We polled 58 marketers to uncover the most important ecommerce KPIs and learned that conversion rate is just one of 23 metrics you should monitor regularly.
Marketing | Sep 9
Elise Dopson on August 27, 2019 (last modified on August 26, 2019) • 16 minute read
For many companies, once they reach a certain size, generating additional revenue from current customers is more efficient (and often easier) than generating new revenue from new customers.
It’s also healthy from a business perspective, as increasing upsells also increases your customer LTV, which in turn, improves cost efficiencies across the board.
But, upsells can be tricky. Focus on the wrong value proposition and your customers view it as a money grab. You end up spamming customers, losing trust, etc.
So, how do you do upsells right?
In this guide, we’ll share exactly what “upselling” means, and the 12 tactics our experts recommend using to increase your customer lifetime value.
Before we go any further, let’s discuss exactly what “upselling” means.
Here’s the simple definition:
Upselling happens when you promote add-on items to a customer that’s about to purchase, usually at a higher cost.
For example: If you’re selling laptops, you can offer the customer a $100 protection plan at checkout that not only protects their purchase but offers service to their machine should they ever need it.
Or, if they’ve chosen the model with a 128GB hard drive, you can upsell them the 256GB version by appealing to their need to store all of their pictures, music, documents, and more, on one device without fear of ever running out of space. Plus, it’s way faster and has better screen resolution.
Upselling isn’t just a dodgy sales tactic, though. Our survey found that the majority of upsells have a conversion rate of 20%–compared to just 4.31% for the average eCommerce website:
Fancy a slice of that conversion pie? You’ll need to know the difference between several sales tactics in order to nail upselling–and see those conversion rates happen on your eCommerce store.
We’ve already mentioned that upselling happens when you promote a higher cost item, or one with better features, to your customer.
Cross-selling is slightly different.
Instead of promoting a new product in replacement of the one they’re browsing, a cross-sell promotes items that can be used together with their choice.
Using the same laptop store example, a cross-sell would be links to computer mice, wireless keyboards, or additional chargers–as opposed to a newer model.
Sure, upselling has a great impact on conversion rates. But there are other eCommerce metrics and KPIs that can be positively impacted when you upsell–most notably, your Lifetime Value (LTV) of each customer.
(Their LTV is the amount of revenue you expect them to generate over their lifetime. So, if they purchase two plans at $99 each that’ll last them forever, their LTV is $198.)
According to our data, over 20% of companies say their average customer LTV falls between $1,001 and $5,000:
But the experts we surveyed said that several upselling tactics can boost the average LTV of their customers.
We’ll talk about some of the strategies they mention, such as:
Ready? Let’s dive in.
*Editor’s note: Unsure on how much revenue your customer makes? Click here to grab our Stripe dashboard, which you can customize to view your total number of customers, MRR, and revenue-by-plan in real-time.
“I like to sit down with my clients and ask questions. I want to know what their financial state is, if they have enough life insurance, if there are other products they should consider that they may need to fill gaps and they aren’t aware of them,” says HealthMarkets‘ Brett Casey.
It’s their first step in upselling because “frankly, that’s my job. I’m the expert and I don’t want to be just an order taker – I want to make sure that as life happens and situations change, I’m helping ensure my clients have the insurance coverage they need,” Casey adds.
Kiwi Creative‘s Erin Barr has also “personally found that digging deeper and asking “why?” unearths other opportunities for strategic partnership.”
“It’s easier for clients to hand over tactical assignments but if you’re consultative in your thinking, you’re going to find out they’re likely just getting something off their plate.”
Barr explains: “For instance, recently we had a client ask us to update copy for 3 emails in a workflow. Once we asked some why questions, we uncovered that they didn’t completely think through the workflow and we were able to offer a nurturing strategy.”
Sam Underwood says the team Futurety also do this, and have a philosophy to “never upsell a client without demonstrating objectively that the project/service we’re suggesting would help solve an existing problem.”
Why? Underwood explains: “As the saying goes, selling painkillers is a lot easier than selling multivitamins, and we find we work best with clients when we’re addressing a real problem they’re feeling rather than a problem they don’t have yet.”
According to Shayne Sherman, TechLoris “have regular conversations with customers to determine what needs are going unmet. This helps us figure out what products or services our customers are looking for. And helps us create offers that speak directly to those needs.”
Sherman adds that “it doesn’t take long. A quick email survey or a few minutes on the phone is often all you need. Having customers tell you exactly what they need makes creating irresistible offers easy.”
According to Catalyst Marketing‘s Oliver Roddy, “the key [to a successful upsell] lies in finding out about about the client’s pain points, challenges and goals, and positioning yourself from there.”
“If an inbound enquiry comes in for one of your services, the key to securing the up-sell is relevance; if you just offer every service under the sun to each prospect, your approach becomes very blanket and you risk alienating buyers.”
For that reason, Roddy says: “We always recommend drawing out a series of detailed buyer personas which focuses on industry type and the challenges typically faced by each person. Then, when a lead comes in, you’ll begin to instantly associate each one with other challenges you know they face and can start to have genuine conversations about their business which lead to very organic up-sell offers.”
Earlier, we touched on how cross-selling means recommending add-on products. Bundling is a similar strategy; you’re still recommending supporting items, but grouping them together in a bundle.
Marc Bromhall of Beginner Surf Gear explains:”If a prospective customer is looking to buy a surfboard, we offer them the board as part of a package which includes fins, leash, wax, and a wetsuit. The package price is obviously better than the total of the unit prices for each item, so it’s a win win for both parties.”
It’s a tactic Nintendo use to upsell their products:
Kenzi Wood explains what this looks like in action for Kenzi Writes: “I realized one of my clients wasn’t optimizing their website for SEO. I alerted them to the problem and mentioned that I could address it for $X additional to our retainer. I usually build in a discount since they’re already a customer to sweeten the pot.”
How many times have you reached the checkout page of an eCommerce store, and added more items to your cart on the same page?
SEOBetter use this tactic to upsell, according to John Stand: “The best way to upsell to a customer is to add a relate product on the cart page of your eCommerce store. The product should be something that compliments all of the products sold on your website.”
“I have found that removing the clutter from all product pages and leaving the promotion to the cart page only can increase sales by 38% per month. An easy to read, simple message with a button that will add a new product to the cart will work wonders for any eCommerce store,” Stand writes.
Harris Schachter of OptimizePrime explains what this looks like for: “If you sell a wide variety of products, you want to use your own data to figure out what other products people have also bought.”
“Amazon does a good job of this, and it makes a lot of sense. An example of this would be if someone bought a set of grilling utensils, you might also offer them aprons/cutting boards or steak seasoning.”
Schachter continues: “You can also help validate their previous purchase (make your customers continue to feel good about buying from you) by linking the upsell to what they already bought.”
Copahost‘s Gustavo Carvalho puts that into practice: “For instance, if you sell sunglasses, you can offer cases and lenses cleaning products for them. These options can be offered during the checkout. Just take care not to overexpose such offers, otherwise, you will scare the customer and it will give up buying from you.”
Did you know that almost 35% of companies offer a freemium version of their product?
One of those is David Sanchez, who says that “our SEO agency [Mammoth Web Solutions] offers free Google My Business setup for anyone, regardless of whether they are a client. The value from that service is exponential, because people get a chance to experience our customer service, and see some real results that increase traffic to their website.”
“They see an increase in phone calls to their local business within 2-4 weeks, and they think, “Wow, what if I actually invested in SEO? What kind of return would I get? And I really like these guys, so what do I have to lose?,” Sanches explains.
“In every industry, it’s important to realize that your customers choose your service to make life simpler and solve a problem,” says Kassie Herlong of Zippy Shell Louisiana.
That’s why their business, which offers “storage solutions for our customers who are moving locally or long distance,” run free trials for customers to get to grips with their service before committing.
Herlong explains: “We find that after 30 free days or storage, they’re more likely to purchase additional time after that. The takeaway is that offering freebies is a great way to upsell because it establishes trust between you and the customer. Most importantly of all, they get a sample of your additional services which makes it easier for them to see the value in them.”
Whether you’re offering a free trial or freemium product, it’s a great way to prove the value of your product–and the benefits they’ll receive once they purchase a paid plan.
*Editor’s note: Unsure on where your customers are in the sales funnel? Grab our HubSpot CRM dashboard to view how many deals you’re working on, have closed, and won–all in once place:
Upselling products to your customers means they’ll have to spend more cash. That’s usually the main decision they’ll have to make when considering whether to take up your offer.
“To upsell existing clients, we show them the value of the upsell rather than the costs. We show them how they will benefit and profit from it. The goal is to show our clients that thanks to the upsell, they will get faster and better results,” writes Growth Hackers‘ Jonathan Aufray.
Ben Samson of Ever Increasing Circles Ltd also thinks that when you’re upselling, you need to consider “what the solution is worth to the client.”
Samson puts that into practice: “If you’re working with a £10M business, adding 10% to their valuation through digital solutions is worth £1M to them. If you’re doing the same for a £100,000 business then it’s worth £10,000.”
Emily Banks of Inseev Interactive shares a smart upsell tactic you can use to do this: “Since you already have them as a customer, don’t waste time trying to convince them that you could get the job done. Instead, explain how their problem is hurting their business, and create a detailed strategy on how your service could diminish said issue.”
You’ve pitched the cost of the upsell versus the value it’ll provide, but your customer isn’t budging. Is there anything else you can do to seal the deal?
“When you are trying to convince your customer of an upsell, you should be reasonable and limit the price increase. After all, it’s supposed to represent a quick win for your customers,” writes Maksym Podsolonko of Eazyplan.
“The price of an upsell shouldn’t be more than 25% more than the product they are already looking or buying. And of course, you need to justify cost against value.”
Podsolonko continues: “If the price difference between products is very big, the customer will need to go through a longer buying decision and may postpone the purchase or stay with the product they have chosen. Keeping the upsell below 25% will improve the chances of increasing your average order value.”
Businesses are known to thrive on relationships.
That’s why Ben Samson of Ever Increasing Circles Ltd says: “When looking to upsell a client, the primary focus has to be on adding value to them and solving problems.”
“On a weekly, sometimes daily basis, we communicate with clients to understand their pain points and the problems they are facing internally. Once that’s pin-pointed, it’s about offering them solutions and using our experience working with the client to understand their budget to fix said problems and their threshold for risk etc. “
“The closer the client relationship, the easier the upsell. If you don’t know your client and don’t understand their way of working, it’ll be much harder to sniff out the problems and work out an angle for an upsell. If your focus is on the profit made from the upsell and not on the value you add then success will be far less likely,” Samson continues.
It’s a concept the team at Colibri Digital Marketing also follow, as Andrew McLoughlin explains: “Our digital marketing agency makes a point to get to know the brands we work with on a very deep level.”
“It’s always best when all aspects of a business’s brand messaging and marketing outreach cohere with one personality and one voice, and it’s the deep relationships we build that make it so beneficial for our clients to engage with a broader set of our digital marketing services.”
Contractor Calls‘ Joe Goldstein agrees: “Building an actual rapport with your customers is the best way to upsell.”
“When you can help your customers by introducing them to solutions that don’t personally benefit you or your company, you build real trust and goodwill. Then when it comes time to upsell, be honest about what you’re selling and the real benefit for them.
Goldstein adds: “Don’t sugarcoat it, and don’t oversell it. That trust will net you a higher LTV than most upsells ever could.”
Summarizing, SyncShow‘s Jasz Joseph says: “Canned sales pitches do not work. Speaking directly to your customer about the product or service you are trying to sell to them and why it will benefit them specifically does work.”
You’ve probably got a recurring meeting in your calendar to catch-up with your boss or co-workers.
Horseshoe + co‘s Andrea Moxham recommends to add your clients to that list: “Schedule weekly check-ins with your clients [because] they usually have projects and initiatives to share where you can provide support.”
“On these check-ins, review your client’s goals so you can identify where efforts can be improved upon. This gives your company an opportunity to provide additional services and upsell!”
“By proactively finding places to help your current customers improve even more, you show your customer commitment to their success you and will eventually lead to them trusting you with more of their business needs,” Banks summarizes.
In our survey, we asked which channel is the most effective at delivering upsell offers. Social media was second-most popular for companies with a higher LTV:
AdEspresso‘s Paul Fairbrother explains how paid social media could help your upsell campaigns: “Upload the customer email list to Facebook to create a Facebook custom audience. Then, run Facebook Ads to this audience to prompt an upsell.”
“The reason for this is email open rates are often 20% and sometimes lower. By using Facebook Ads in combination with an upsell by email, you can double the number of customers reached, resulting in a much higher conversion rate,” Fairbrother summarizes.
*Editor’s note: If you take Fairbrother’s advice to run retargeting upsell campaigns, download our Facebook Ads (Campaign Performance) dashboard. It’s the easiest way to keep track of how many purchases you’ve received, and how much you’ve spent, on your ads.
When delivering an upsell, Kevin Begola of Titanium Buzz thinks you should “use social proof to convince your customers to upsell and motivate them to say yes.”
“Most people need evidence to convince them before making big, expensive purchase decisions. Social proof lets your customers know that other people like them found your product or service valuable, and it helped them solve their problems.”
So, what does that social proof look like?
According to Begola, “you can show your customer what other people bought with the items they purchase, what other people also looked at, the products that other people recommend to go with the product your customer is buying.”
“You should also add customers’ reviews for each item to convince them with real-life examples.”
Are you ready to start using upsells to make more revenue and increase your customer LTV?
While these expert techniques do work, it’s important to remember that not one standalone task will be responsible for the extra revenue you’ll make.
As Salted Stone‘s Talar Malakian says, “it’s not one thing that closes an upsell because it’s never just about the upsell as a standalone sales touchpoint. Upselling is tied entirely to the full spectrum of touchpoints for a customer from marketing, to sales, through customer success, and back into sales.”
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