What is Upselling?

What is Upselling?: it is a sales technique to improve the average price per customer, i.e. increase the average amount a customer pays to purchase a product or service. What is an upsell: explain the difference with cross-selling and the points that lead to success!


What is Upselling?

Acquiring new customers is essential for your business, but it is also important to use up-selling techniques from the perspective of persuading existing customers to buy as many as possible.

Therefore, in this article, we will explain the outline and purpose of upselling, the difference in meaning between upselling and cross-selling, which are often confused, and the points that lead to a successful upselling strategy.

Suggestion of high-end products and luxury products. For example, when a customer concerned about blemishes is about to buy a low-priced whitening lotion, we will suggest a high-priced whitening lotion with a higher whitening effect.

Bulk purchase suggestions

Encourage your customers to buy several items instead of just one. For example, suggest buying a set of 3 lotions. This is recommending a product of higher quality and higher price than the product the customer is about to buy.

Regular course information

Is to introduce a service that delivers products to customers on a regular basis. Upselling can be broadly divided into three patterns: "luxury or high-end item suggestion", "wholesale purchase suggestion" and "regular course guidance".

Here, we will explain each pattern using cosmetics sales as an example.

For example, if you explain to customers that there is a regular course service that delivers a new lotion when they run out of lotion, they can use the regular course if they like the lotion, sexuality will increase.

Purpose of upselling

The purpose of upselling is to improve customer lifetime value (LTV: Life Time Value), strengthen business models and improve operating efficiency .

First of all, improving LTV means increasing the profit that a given customer gives the company during its lifetime. With cross-selling, you can make your operations more efficient to increase revenue.

If it uses upselling, it can make a big profit by providing added value according to customer needs, such as enhanced functions, to customers who want high-quality products and services.

Difference from cross-selling

Cross-selling is often confused with up-selling. Both up-selling and cross-selling are known as methods of increasing the unit price per customer, but they differ greatly in terms of what is done to increase the unit price per customer.

LTV is a numerical value that is calculated by multiplying the unit purchase price, purchase frequency and contract duration, so if the customer's unit purchase price increases through additional sales, LTV will also improve along with it.

Cross-selling is a method of selling in which a customer who is considering buying a certain product is offered a joint product containing that product or another related product, and the customer also buys other products.

Advantages and disadvantages of upselling strategies

While the upselling strategy has many benefits, it also has its drawbacks. Below is a brief explanation of the advantages and disadvantages of each.

In terms of operational efficiency, it is better to focus on increasing the unit purchase price of already acquired customers by using upselling rather than spending a lot of sales effort and advertising expenses to acquire new customers.

In up-selling we try to increase the unit price per customer by adding value to the favorite product that the customer is trying to buy, but in cross-selling, we add another product to the favorite product to increase the unit price per customer.

Benefits of the upselling strategy

The main benefits of the upselling strategy include "improved unit price per customer", "improved sales efficiency" and "improved customer satisfaction".

Upselling is a way to improve the unit price per customer by adding some value to the company's products and services and increasing the amount of money a customer buys at the same time.

Improving the unit price per customer is directly related to the company's profits, so even if it fails to acquire new customers, the company's financial situation will not deteriorate.

Disadvantages of the Upselling strategy

The revenue from regular customers is large enough, it can lead to business growth. The main disadvantages of the upselling strategy include "lost orders" and "decreased customer loyalty".

The risk of order loss is the risk of not getting an order due to inadequate marketing to the customer. In addition, a decrease in customer loyalty refers to a decrease in the goodwill and trust that customers have in a company.

Both tend to occur in sales that try to improve sales performance and unilaterally propose only high-priced products without listening carefully to what customers have to say. If you receive an aggressive offer, you may feel that the company is pressuring you for something you don't want.

Tips for a successful upsell strategy

To minimize the above upsell disadvantages, you must have a successful upsell strategy so that you can enjoy the benefits alone. Next, strengthening the business model means improving the mechanism by which the company generates profits.

The desire to buy will diminish and, in the worst case, flow to other companies. Even if they become a fan of your company's products and services, if the impression is bad because they were pushed and sold, the customer's heart may turn away from the company.

The main points for a successful upsell strategy include "upsell preparation", "target customer selection", "introduction of tools" and "contact center presentation of benefits and discounts by the customer".

Pre-preparation for upselling

First, it is important to develop and prepare unique products and services for each price range. First of all, it would be impossible without a higher-level alignment so that we can make suitable proposals to customers with diverse needs.

In addition, instead of looking for new customers and making sales, sales to customers who already have a relationship with the company can be expected to improve sales efficiency because sales costs are lower and the success rate is higher.

For the products and services you develop, make sure that the differences in functions and designs according to price range are obvious to everyone, and that the higher the price range, the more attractive the line becomes.

Selecting target customers

It is also important to select additional sales targets who are highly loyal among your customers and who are likely to buy high-priced products. Customers who choose the one they are currently using after learning about the rich list are unlikely to be high prospects, so it would be safer to exclude them from the target.

In addition, if the added value of the product or service satisfies the customer's needs, and if the customer is convinced that the increase in price is worth the added value of the product or service, customer satisfaction can be expected to improve.

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