A customer comes to your website and orders a product confidently in one shopping session. Pretty nice visitor-to-sale conversion rate, right? 1 website visitor, 1 successful purchase, job well done.
Not so fast. You’re missing an easy opportunity to increase the order value of this customer by upselling.
Upselling is the low-cost way your e-commerce webshop can start increasing monthly revenue.
In this blog post, we’ll lay out a how-to guide for everything you need to know about upselling, like what it is, when to do it, and a few things in between.
What is upselling?
E-commerce upselling is when you offer customers a larger, better, or higher-quality version of the product they are currently buying.
The appeal of a product upsell to your customer is now they can see the value of a more expensive version of the product they were originally looking for.
What's the difference between upselling and cross-selling?
You may hear the terms upselling and cross-selling used interchangeably in e-commerce. However, for most webshops, there’s a difference between the two.
We've covered upselling in the section above: offering the customer a higher-priced item similar to the item they are buying.
In contrast, cross-selling is the act of offering complementary products to customers in relation to what they’re buying.
So, for cross-selling, consider which product goes nicely with the product the customer just added to their cart? What will they need for this product to work best?
These questions lead you to the right cross-sell offer.
To really drill the difference home between upselling and cross-selling, let’s zoom in on a specific product example.
Let’s say you sell coffee and other home goods.
A 500-gram pack of coffee is 6€ and a 750-gram coffee is 9€.
If a customer adds the 500-gram-sized coffee to their cart, to make an upsell, you would offer them a 750-gram coffee that lasts longer and has nicer packaging for only 3€ more.
It’s up to you if you want your upsell to be a discounted offer too.
For a cross-sell opportunity, if a customer adds the 500-gram-sized coffee to their cart, you could offer a coffee mug or bottle of vanilla syrup to complement their coffee bag order.
Fun fact, studies show that upselling is 20x more effective than cross-selling.
This is mainly because once a customer has their mind set on a product, they most likely won’t change their mind and will opt for the better value version. In contrast, cross-selling can sometimes distract the customer from their original purchase.
Why is upselling important in e-commerce?
We know that e-commerce shops face steep competition. That’s why upselling is a great opportunity to make the most out of the customers who have decided to buy from your shop.
Research shows that it’s 68% more expensive to try to convert someone new into a customer than it is to upsell to current customers. Therefore, upselling is a less expensive way to increase revenue.
The bottom line is that upselling is important because it provides a low-cost strategy to grow your average order value.
More benefits of upselling for your business
In addition to being cost-efficient, an upselling strategy has even more benefits both you and your customers both will appreciate.
- Upselling delivers a better customer experience. When done right, an upgraded product can make the customer’s experience with your shop and their new product easier.
- Upselling helps build loyal customer relationships. When you offer an upsell that is relevant to the customer, they begin to trust you more and appreciate your webshop.
- Upselling increases your customer lifetime value (CLV). When you’re able to increase average order value with an upsell, you’re also increasing that customer’s lifetime value. Especially when you’ve built a relationship with them with trustworthy upsells.
Upselling opportunities and the best time to offer upsell products
Maybe you’ve caught on already that upsells only convert when they are relevant.
This means that you can’t just throw out an upsell on each page, at every step of a customer’s journey on your website. There needs to be a level of consideration and intention behind it.
It boils down to timing.
(Well, it boils down to a few other things, but we’ll discuss that a bit further down in the step-by-step section..)
In general, you have a few different options to choose from when you want to take advantage of the upsell opportunity:
- Pre-purchase upselling
- During-purchase upselling
- Post-purchase upselling
Each stage has its own pros, cons, and best practices.
For example, for a pre-purchase upselling opportunity, the upgrade offer could be on the relevant product page. For during-purchase and post-purchase upsell opportunities, the upgrade option could be created as an engaging pop-up. Or you could upsell during a live chat conversation.
Here's an example of cross-selling pop-ups below:
Remember not to overdo it by offering an upsell at more than two stages of the buyer's journey.
If the customer has to exit multiple upsell pop-ups, he might view your brand as a bit sleazy or pestering.
5 Steps for how to upsell & boost average order value
Step 1: Use e-commerce upselling tools or code the upselling funnel yourself
Upselling is a bit easier when you have the right tools in place to make the process seamless. It’s even easier when you don’t have to go through the trial and error of codíng a solution yourself.
You’ll want to use a tool where you can take hold of the customisation reigns but, at the same time, a tool that doesn’t require too much configuration to work.
Something like Interaction Builder from giosg should do the trick for making upsell pop-ups.
Step 2: Consider your webshop product options
If there’s a best place to start with building your upsell strategy, it’s to think about your product range. Look towards two categories: best-sellers or products that could be upgraded.
Your best-selling products are a great indicator of what your customers are often looking for, and perhaps what customers repeatedly buy. Here lies a perfect opportunity to start offering upgrades.
Another option is to think about what products that you have in your webshop which are even upgradeable, not all of your products will be.
Step 3: Choose the best timing for upsell opportunities
Now for the tougher decisions. Timing.
As we mentioned earlier about pre-, during, and post-purchase upsell strategies, selecting the best time is a bit of a strategy in itself.
For the most part, it would be great to test these options and see what works best for your online store.
Pre-purchase is a great choice for putting the first idea of an upgrade in the customer’s mind early.
During-purchase is a great choice for an upsell when the buying intent is highest.
Post-purchase is a great time to upsell so you don’t interrupt the buying process at all, but rather propose an upsell right after checkout is completed.
A post-purchase happens after the sale is completed and before the final thank-you page. If a customer decides to accept the upsell offer, they can instantly purchase it, without having to add in their payment details again.
Step 4: Run your upsell offers for at least 2 weeks then adjust
With the upsell puzzle pieces in place, it’s time to see how your strategy works.
You could A/B test how triggering upsell offers at different stages of the buying process perform.
You could test to see which products of yours attract the most upsell conversions.
Once you have results to base your conclusions on, it’s time to repeat the above steps & tweak your upsell process as necessary.
Happy upselling!
FAQ:
- What is upselling?
Upselling means selling something of more value to a customer that was initially going to buy a lower-value version of the same products. A good example is when you go to a coffee shop and the clerk sells you a large coffee for 50 cents more than the medium you were planning to buy. Upsell increases the value of the shopping cart.
- What is cross-selling?
With cross-selling, you sell complementary products to the customer. For example, if they have added a phone to their shopping basket, you can try to sell them a protective case for that specific phone model.
- How to upsell?
When upselling products, think about your products. Not all products are "upsellable". Secondly, make sure you upsell at the right time. Otherwise, you ran the risk of being too "pushy". The upsell needs to be beneficial for the customer as well. Remember to train your live chat agents and live shopping assistants to know when it is the best time to upsell. You can also automate upselling by using highly targeted pop-ups to push for beneficial upsells for the customers at the right moment in their buying journey.