Upselling
Upselling can be a differentiator for employees, customers, and your businesses growth. Find out what upselling means, and how to get started.
What is Upselling?
Upselling is when a brand persuades a customer to purchase a higher-priced version of the item they intended to buy. Upselling can happen in-person, online, and in all price categories. The barista at Starbucks who convinces you to go for Venti instead of Grande upsells. So does the airline website that gets you to upgrade from economy to business with a good deal.
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TWILIO ENGAGE
A growth automation platform
Scale your growth strategy with a blend of automation, communications APIs, and real-time data.
Why is upselling important?
Upselling increases revenue. But that's not the only (or most important) rationale for using this sales tactic. Here are the three main reasons why upselling helps your business.
1. Upselling creates value for customers and loyalty for brands
Upselling works when you suggest an upgrade that better addresses your customer's needs – despite the higher price tag.
When you provide these recommendations at the right time and to the right customer, they'll feel understood, which increases trust and loyalty. But this isn't exactly a simple task – today, customers use a variety of channels and devices to interact with a single brand. Meaning, it's much more difficult to know when (and where) customers will be most receptive to your offer.
To help, customer engagement tools like Twilio Engage can orchestrate multi-step, multi-channel customer journeys that adapt in real time based on people's behavior. (We've included a sample Journey below, which demonstrates a flow for converting free trial users to a paid account.)
2. Upselling is easier and cheaper than customer acquisition
You can only upsell to someone who has or is about to buy from you. By definition, such customers trust you and need your offering. Otherwise, they wouldn't be purchasing. Convincing them of an upgrade that better meets their needs is easier than finding and selling to someone who has never heard of you.
You'll also have more relevant data on existing customers, which will help you propose the right upsell option. Even prospects who are about to make their first purchase might have already left some data you can use, for example, other product pages they've looked at before proceeding to check out.
3. Upselling increases revenue and LTV
Finally, upselling naturally brings in more revenue, as the customer buys a higher-priced option than they intended. But the benefits transcend that one sale.
Upselling increases loyalty – see point one above. Loyal customers stay with your company longer and spend more, so the practice also improves Customer Lifetime Value (CLV or LTV).
Frequently asked questions
The customer buys a more expensive and expansive version of their original item when you upsell. When you cross sell, they buy another product that complements or relates to their initial purchase.
To return to the barista from earlier on: going from Grande to Venti is an upsell. Recommending a cake with your coffee is cross-selling.
Upselling quickly turns into overselling, and then all its benefits disappear.
A customer's experience sours when you push a more expensive option they don't need – they might not return or even reconsider their original purchase.
Other forms of overselling are presenting the customer with too many options or ones they can't afford, even if those upgrades meet their needs.
The best way to upsell is to know all you can about your customer and products. Such knowledge allows you to operate as a kind of matchmaker between the two, offering the perfect recommendation to a customer when they need the upgrade and can afford the higher price.
A Customer Data Platform like Segment helps you make such perfect matches. You'll have as much information about your customers as is available and appropriate. And with features like Journeys, you can make personalized offers to the right audience segments at the right moment in their customer journey.