Sales Glossary / Glossary Term

Upselling:

Techniques, Strategies & Opportunities

Learn to increase the value of sales and build loyalty among your existing customers.

What is upselling?

Upselling is a value-added sales technique where a higher priced product or service is recommended to a prospect during or after the point of sale.

Not to be confused with cross-selling, a technique which involves add-on or complimentary offers, upsales is a method where a higher-priced alternative of the initial offering is recommended such as additional storage, advanced features, or dedicated customer support.

Why is upselling important?

Upselling makes businesses’ customer acquisition efforts more profitable.

For example, if a business spends $25 to acquire a customer that spends $200, that business makes an 800% return. However, if that same $25 acquisition cost upsells to a $400 purchase, the business doubles its profit margin with little additional effort.

Long-term, identifying customers who are willing to spend more empowers businesses to create intelligent customer segments who are more likely to purchase add-on, or upgraded services.

While the goal of upselling is to drive more revenue, upselling is also effective in matching prospects to the products or services that best suit their needs, potentially increasing lifetime value and minimizing customer support debt.

How to identify upselling opportunities

The ideal upsell feels like the prospect is getting into the right product or service for their needs. The prospect feels respected for the business understanding their needs and goals to offer them the right product or service.

But how does a business identify these upselling opportunities and tastefully position the sale?

Here are five upselling strategies:

1. Analyze quantifiable customer data

No matter what the business sells, quantifiable customer data often reveals upselling opportunities and when to offer them.

For example:

- A software company with usage based pricing tiers might upsell when customers come within 20% of their limit.

- Creative agencies may find clients within specific industries upgrade services within a few months.

- Customer service transcripts reveal frequently requested features that exist in a higher level of service.

In each of these examples, businesses find upselling opportunities by observing quantifiable data about how their existing customers use the product or service.

Having identified these opportunities, upselling may eventually be built into the product, offered at the initial point of sale, or added as a feature for a higher pricing tier.

Additionally, sales operations professionals can find warm opportunities for upselling with LinkedIn Sales Insights by seeing where salespeople have strong relationships and making it easy for teams to focus on the right accounts.

2. Watch conversations on the open web

Similarly, social media, review sites, online forums, and the LinkedIn feed provide businesses with a wealth of conversational data that can act as the foundation for upsale opportunities.

For example, software sales and product development professionals might research the following:

- Complaints about competitor’s existing features
- Competitor’s commonly requested features
- Conversations around pricing and value
- Troubles around integration

Using this research, businesses can form a hypothesis on how to improve or include new features, bundle services into various pricing tiers, and add a premium service that offers integration.

LinkedIn Sales Navigator also makes monitoring conversations easy by notifying sellers about actionable and newsworthy events impacting their leads and accounts.

2. Upsells can be offered as a convenience to the customer

Customers are responsible for an increasing number of daily projects, items, and tasks, therefore, for many businesses, upsales can be positioned as a matter of convenience or as a way to future-proof their spend.

- Automatic reordering saves the customer time from having to repurchase.
- Bulk purchases reduce the cost of individual items and leaves room for growth.
- Annual plans simplify accounting and guarantee the purchase.

Upselling is mutually beneficial in these examples, as it reduces what the customer has to regularly keep track of, while the business is guaranteed larger revenue on the purchase.

3. Test with focus groups

Taken a step further, businesses can create focus groups within their customer segments to collect unfiltered feedback and validate potential upsell ideas.

This strategy can be deployed by asking questions like:

“What would you change about our options?”
“Why would you consider upgrading to this higher-priced alternative?”
”When was the last time up purchased our product or service?”
“What compelled you to buy from a competitor?”
“Did you switch from a competitor to purchase from us? Why?”

The qualitative insights generated from these focus group sessions can provide months or even years worth of upsales ideas that can be introduced across the buyer’s journey.

Note: Businesses may also use LinkedIn Sales Navigator to find prospects in their target market and run similar focus groups to build personal connections, validate hypothesis, and test ideas with potential customers.

4. Adjust to market conditions

Each business lives in an ecosystem and a shift in one sector leads to upsell opportunity another.

For example:

As disk storage increased, DVD/Blu-Ray movies were bundled and sold at higher price. As internet bandwidth increased, movies coud be streamed for a subscription fee. As TV’s image quality increased, streaming services added offer a higher fee to stream at 4k+ resolutions.

Adjusting to fluctuating market conditions are often the impetus for upselling opportunities and add-on services.

5. Monitor Product Adoption

It’s not uncommon for multiple teams within large organizations to unofficially adopt software, unaware other teams are using the same product.

This often means businesses pay more than they would by having a vendor level agreement.

The software provider, however, can monitor the customer’s emails used within their different pricing tiers. If they find multiple accounts are from the same company, it becomes an opportunity to upsell a more appropriate plan with features more suitable to the overall businesses needs.

Upselling Techniques: How to Upsell Successfully

Discounted upgrades
Buy in bulk, get discounts on the individual unit.

This is common technique in software sales. A software company may normally charge $60 per individual license, or $45 if they purchase 100 seats in advance, which is valuable if the purchaser anticipates high-adoption within their organization.

A variation on this technique sees lower monthly costs when purchasing annually.

This isn’t limited to software - printers, book sellers, and many commodity goods are also discounted when bought in bulk.


Customizable options
While the product is the same, customizable options are offered at a higher premium.
This could be a computer’s upgraded storage and processing power, a car’s custom interior, or personalized engraving on a piece of jewelry.

Offer a risk-free upgrade
Common upon subscription services, the risk-free upgrade automatically applies a higher tier of service within the first 14-30 days of using the product.

Upselling vs. cross-selling

While the goal of increasing revenue on the same transaction is the same, upselling and cross-selling strategies are often confused.

The difference is that upselling offers an enhanced version of the same offer while cross-selling offers complimentary products or services related to the main offering.

Here are some examples:

In each of these examples, the cross-sale can stand alone as its own purchase, but is also a natural add on that enhances the initial purchase.