Upselling can boost retail store revenue by up to 30%. If you’re not upselling products, you could be missing out on a significant amount.
Shoppers are also willing to spend more if they feel they’re getting a good deal, so it’s important to learn how to upsell the right way. But how do you make sure you’re successfully upselling?
What is upselling in retail?
Upselling is a sales technique where a retailer sells a more expensive product or upgrade to a customer compared to what they first came in for. This is usually done by emphasizing the benefits of the more expensive product, or by pointing out how it is a better value than the cheaper option.
Apple does this well on its product pages. When buying an iPad Mini, you will notice the website prompts users to choose the larger storage variant by saying:
“Plan ahead. Leave room for later. The more storage your iPad mini has, the more room you have to store digital content, now and in the future.”
This is a fairly convincing line and people who haven’t decided on the storage size yet may end up buying the higher storage version at a $200 premium.
What is cross-selling in retail?
Cross-selling is where retailers try to get the customer to spend more by offering them additional products that complement the ones they are already interested in.
Taking the Apple example further, the iPad mini will absolutely benefit from the accompanying Apple Pencil 2.
So they built it into the product choices before customers can proceed to checkout.
Since upselling and cross-selling are used together so often, it’s easy to forget that they mean different things.
Upselling vs. Cross-Selling: What is the difference?
In the above examples, you may notice that both upselling and cross-selling look pretty similar. They aim to increase revenue for Apple. But both of them do so differently.
Upselling increases the cart value by offering a product upgrade. Here, the product becomes more expensive with larger storage or features like Wifi+Cellular instead of just the Wifi option.
Cross-selling increases the cart value by recommending related products. Apple Pencil will add value to iPad users. Even if the customer chooses the lowest variant of iPad mini, an Apple Pencil will help them make the most out of it.
Why should you upsell to customers?
There are a number of reasons why upselling can be beneficial for retail businesses:
- Increase profits: Upselling can have a significant impact on your bottom line. If you’re not taking advantage of every opportunity to upsell, you’re leaving money on the table.
- Build relationships with customers: When done correctly, upselling is a way to show your customers that you value their business and want to help them get the most out of their purchase. This can help build loyalty and repeat business down the road.
- Low-pressure selling technique: Upselling is generally less intrusive than other selling techniques, such as hard-selling or high-pressure sales tactics. This makes it more likely to be successful with customers who may be turned off by more aggressive approaches.
The simple phrase heard at just about every McDonald’s—“Would you like fries with that?”—is an example of an upsell that has sold millions more fries each year.
11 tips to upsell in retail like a pro
You now know upselling can be a great way to increase your sales and boost your bottom line. But how do you do it without being pushy or annoying your customers?
1. Show, don’t tell
We process images faster than words. Look at the below copy from Pillow Cube and it is evidently clear how the pillow cube helps align the spine.
Visually demonstrating higher value for your upsells can help you get the additional revenue you’re looking for with each sale.
2. Understand the product you’re selling better than your customers
This may seem like a no-brainer, but it’s important to know your products inside and out before you can successfully upsell them.
If it’s a pillow, like the one in the above example, you must know all the different use cases, understand how customers use the products, and what the benefits are.
This makes it easier to suggest more expensive products by selling the benefits they would offer. Simply put, if you can’t explain why someone should buy a more expensive version of your product, then they probably won’t bother.
3. Ask relevant questions
Starbucks does it really well with its personal touch approach. Each barista is trained to sell upgrades. When you ask for a coffee, the barista begins with a series of questions that you may end up answering “Yes” to.
- Would you like to make it Grande or Venti?
- Want to add the whipped cream on top?
- For an extra dollar you can have an additional espresso shot, should I go ahead?
These questions make it easier to say yes than no for customers, thus increasing the order value for a single coffee. Given that Starbucks has a loyal customer base, it reduces the price sensitivity allowing the company to upsell more expensive products without lowering sales.
4. Use the decoy effect to your advantage
The decoy effect is when people make a purchase based on the comparison of two similar products, with one being slightly more expensive than the other. The more expensive product is the “decoy,” and is meant to make the less expensive product look like a better deal.
In the above example, buyers may find more value in the $125 and $149 products even though the price value is similar for all three. With the more expensive and better options available, the lowest-priced version does not seem like a bang-for-the-buck offering.
5. Don’t go overboard with price points
Looking at the rising revenue figures, you may consider raising the prices. But it’s best to test your assumptions before raising the prices. It can be easy to go overboard with pricing and put off your existing customers.
If you run an online Shopify store, you can run price tests with a price testing app like Dexter.
Since increasing the price by just 1% can give you a 10-14% boost in profits, it makes sense to raise prices gradually. Once you find the price where the sales volumes or customer happiness scores don’t suffer, you have found the optimal pricing.
At this point, if you still wish to raise prices, you would need to add more value through product sales—either through offering add-on products, improving the features, or making it better than existing competitors.
6. Offer loyalty rewards to keep customers coming back
Starbucks has a loyalty program where customers get stars based on their spending in the store. With every added star, they’re closer to some benefits like a free size upgrade, free customization, or even a free drink and products.
This makes customers purchase more products from the store as every dollar spent brings them closer to the higher tiers of membership. It also makes upselling easier for the baristas.
7. Round off the total when possible
Strategic pricing involves finding the lower-priced product and offering an upgraded version for a rounded-off price.
For example, if you sell a lower-end laptop at $729, you can sell an upgrade that costs them $800.
We love rounded numbers so much that we’re almost always okay with rounding up to the nearest dollar. In fact, consumer psychologists say that the number of people who’d say yes to round up is very close to 100%.
8. Recommend your most popular items
Over 84% of customers trust online reviews as much as personal recommendations.
This makes sense from the customer’s perspective—if other people are buying it and finding value in the product, chances are you will too. Upselling the best-selling products can have a similar effect on your revenues.
Because the products have been vetted by your customers, other customers have fewer objections and are much more likely to say yes to the upsell.
9. Bundle your products
If you have found your optimal pricing as mentioned in point #5, you can start bundling products up. For example, Dollar Shave Club offers a large variety of product bundles helping customers reduce the number of recurring purchases they need to make.
By offering shaving cream and additional blades, Dollar Shave Club raises the perceived value of the product. They can offer these bundles as checkout upsells and raise their average order value almost instantly.
10. Reward customers when they increase their cart values
What gets rewarded, gets repeated. Offer an unexpected free gift or reward when a customer opts for an upsell. Conveying the reward is a choice you must make for your brand. However, a reward as simple as additional discounts directly applied to the cart value, free shipping, or a free product can go a long way.
Dollar Shave Club wants its average cart value to be over $20 and that is done by promoting free shipping for orders above that amount. This small nudge on the checkout page is enough for customers to round up their cart value to $20.
11. Add value with every upsell
When in doubt, think of a way to add value to your customer’s life. Would the upgrade be beneficial to the customer? If yes, convey the same without being sales-y. It’s better to put forth the available options and allow them to make the decision.
When the benefits of a higher-value product outweigh the one they currently have, it makes the customer happy while increasing the revenue—a clear win-win
Questions to ask before upselling a product
1. Is the product related to what the customer is already purchasing?
If you are selling a customer a piece of clothing, then suggesting they purchase shoes or accessories that go with it would be complementary and make sense. The customer is likely to be open to this suggestion as it will help them complete their outfit.
2. Would this upsell benefit them?
Only suggest products that will genuinely benefit the customer—otherwise, you risk damaging your relationship with them. If a customer is buying skincare products, for instance, then suggesting they buy a face mask or serum that will improve their skin’s appearance would be beneficial and could result in an upsell.
3. Is the customer okay with spending more money?
Some customers may be more price-sensitive than others and less likely to spend extra on additional products. In these cases, it is important to gauge whether the customer is interested in purchasing extras before making any suggestions. If they seem reluctant, then it may be best not to attempt an upsell as you are unlikely to succeed.
Top 3 must-have Shopify apps for upselling and cross-selling on your online retail store
Upselling is an important selling strategy that can boost your sales and profits. But, they can be difficult to execute without the right tools. Here are three great Shopify apps that can make upselling easier.
Think of the candies and ice cream kept right at the checkout counter in a retail store. This small change makes customers add more products to their cart impulsively.
AOVBoost is a powerful Shopify Plus app that replicates the impulse purchase behavior on your Shopify store. It allows you to show additional products or upgrade options right before the pay button.
Customers making the purchase may opt for the upgrade or additional related products displayed at the checkout thus raising your average order value—that’s what AOVBoost is for.
Bundling products can be hard with Shopify. You need to create product variants and keep them updated when you make changes to individual products. BoxBuilder makes things easier.
Once set up, you can create custom bundles that you offer on your Shopify store. Alternatively, you can allow customers to create their own bundles by pairing different products.
Box Builder makes making such bundles effortless for your customers.
You cannot rely only on assumptions for raising prices. The decisions need to be backed by data. Dexter is a powerful, yet extremely simple price testing app that allows you to test your prices before you finalize them.
Unlike most other AB testing apps, Dexter does not require you to create product variants or different pages on your store. It automatically changes the prices in real time for individual customers.
Also, with persistent cookie tracking, your customers always see the price they were shown the first time. And with continuous data tracking, you can get statistically significant data with just a few 100 visitors.
Become a retail upselling pro and boost your store revenue
Upselling is much more than selling more expensive products. When you upsell the right upgrades, customers know that you understand their problems and can trust you with the solutions.
When you upsell correctly, it adds value to a customer’s life, helps you build better relationships, and creates a loyal base of repeat customers. But remember that this requires an extremely strategic approach.
Knowing your customer’s needs better than they do, can help you upsell better solutions without sounding pushy. If you have an online store, you can get the technicalities of upselling and cross-selling out of the way with an app like AOVBoost.