Upselling is basically the act of offering a more expensive option to a buyer in order to increase revenue. In sales generally, it has gotten a bad rep because of people’s bad experiences with it. Salespeople and even ordinary storekeepers have used it “unethically”. When someone persuades you into buying something you eventually feel is unnecessary, there is an immediate feeling of disappointment. This could cause you to distrust the person who sold you the product. As a business, you genuinely want to avoid this, because you want to keep your customer.
Firstly we should differentiate between upselling and cross-selling
In an upselling scenario, if I wanted to buy a smartphone, you could recommend buying one with a larger screen instead. While in a cross-selling scenario, you recommend buying a pouch and headphones in addition to the phone. In both scenarios, you end up making more money but if not done properly they could go wrong.
Here is how you know you are upselling the right way
1. You should centre your quest to increase revenue around your customer
Studying your customers helps you a great deal. From the moment a certain customer walks into your place of business, there are things you can learn that help you serve him/her better. Needless to say, if you run a business even if it semi-professionally, you know a happy customer makes for a good business.
Categorizing your clients as well can be of help. For example, if you study your customers well enough and how they interact with your product you can tell them apart even from a phone call. Taking note of their behaviour and your conversation can help distinguish someone who wants something he can use for now from someone who wants something that will last a long time. In your process of making a sale and/or recommending a more expensive product try to ensure you tailor your recommendation towards what you feel might best suit the customer. The main thing is this. If you’re thinking about the customer also, rather than just trying to make a bigger sale, you’re upselling properly.
2. You should be able to identify new markets and in turn increase revenue
In the process of upselling, you can take note of a few patterns. Again you will need to study your customers closely for this. Their buying process and behaviour can help identify new products or services you didn’t even consider previously. Like in the example of the smartphone, if you have recommended the headphones to a number of clients and they seem quite happy with the purchase, even though selling headphones isn’t your primary business, you can add it to your revenue stream.
3. Upselling should help with customer retention and acquisition
This process has turned customers away they felt they were sold something they didn’t need. If your recommendations have actually helped out your customer they are more likely to keep coming back. In our scenario, you might now be able to offer a little discount when a customer buys the phone and headphone together. This can help you with your current customers and help get more customers. This, in turn, can help you increase revenue.
Your efforts to increase revenue should lead to business growth
In conclusion, upselling should have you thinking long term and not just short term. If you are following the process correctly, you should be thinking of things like expanding your product range and increasing your customer base rather than just making that one more sale.