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What is Upselling?

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  • Written By: Sheri Cyprus
  • Edited By: Bronwyn Harris
  • Last Modified Date: 31 July 2014
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Upselling is a sales technique designed to increase the sales invoice. It’s an important business concept as it requires sales people to not be order takers, but instead be active sellers. Upselling involves promoting upgrades or add-ons to customers that are extra purchases and increase sales. When you upsell you offer the customer another product for purchase.

As the customer wasn’t planning on purchasing the product, but instead is ready to pay only for what they’ve already decided on, the salesperson must use effective strategy. It’s up to the salesperson to make the customer see why he or she needs to buy the extra item(s) immediately. The reason that strategy is everything in upselling, is that without it, asking the customer to buy more than planned just comes across as a high pressure sales tactic.

Incentives are crucial features of upselling. Incentives such as a discount and/or free shipping give the customer good reasons to purchase something extra right away. For example, the "buy one, get one" (BOGO) incentive works well to increase sales in many industries such as fast food and fashion accessories, whether the offer is to get the second item for 50% off or for free. Free shipping is often a good way for web-based retailers, or "e-tailers," to encourage consumers to buy extra items, such as by offering free shipping on all orders that total a certain minimum amount.

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In addition to offering incentives, pointing out the benefits can also help convince a customer to add more onto their original order. For example, will buying one or two extra items now save a substantial amount of money on high repair costs sure to occur down the road? Or does bulk buying now allow not only for a lower price, but also the convenience of not having to re-order so often?

Understanding the customer and the psychology behind buying additional items is essential to effective upselling. Do the math and give the customer the exact amount of money he or she would be saving by buying now rather than waiting. Show him or her why that represents a significant savings that can't be put off. Whatever your incentive offer is or whatever the particular benefits to buying extra now are, show the exact details of these to your customer. Above all, when planning your upselling strategy, think about your customers and what exactly would make them want to add on to their planned order.

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Discuss this Article

mutsy
Post 5

@Latte31 -I agree with you. The only time I don’t want to hear all of those offers are when I am on the phone.

For some reason when I call a company to order something over the phone, I already did my research and know what I what to buy. I don’t need to hear about magazine subscriptions that I can save on or any additional offers.

I just want to place my order and get off the phone. The standard upsell won’t work with me because I just tune out the offers.

However, if I am in a store, I am more open to hearing about the offers and will usually take advantage of the promotion. I think it is due to the fact that the promotions within the store make more sense to me than the offers I receive over the phone.

latte31
Post 4

@Cafe41 - Wow that is pretty awesome. I have to say that some people feel uncomfortable offering customers more products or trying to get the customer to buy more, but if you change your prospective it is not difficult.

I think that some people in sales positions feel that they are bothering the customer by offering them more, but in reality they are just giving them more options. Sometimes people do have a set budget and know exactly what they want, but most people don’t.

If you can explain the value of buying more and it makes sense then the customer might buy. All I know is that if you never ask a customer to buy more you will never be able to sell anything.

Upselling skills improve by asking everyone that walks in the door because the more practice that you have the better your delivery will be..

cafe41
Post 3

GreenWeaver - I used to work in the cosmetics field and we had to learn how to upsell constantly in order to learn how to increase our sales. Most cosmetic companies do a combination of cross selling and upselling.

For example, if a customer were to come in for a lipstick, the consultant was trained to get the request for the customer, but then offer to show her a three minute eye demonstration. If a customer agrees the consultant will then demonstrate the concealer, the eye cream, the eye liner, the eye base, the eye shadow, the mascara, and the brow shaper on the customer.

This upselling technique can upgrade the sale from $20 to $140 in a few minutes. If the customer is open you can also discuss skin care needs which are really what the cosmetic companies want because it gets them back to the counter to replenish their skin care products.

Makeup does not have the same results because people can buy makeup anywhere. If you introduce skin care then the potential sale can go from $20 to $240 in a manner of minutes. I always used to tell my consultants that the more products that you show a customer the higher the chances that she will buy more from you.

The upsells and cross sells directly impacted the average unit sale which was something that the cosmetic company tracked for all consultants. My average unit sale was $46 while the company average was $25; this is why I was promoted into a sales training position.

GreenWeaver
Post 2

I wanted to add that I have worked in sales all of my life and most companies train their sales people with scripts to improve their upselling skills and track the results when selling over the phone.

Usually the standard upsell is scripted on the screen and the representative just has to read the offer to the customer.

It is usually offering a better product that has more features or even offering a house brand product. I was surprised that a particular office supply store considered one of their house brand products an upsell but I was told that it is because the company gains more profit when you buy one of their house brand products.

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