Upselling For E-commerce, How, When & Why
THE ART OF UPSELL
The art of the upsell is as old as commerce itself. From the days of the merchant selling you the cart to go with horse to the pack of gum next to the checkout stand to the ubiquitous "Would you like fries with that?"; these are all forms of “upselling”.
Upselling is simply a sales technique designed to make a sale more profitable by means of suggesting additional products and services that in some way compliment the item being purchased. When you think about it we’re actually surrounded by this technique and its many forms just about everywhere:
Car dealerships: extended warranties & pre-paid servicing
Supermarkets: buy one and get the second at half price
Electronics stores: HDMI cables, and surge protectors for flat screen TVs
… In fact, some stores sell the main product at little or no profit to attract customers and then rely solely on extra items upsold with it for their profit.
Upselling, as it pertains to e-commerce, is no different. We want to add to our customers cart total, thus increasing our profits! In fact, if you’re not offering some form of an upsell you’re missing out on potentially increasing 30-40% of all your orders.
Not all upsells are equal!
Knowing how, what, and to whom you should upsell is critical. Let us shed light on some best practices and guidelines to effective and profitable ecommerce upselling.
1) Less Choice = More Sales!
This doesn’t feel natural for most store owners, it’s in our nature to seek out choice and variety. The irony however is that when presented with too many options, it’s the choices themselves that actually scare customers away. The last thing we want to do is interrupt a customer's buying cycle by inundating them with too much information about products competing for their attention.
I own an online camera store; John has found my site and has decided to purchase a new camera from me. He proceeds to check out and is prompted with an upsell offer:
BAD UPSELL EXAMPLE
John is now offered a wide selection from all the memory cards you sell. There are so many types of memory cards in different formats and sizes John will feel overwhelmed and go back into “research mode” and quite possibly abandon the order he was minutes away from completing. John might not even take the time to review any of the options and completely bypass your upsell offer.
GOOD UPSELL EXAMPLE
Upon check out, John is presented with an upsell offer of 3 different memory cards. Each has a distinct price point and quality. This is know as the ‘good, better and best’ option. It allows John to make a quick decision based on how much more he is comfortable spending and what quality of product he needs. It drastically increases his chance of converting. The model of “Price Anchoring” in this way makes it easy for customers to identify with a product based on how they view themselves and quickly make a decision.
As a rule of thumb you should provide your customer with a maximum of 3 choices in your upsell offer… Good, Better and Best!
GOOD - The least expensive option appeals to people that see themselves as thrifty
BETTER - The mid priced option appeals to people that want a little better than the basic but don’t want to spend the money for ‘top of the line’ goods.
BEST - The highest price option appeals to people that see themselves as “high end” and also serves as a price anchor to make the “Better” option more appealing, and the “Good” option extremely thrifty.
Make it easy for your customers to choose a product and you’ll see bigger shopping carts!
The most important and overlooked part of creating an upsell is relevance. After answering emails, filling the orders and marketing, sometimes we forget that customers are not just numbers. The people considering upsell offers have likes, dislikes and unique shopping tendencies.
In a perfect ecommerce world we’d all slap a $100 upsell on a $500 purchase regardless of what it is and be successful. Unfortunately for us this is not the case.
I have a clothing store and Jane has a pair of new shoes in her cart. Jane is in a shoe shopping state of mind and has been looking for a couple days before deciding to buy from my store.
- If I upsell Jane a new hat after she has been shopping for shoes all week she’s going to bypass it and won’t think twice! A hat is not relevant to her purchase or state of mind.
- If I upsell Jane a new pair of socks to go with her new pair of shoes she’s she is more likely to add them to her cart. It’s relevant to her original purchase and current shopping state of mind.
Let’s take this a step further. Is she shopping for new running shoes, boots or just something casual? Offering her the right type of sock will help the upsell even further. This might be a simplified look at upsells and buyers logic, but as the old saying goes “don’t look for complexity where complexity does not exist”.
Review your current upsells and recent orders. Which upsells are working and what products are people buying together?
You can enhance your upsell conversion rate even more by:
- pairing relevant accessories with big ticket items
- testing, testing, testing
- offering “BoGo” offers on popular products
- thinking like your store’s average customer
- setting up tracking, analytics and surveying your customers after their purchases.
Targeting is another sometimes overlooked but highly important part of creating an effective upsell offer.
Targeting is defining a selection of customers for whom you are trying upsell products or services to. To make this clear we want to define the customer who is buying the product; not the product that the customer is buying.
Targeting can happen at the store wide level, product page, landing page and in marketing materials to name a few.
In regards to upselling products we want to target the customer who is buying a particular product and answer some key questions before offering an effective upsell:
Demographic: age, gender, income and occupation
Where are they from: down south values, hardy northerner or easy going from the west?
Level of familiarity: new user or seasoned pro
Life style: what are the likes and dislikes for the average customer buying this product?
These are only a few of the possible questions you may want to ask when targeting an upsell offer for a product.
Going back to our camera store example: Our store offers only DSLR cameras and compatible lenses and accessories; no point and shoots, film or vintage products.
John has decided to purchase lower cost ABC brand camera that would be considered “entry level”. We answer a lot of emails regarding entry level cameras and the right accessories to get as well as defining the more technical specifications.
From this we can gather that John is probably new to DSLR photography; could be younger (likes parties, friends and art) or just over prime age (likes recreation, grand kids and is family oriented). We also know that he has picked the ABC brand instead of the XYZ brand.
With this information we can craft an upsell that offers ABC brand products like:
an extra lens for the younger crowd (variety, artistic use and experimentation)
a tripod for our older crowd (still life, family portraits and general photography)
- a starter kit pack with accessories and spare parts
We can track and analyze sales and conversion on our upsell and further optimize it based on what is selling and what is not.
Targeting is all about knowing and defining your customer; the more interaction and relationship you can build with your customers, the further you can improve your upsells, sales and profit.
As the average store owner, we do not have the advantage of industry leading resources and spectacular algorithms to automatically choose relevant and targeted offers to present to our customers like the ecommerce giants out there. However, we do have the distinct advantage of knowing our customers; We are more personal with them in our communication. We find out who they are, where they come from, their likes and dislikes, and individual buying preferences. When crafting an effective upsell offer it’s our job to leverage these advantages to not only drive the bottom line but leave the customer feeling satisfied with their purchase and wanting to return.
Upselling products is used in nearly every industry, wherever the sale occurs, whether it’s at the brick and mortar location, from a door to door pedlar or online. Upselling is extremely useful when it’s planned, relevant and targeted at the customer who is buying a product.
Sell, Target, Upsell, Profit, Happy Customer and Repeat.