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How To Use Ecommerce Upselling To Increase Your Profit

09 Jun 2016

Many ecommerce store owners are familiar with the concept of cross-selling, which is why online shoppers often find a 'related products' or 'people who brought this item also brought' section located on a product details page. The idea behind cross-selling is that if a customer is viewing a particular product that might not be quite right for their needs and that a related product might be the one that captures the sale, or that because they've purchased a winter coat for example, that they probably need a scarf or a hat to go with it.

It's a sound strategy and for many businesses, especially those that offer free shipping over $x, it's a good way to make additional profit on a sale. The effectiveness of cross-selling depends on how it's implemented and what your ecommerce store sells, but what is interesting, is that according to PredictiveIntent research upselling techniques can be 20 times more likely to make you profit compared to cross-selling.

What is upselling and how does it work?

The idea behind upselling is that you are trying to increase the amount a customer spends, but instead of focusing on selling them another product, you are focused on improving the product that they have already decided to purchase.

The difference is this (using selling televisions as an example):

Cross-selling:
A customer adds a TV to their cart. Your ecommerce store shows them other items which might be helpful such as a DVD player, home theatre system, cables etc. The problem is that a customer may already have these items, may not understand why they should have them, or they may be outside of their budget. But you may just capture a customer that hadn't intended to purchase an additional item, who now has.

Upselling:
A customer adds a TV to their cart. Your ecommerce store shows upgrades which are specifically designed to improve their experience with their new product. You aren't asking your customer to purchase a different item, everything is purely intended to enhance the product that they've already decided to purchase.

What you need to know before you implement upselling

  • It won't work for every product. In order to upsell a product there needs to be a clear distinction between the standard version and the 'luxury' version.
  • It works best when you clearly explain what the benefit of upgrading is. For each upgrade, make sure you say what is standard and why the upgraded version makes your customer's life better, simpler or faster. Otherwise you are just asking your customers to spend money and without knowing why they should, they're far more likely to ignore you.
  • Don't go crazy with options - otherwise your customers will abandon their carts! Stick to 1-3 upgrade choices, with 2-3 options in each one.
  • Make sure you keep in mind the original price of the standard option and keep the upgrade costs relative. For instance if a customer purchases a double bed for $1,500 then they are probably okay with spending an extra $100-150 (6-10%)  to upgrade to a queen size if you explain how much additional space they'll get. But if they're purchasing a $25 desk fan, a $100 upgrade (400% increase) so it can also heat isn't likely to go down that well because they could probably purchase a heater for cheaper any way.
  • Make sure that you introduce it into your ecommerce store with thought - it needs to be placed in the right part of your site to make sure it increases conversions and it needs to be introduced in a way that won't frustrate customers or make it harder to purchase from you.

If you have any questions about upselling or cross-selling and how it can work to create a great ecommerce store, please feel free to contact us; we're happy to chat about what we can achieve for your online store.

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