Super Size Your Customers: Mastering the art of upselling

by in Sales

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Mastering the art of upselling can pay enormous dividends for salespeople. An upsell (which occurs when a customer who has already purchased something from a vendor commits to spending more on the same or similar product or service) typically falls into one of three categories: 1) a customer agrees to purchase a more expensive product or service in the same family as his/her previous purchase, 2) a customer agrees to purchase additional subscriptions or licenses, or 3) a customer agrees to purchase additional “bells and whistles,” which may manifest in added features, added functionality, or enhanced training or support.

An upsell differs subtly from a cross-sell, a transaction that involves a customer purchasing a complementary product or service from a particular vendor (purchasing a retirement plan after signing up for a bank account, for example). Amazon is a master at cross-selling; it’s been reported that Amazon.com attributes 35% of its business to cross-selling.

In theory, upselling and cross-selling strategies seek to achieve a common goal – to increase the average total spend per customer. Of note, however, is the fact that upselling is proving even more lucrative than cross-selling. According to a study spearheaded by PredictiveIntent, upselling can be 20 times more effective than cross-selling. When executed at the right point in the purchase lifecycle, upselling paves the path for high conversion rates that optimize not only revenues, but also customer purchase experiences.

Upselling can be one of the most powerful tools in a salesperson’s arsenal.  Yet, as with any skill, the art of upselling cannot be mastered overnight. When perfecting your upselling skills, the following three leverage points should be kept in mind:

  1. Offer Details

According to Marketing Metrics, the probability of selling to a new prospect is 5-20%, whereas the probability of selling to an existing customer is 60-70%. Because upselling is predicated on generating additional revenue from existing customers, the cost of customer acquisition is negligible (which ultimately lowers the overall risk associated with the sale).

In structuring an upsell offer, use customer history to your advantage. You already have a wealth of information at your disposal. The best salespeople structure each upsell offer so that it is specific to each individual customer and informed by known behaviors, activities, and preferences of the customer.

Take time to understand your customer’s previous usage patterns and behaviors, and identify how the customer has been responding to your offerings. For example, has he/she increased license count over the previous subscription period? If so, perhaps you’ll want to offer additional licenses as part of your upsell proposal. Has your customer gravitated towards certain features or functionalities? If so, you’ll likely want to focus on offering additional “bells and whistles.”

In crafting any upsell proposal it’s also important to reflect on your customer‘s behaviors in previous interactions and engagements with you. If, for example, your customer has demonstrated price sensitivity, he/she will likely respond well to a discounted upsell offer. Alternatively, if your customer has expressed an interest in additional training (perhaps the customer has participated in webinars or has downloaded training resources via your website), he/she is likely to respond well to an upsell offer that includes round-the-clock support and additional training resources.

Regardless of the specific details, ensure your offer is informed by the specifics of the customer. There is no “one-size-fits-all” model to upsell offers. Take full advantage of the fact that the customer has already forged a relationship with you. The key to mastering the art of the upsell and ensuring conversion rates are high is customer relevancy.

  1. Offer Timing

In addition to ensuring your offer is relevant to your customer and informed by his/her previous behaviors and usage patterns, the offer should be informed by the customer lifecycle. Upsell offers will differ in effectiveness when introduced at different times throughout the customer lifecycle. To the extent possible, broach the upsell conversation immediately after your customer has reached a key success milestone. Perhaps the percentage of active users on your customer’s current plan has just reached an apex of 95%. Perhaps the customer has just provisioned 90% of licenses and is encroaching on the limits of his/her current subscription plan. Perhaps the customer has recently referred another team or division at his/her company to purchase from you. When engaging in an upsell conversation and negotiating the offer, make sure to highlight and celebrate the specific customer success milestone achieved. This can act as a powerful influence technique in terms of closing the deal.

Another natural time to engage in an upsell conversation is during the days leading up to subscription renewal (especially if the customer has already agreed to renew his/her agreement with you). Timing is everything. 

  1. Offer Structure – The Power of Three

There are psychological tricks to upselling. Once you decide on offer details and timing, you’ll next want to determine how to best structure the offer. The most effective salespeople have a knack for structuring upsell proposals such that the customer is driven to subconsciously gravitate towards a specific option.

In structuring an upsell deal, the best salespeople take advantage of the “power of three” (sometimes referred to as the “rule of three”). The concept is based on the belief that it is least taxing for the human brain to process information in increments of three. It’s no coincidence that there are countless examples of the “power of three” in our day-to-day lives: the three little pigs, Goldilocks and the three bears, the three Musketeers, the Three Stooges, etc. Too many options often prove to be too mentally taxing, causing the customer to feel overwhelmed, and ultimately limiting the overall potential of the offer.

Exploiting the “power of three” enables you to structure upsell deals such that they appear as “no brainers” to customers. In the world of upselling, the “power of three” involves crafting a selection of three options to be presented to the customer, with one option designed to be most attractive. The first offer presented is a “standard option.” It manifests in a competitively priced offer that is designed to pique the interest of customer. It is structured to be within the customer’s budget and most similar to his/her existing package. The second offer presented is an “enhanced option.” It is priced slightly higher than the “standard option,” but includes several additional valuable features, as well as a functionality level that exceeds the customer’s current package. The offer is intended to be clearly perceived as one worthy of additional spend. It is strategically designed as the most attractive choice. Finally, the third offer presented is the “super-enhanced option.” This option is far more expensive than the “enhanced option.” While it includes some additional features, the overall added value does not tend to motivate any additional cash outlay.

By structuring your upsell offers to exploit the “power of three,” you’ll best ensure that it’s easy for your customer to take the mental leap and commit to spending more money with you.

Too often, when it comes to dealing with existing customers, salespeople fixate on minimizing churn. Upselling is often overlooked and undervalued. Just because your customer hasn’t explicitly expressed an interest in increasing his/her spend with you, this doesn’t necessarily mean that the willingness is absent. The value and payback of upselling can be enormous to the salesperson, as well as the consumer. Consider the hospitality and transportation industries. It has been found that 48% of airline passengers and 59% of hotel guests are willing to purchase upgrades and additional services. In today’s competitive selling world, salespeople can’t afford to leave money on the table. Don’t sell yourself short. By perfecting the art of the upsell, you’ll “super size” your customer spend amounts and best ensure that you consistently hit quota.

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About The Author

Rebecca Hinds
Rebecca Hinds - View more articles

Rebecca Hinds graduated from Stanford University in 2014 with a M.S. in Management Science and Engineering. In 2013, Rebecca co-founded Stratio, a semi-conductor company developing infrared sensors. The company was selected by the Kairos Society as one of the 50 most innovative student-run businesses in the world.