Even if you haven't heard of the term "upselling", rest assured that you have been upsold before. Have you ever been asked if you'd like to add:
A drink to your burger order?
Insurance to your smartphone purchase?
An aftercare spray after getting a new piercing?
All of the above are examples of classic upselling. Every industry has options for upselling, and it can be a great way to get a customer to spend more on their purchase. However, upselling can be disreputable if done merely for the sake of emptying out more of your customers' wallets. It should end up benefiting both parties and helping customers reach their end goals.
Upselling is suggesting the purchase of an additional product or service that would make the original product or service more expensive.
It's important to know the difference between an upsell and a cross-sell. Cross-selling is suggesting the purchase of an additional product or service to be combined with the original product or service. For example, rather than offering AppleCare+ coverage to an iPhone purchase, cross-selling would be offering a MacBook or Apple Watch in conjunction with the iPhone.
While both have their benefits, we'll be focusing on upselling in this post as upselling is 20X more effective than cross-selling. This is likely because it's easier to prompt a smaller purchase to make the original purchase even better, rather than prompting the purchase of an equally or more expensive product in conjunction with the original.
7 Steps for Upselling Your Customers
1. Learn about their motivations and goals.
No matter what purchase a customer is making, they are doing so due to an intrinsic or extrinsic motivation. For instance, when someone buys an iPhone, perhaps it's because they genuinely enjoy the product and want to own it. Or, maybe, they want the latest iPhone because their boss encouraged them to buy it or because everyone else has one and they want to fit in.
Understanding the motivations behind the purchase can tip you off on whether or not an upsell is beneficial to the customer. In addition, you should always discuss with your customer their goals. What do they hope to accomplish with their new product? Why are they choosing this model over another? Having them answer such questions can give you a good sense of what might be a good option for an upsell.
2. Identify the customers who can actually benefit from the upsell.
Based on the motivations and goals of each customer, you can begin to decide which customers will find value in an upsell. You never want to push an upsell on a customer who really doesn't need -- or want -- it. This will just annoy and deter them from making future purchases. You have to be able to build a valid case on why the upsell is a good decision for the customer.
However, take note of those who show signs of benefiting from an upsell. For instance, if a customer says they're purchasing a new iPhone because they cracked the screen on their previous one beyond recognition, that might be a good reason to prompt upselling AppleCare+ coverage. Purchasing the coverage can help them in their goal to protect their new phone from damage and ensure it lasts longer.
3. Do your research.
It's not enough to simply tell a customer they should purchase the upsell. Imagine you're already spending $999 on the brand-new iPhone model, only to have the customer service rep immediately tell you that you should purchase a $199 AppleCare+ coverage, too? You're a fairly careful and coordinated individual; you don't need to spend so much on support and damage insurance.
By collecting data, you can prove a great argument in your favor to your customers. Perhaps, you may include some statistics from this infographic based on a Motorola study, which states that 50% of people around the world have experienced a cracked smartphone screen and that 42% of smartphone owners globally claim that the biggest barrier to fixing cracked screens is the high expense.
By dropping statistics like that on the customer, they can't help but have their attention perked. If the cold hard data is in favor of the upsell, it's difficult for them to say no. After all, it's better to be safe than sorry. They know they can trust you because you're looking out for what's best for them and not just trying to get more bang for your buck.
4. Persuade them by setting up a plan.
You've done your research, and you've built your case. Great. However, the last thing a customer wants is for you to jump in with ten reasons why they need to purchase an additional product or service from you. This will overwhelm and, possibly, put them on the spot.
Instead, approach the topic as another step in their path to success. Don't just tell them; show them why the upsell is an investment in their future. Convince them that it could be detrimental if they don't make the purchase, but do so because it's true and not because you want to manipulate them. If you genuinely believe the upsell is going to help your customer lead an even more satisfied life and get closer to reaching their goals, then it should be obvious to them, too.
5. Be honest about the costs.
As great as this upsell is, in your eyes, it may not be so great for your customer's budget. There's no point trying to sugarcoat the price. It will only make them suspicious of you if you try to mask the real cost of the upsell.
Instead, lay it all out. Tell them exactly what the additional costs will be, what they go towards, and how it will alter their final purchase. Also, though, tell them exactly what values they will receive for their costs, and what the costs may end up being if they don't invest in the upsell at this time.
For instance, purchasing AppleCare+ coverage for an iPhone X is $199. This includes coverage for up to two accidental damage incidents, with each subject to a $29 service fee for screen damage or $99 fee for other damage, plus tax. If you don't purchase the AppleCare+ coverage, you may be paying a couple hundred dollars to repair each accidental damage incident. This price breakdown is honest, but also shows the customer the risks involved with turning down the upsell.
6. Show proof from past customers.
Customers trust other customers more than they trust employees. There's a sense of camaraderie and belief that customers will know what's best for each other. If they're still skeptical after hearing the data, the plan for success, and the honest pricing breakdown, a word from a fellow customer might just push them over the edge.
If you have any customer testimonial videos lying around, this is the perfect opportunity to use them. Customer testimonials are a genuine way to spread the positive aspects of your companies that loyal customers love. Suggest to your customer that they watch some of the testimonials on your website, or email them a few to get them thinking on their own time. Be subtle; you don't want to push too hard. Instead, frame it as you gently nudging them in the right direction.
7. Reflect on what went right and wrong
Once you've -- finally -- closed the deal on the upsell, you'll probably be feeling ready to celebrate. It's a huge accomplishment and one that will profit both you and your customer. However, as with any customer interaction, there are strengths and weaknesses. There's also room to improve for next time.
Make sure you put aside time to reflect on your process of upselling your customer. Was your research sufficient? Could a more well-structured plan of success have convinced them earlier on? Did you ever feel like you were over-pressuring your customer? These kinds of questions, as well as a careful record of the process, can help you build a more efficient and effective upselling process for the next time. The more you practice, the better you'll become and the more customers you'll satisfy.