What Does Upsell Mean?
To upsell means to encourage customers to purchase additional, complementary, larger or more expensive products and services than they had originally intended to buy. By doing so, the business can improve sales revenues, profits and profit margins.
Though that may sound like it benefits only the seller, it also can benefit customers. The following story illustrates...
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Upsell, Downsell and No Sell
My husband is an avid (rabid?) motorcyclist, owning multiple motorcycles of various riding styles, including some imported specialty models. Sometimes he tries to save his motorcycle hobby funds by buying smaller and/or different models than he really wants, feeling that he can make do.
So on one recent motorcycle, he purchased one that was a scaled down version of a fully loaded and more expensive model. He reasoned that he could just purchase aftermarket accessories and add them as he went along. Hundreds and hundreds of dollars of accessory purchases later—which necessitate service calls to the dealer about 60 miles away—he realizes that he actually spent just about as much on the stripped down model plus accessories as he would have just purchasing the fully loaded version at the outset. What a hassle!
The brakes on one of our vehicles were making a racket and I drove it in to a local brake shop. After the car was put on the lift, the attendant came back and said that the front brakes were quite worn and would need to be replaced. That was fine. Had the job done and didn't think about it again until I brought the car in for scheduled oil change and maintenance at the dealer a little over two months later.
Drove the car to the dealer which was about 20 miles away (but their dealership is so worth it!). After the servicing began, the service rep came to chat with me and said that the back brakes were almost completely worn. In fact, the left rear brake would have to be replaced within the next 1,000 miles for safe driving. What? I just had the brakes done. Told the dealer to just give me a quote and I wanted to check the paperwork from the brake job done just over 60 days prior. There is no way there could have been that much wear in that short amount of time.
When I got home, sure enough, the invoice was for only the front brakes. The local shop didn't even check the back brakes, even though I told them I wasn't sure what was wrong or what was causing the noise. The shop could have DOUBLED their sale with me if only they had thought to upsell me on all four brakes.
Think I went back to the local shop to have the back brakes done? No way! I trekked it to the dealer who was looking out for my best interests.
These are occasions where the sellers would have helped serve the customer better by upselling to offer what really met the customer's needs and wants.
Good Read on Customer Buying Behavior
Although there may be other opportunities to do it, upselling is usually done during a sales transaction. The reasoning is that the customer already is in a buying mood and motion, so they are primed to spend more.
Here are some common examples of upselling:
- Restaurants. Wonder no more why a server always suggests side dishes, desserts, appetizers or drinks! Upselling in restaurants can add as much revenue as another entrée to the order, with no additional advertising effort.
- Retail. A store may advertise an item at a low, low loss leader price. But when the customer is at the store, they will see a display of more expensive versions of the same product or an alternative product to encourage sales of these higher revenue items. Click here to learn more about loss leaders.
- Automotive. Car buyers may wander into a dealership with a specific make and model in mind. The dealer may also show buyers upgraded models with additional features and benefits. Warranty purchases could also be used for an upsell opportunity.
- Services. Salons, car detailing, computer software... services of all types are prime candidates for upselling. There's usually a basic service package with an upgraded or deluxe package that includes additional services and/or longer service periods.
In all of these cases, the customer is already there and in the buying process, so no additional marketing or advertising is needed to encourage sales. What is needed is astute sales or customer service personnel who can tune into what customers really want and then match that with an appropriate purchase—regardless of whether it's the standard or upsell offering.
For more insight into customer buying behavior, read Predictably Irrational by Dan Ariely.
What do you think of upselling?
The type of upselling techniques used depend on the type of product or service and its selling environment. Here are some common examples:
- Restaurants. The server staff must be trained to be salespeople for the restaurant, automatically suggesting additional menu items when taking diner orders. These server suggestions can be reinforced by a variety of in-restaurant and on-table promotions including: standard or electronic billboards and signs, table tents and menu inserts.
- Retail. As with restaurants, in-store signage and displays can help customers choose upgraded selections. At checkouts, add-on items can be displayed for easy adding to customer carts. Learn more about why location of these items is important in How to Choose a Method of Advertisement for a Business. For online selling, a page during the checkout process can show items that can easily added to the order prior to submitting payment. Click here to learn more about transitioning offline to online sales.
- Automotive. Sales and service personnel are usually the key drivers (no pun intended) in encouraging purchase of upsell features and services in automotive. Sales training is recommended.
- Services. Whether the service is purchased offline or online, before the customer confirms the order, sales or service personnel should make an offer for upgraded or additional services prior to the rendering of service and payment. As with restaurants, in-store and other promotions can be used to encourage these sales. For online selling, a separate page or pop-up window during the checkout process can offer these upsell services. Another popular way to upsell, particularly online, is using the freemium sales model which offers a free or low priced service with the option to upgrade for more benefits. Click here to learn more about the freemium business model.
Realize that upselling techniques don't work on all customers. But remember, those who don't ask for the sale, don't get the sale! It doesn't hurt to try.
Disclaimer: The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.
© 2014 Heidi Thorne