upsell excite enough customers’ interest to increase the average order value?” A/B testing, therefore, is an especially useful solution for pricing upselling products.
How to Upsell in eCommerce Effectively
Step 1: Install an Upsell App or Extension
You can configure your eCommerce platform to build an excellent upsell performance. But in case, it is not available on your site; you can install an upsell app or module from other providers
There are some popular options to build online shops like Shopify, Magento, WooCommerce, Prestashop and BigCommerce, take a look:
- Shopify: Product Upsell by Bold Commerce, One Click Upsell by Zipify, CartHook
- Magento: Who Bought This Also Bought, Sales Pop and Automatic Related Products by Mageplaza, Magento Fast Product Relator
- WooCommerce: Smart Offers by StoreApps, Booster for WooCommerce, Live Sales Notifications
- Prestashop: Smart Upsell in Cart Advanced, Upsell - Push on Cart, MyDream Match - Personalised recommendations module
- BigCommerce: Unlimited Upsell, Easy Upsell, Frequently Bought Together
Step 2: Choose Products to Upsell
As product recommendations can take up 10-30% of an eCommerce site’s revenue, putting the right products in your upselling is vital to the sales growth.
When upselling, you should provide customers with variants of your products that are more robust, feature-rich, or bigger than the original products.
Those recommendations necessarily complement the original choices. Upsell the products customers are interested in, not just the products you want to move quickly like long-time inventory items.
In B2B eCommerce, it is imperative as B2B customers are more likely to engage with businesses that have a deep understanding of their needs and help them deal with their challenges. Those who are trying to turn a quick buck, instead of providing what customers need, will not get a foothold in the upselling playground.
Step 3: Measure and Adjust
The last, but no less crucial step, is to measure, analyse your upselling and adjust.
If your upselling flops, have the confidence to try other products/approaches to find the best results. Always keep your upsell relevant by updating the trends, seasons, and changes in shopping behaviours of your customers.
Upselling may be complicated and risky, but you can make your life easier by relying on metrics and conversions on your site.
Google Analytics and Sumo’s heat map will be useful solutions for you to learn which products are trending, which customers click to view the most, and ultimately help you determine what to upsell brilliantly.
Track your upselling strategy and keep an eye on your stats.
And, if things don’t go well, try new offers.
The bottom line
It’s time to leverage upselling to grow your eCommerce business. Many big names like Apple, Amazon, or Alibaba have been using upselling and all are thriving in the industry. So can you.
This article already gives you a no-fuss guide and handy tips to perfectly upsell on your eCommerce stores. But, if you haven’t adopted this selling strategy, think about it. It’s better to experiment with your products.
Through real experiences, even the failed ones, we believe you will discover which upselling technique works best for your company.
Find out about the author
Avada Commerce is an eCommerce solution provider based in the heart of Vietnam where developers unite. Founded in 2017 by Mageplaza, Avada Commerce is responsible to complete the mission to help one million online businesses grow their revenue.