Upselling is a sales technique used to increase the average transaction value by inviting customers to buy an upgraded version of the same product.
Upselling and cross selling are sometimes used interchangeably, but in fact they are two different techniques and it is important to make the distinction.
Cross Selling vs. Upselling
The main difference between upselling and cross selling is that in upselling the originally chosen product is dropped and replaced by a similar, but upgraded version, of the product. In cross selling, however, the original product is kept and additional, related products are added to it.
Example of Cross Selling vs. Upselling
A customers buys an economy ticket to Paris
Upselling: The system suggests upgrading to business class or first class.
Cross Selling: The system recommends hotel stays and car rentals in Paris.
Benefits of Upselling
Upselling can be very beneficial to the business, because it increases the order value for customers who are already buying.
It is always easier and cheaper to sell more to existing customers who are finalizing the purchase, than to try and bring more customers to the store and then try to convert them.
For example, with the rising trend in iced beverages, Starbucks introduced an even bigger “Trenta” size, to capitalize on it. It also uses a trick that automatically upsells most customers to the “Tall” size, by removing the “Short” size option from in-store menu at many locations.
Read Also: Starbucks Sizes
Such an easy win can add a lot to the business’ bottom line, because this extra value in sales didn’t come with extra spend on marketing or manpower.
However, it should be noted that, in order to keep the relationship between the customer and the business mutually beneficial, upselling should add real value to the customer as well. This could be in the form of savings or better customer experience through the upgraded version.
In fact, many times customers buy the lower version and later on wish if someone told them about the upgraded version of the product, so they could have saved on it or had more benefits out of it. In this case, suggesting better options through upselling can be a win/win for both, the business as well as the customer.
How to Set Up Upselling in Ecommerce?
Cross selling and upselling can be set on your ecommerce store through your shopping cart.
Here we will give an example on WooCommerce
After you have created a new product, scroll down to the “Product Data” section and then click on “Linked Products.
Here you will be able to choose from existing products that you already have listed in your shop and either assign them as an upsell or a cross-sell.
It is important to make the distinction here because if you assign the product as an upsell, the shopping cart will recommend it as a replacement to the current product and not as an addition to it.
This sales technique is used across different industries from retail to hospitality. Here we will give some examples.
A customer buys a small bottle of shower gel and the sales person suggests the bigger size to save on the product.
A guest books a basic room and the sales person suggests an upgrade to a bigger room with a better view.
A customer buys a subscription for one month, and the system suggests paying for the year in advance to get a better rate.
Overall, the suggested products are meant to replace the original purchase with a better, bigger or upgraded version.
Businesses try to maximize their returns, by increasing the average transaction value of each converting customer, using different techniques, such as upselling.
It is important while applying such techniques to make sure, that while the business is increasing its own value, it also adds more value to the customers in the form of savings or better experience, so that they can build a long term relationship that is based on trust.
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Retailer & Founder of Retail Dogma, Inc.
Rasha has 12 years of retail & ecommerce experience. She has started an ecommerce business in 2008, and later worked at H&M, Bath & Body Works, Victoria’s Secret and Landmark Group. She has lived in 4 different countries, speaks 3 different languages and holds a master’s degree in Strategic Management & Marketing.