Guide

Upselling techniques to increase revenue and profit

Upselling techniques invite customers to upgrade their purchase, which can create better outcomes for you and them.

A person circling data on a graph.

What is upselling?

“Would you like fries with that?” If you’ve ever answered “yes” to that well-known question, then congratulations, you’ve been upsold to.

Upselling techniques encourage customers to consider bigger purchases by choosing a more expensive item, or buying extra items.

The purpose of upselling

Upselling strategies help increase revenue and – seeing as the margin is usually fatter on expensive items – it often improves profitability, too. (You can stay on top of profitability with software like Xero.)

When done right, upselling should also benefit the customer. The idea is to give them a higher-spec product or service that better suits their needs and delivers more value for money in the long run.

Upselling takes advantage of the fact that it’s always easier and cheaper to retain your existing customers by understanding their needs, than it is to attract new ones.

Different types of upselling and cross-selling

  • Premium products or services: Moving a customer from a basic product or service to a premium one at a higher price
  • Cross-selling opportunities: Selling related items that a customer may need to support their first purchase, such as batteries for a game
  • After-sales service: Signing customers up to additional paid-for benefits, such as installation, training, maintenance, or recycling programs
  • Recurring orders: Setting up a standing order to deliver replacement products or service refreshes at set intervals

Upselling techniques

There are a range of techniques you can use for upselling your products or services to your customers.

Ensure you offer a premium option

Find out what your customers value most and ensure you offer a premium product or service that fits the bill. You can’t have an upsell strategy if there’s nothing better to offer. The upgrade needs to be relevant – not a whole different product.

Seek testimonials for the upsell product

Nothing works better than social proof so sell your upgrade with genuine customer reviews and testimonials. If the product’s new, you may need to initially offer it for free or at a discount in order to collect some quotes.

Highlight the comparative advantages

Create a pitch for the "upsell product" and tailor it to your customers’ core requirements. Make sure it cuts to the chase, is explanatory rather than aggressive, and graciously takes no for an answer.

Personalize the pitch to relevant customers

Use your customer database to find out who’s already bought the standard product. It may make sense to contact them about an upgrade or add-on services, or even just to flag the premium option for next time they buy. Consider a special introductory offer seeing as they’re already a valued customer.

Co-locate the premium product

Invite the customer to consider an upgrade by placing it next to the standard purchase. Make sure it’s highly visible and clearly list its advantages (but don’t trash the basic model).

Create pricing tiers

Services can be hard to upsell so offer clear levels to customers, such as silver, gold and platinum. That way, customers can easily see the option to upgrade.

Put a deal together

Make your customer an offer they can’t refuse. Put together an attractive deal by using strategies like these:

Introductory pricing for a premium product or service

A lower introductory price appeals to the desire for a good deal and makes the customer feel they have little to lose financially. By the time the offer’s over, the customer is hopefully sold on the advantages of the upgrade.

Offer extra assurances

The upgrade must make financial sense to the customer so, if the price jump is big, add in as many benefits as you can. Consider add-ons for the upsell product like extra guarantees, additional after-sales service, or a free maintenance period.

Bundling items together

Create a package of services or products at a "bundle price" to help nail a cross-selling opportunity. The bundle will typically be priced lower than the individual items would cost separately, which means you’ll take a hit on the margin of one or more items. But you can still do this while raising the overall revenue and profit of the sale.

Sometimes one or more of the bundled items are only available as part of the package. This can help to move less popular items with the most popular.

You can also invite the customer to build their own bundle by buying more than one item from, say, a clothing collection, makeup range or wine selection, with a discount for each subsequent purchase.

Services that are bundled could include:

  • a kitchen builder who also offers bespoke design
  • a website designer and developer who also provides maintenance
  • a veterinarian who offers a "check-up, full vaccination and neuter/spay" bundle for kittens and puppies

Free trial

Free trials are a great drawcard. There’s little financial risk to the customer if they don’t like the product or service and it’s a chance for the business to gather social proof, such as reviews and testimonials. The hope is that the customer’s hooked by the time they have to start paying.

Finance options

Upsells cost your customer more, which can put pressure on their cash flow. You may be able to help them by offering flexible payments that split the cost into affordable installments.

After-sales upsells

Upsell strategies can target that moment after customers have fallen in love with your product or brand. As time goes by, they may discover an associated need – like the fact that your handcrafted leather shoe can be complemented by cutting-edge protective equipment.

Since you now have purchase data and possible feedback, you should be able to tailor a pitch to pursue that cross-selling opportunity. So, try to interest customers in related products or services that complement their initial purchase, such as:

  • maintenance calls
  • training
  • disposables (such as detergent for window mops)
  • adjacent products (such as squeegees and hose attachments for window mops)

Measure your after-sales upselling performance and customer feedback to refine your offers and timing, so this becomes a continuous improvement loop and not a one-off event.

Upselling techniques don’t have to be sleazy

As you can see, upselling doesn’t involve hard-selling. If you know your customers well, you can build your case around real benefits for them. There’s still an art to when and how you approach the pitch but there’s no need to feel uncomfortable about it if you’re adding value for the customer, too.

Check out other ideas for revenue growth in the guide How to increase revenue

Disclaimer

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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