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Upselling is a sales technique where a seller induces the customer to purchase more expensive items, upgrades or other add-ons in an attempt to make a more profitable sale. While it usually involves marketing more profitable services or products, it can be simply exposing the customer to other options that were perhaps not considered (A different technique is cross-selling in which a seller tries to sell something else). In practice, large businesses usually combine upselling and cross-selling to maximize profit.
Up-selling vs Cross-selling
Up-selling is the practice in which a business tries to persuade customers to purchase a higher-end product, an upgrade, or an additional item in order to make a more rewarding sale. For instance a salesperson may influence a customer into purchasing the newest version of an item, rather than the less-expensive current model, by pointing out its additional features. A similar marketing technique is cross-selling, where the salesperson suggests the purchase of additional products for sale. For example, he might say "Would you like some ice cream to go with that cake?" It is beneficial for businesses to use both techniques in order to boost revenue and provide a valued consumer experience. However, research has shown that upselling is generally more effective than cross-selling.
- suggesting a premium brand of alcohol when a brand is not specified by a customer
- selling an extended service contract for an appliance
- suggesting that a customer purchase a faster CPU, more RAM or a larger hard drive when servicing that customer's computer
- selling luxury finishing on a vehicle, such as leather upholstery
- suggesting a brand of watch that the customer hasn't previously heard of as an alternative to the one being considered
- suggesting that a customer purchase a more extensive car wash package
- asking the customer to supersize a meal at a fast-food restaurant, or adding extra toppings to a pizza
- using mobile check-in services to send upgrade seat or service offers to flyers
Many companies teach their employees to upsell products and services and offer incentives and bonuses to the most successful personnel.
A common technique for successful upsellers is becoming aware of a customer's background, budget and other budgets, allowing the upsellers to understand better what that particular purchaser values, or may come to value.
Another way of upselling is creating fear over the durability of the purchase, particularly effective on expensive items such as electronics, where an extended warranty can offer peace of mind.
Overlap with cross-selling and Add-on sales
It can be hard to divorce all three techniques from each other, given that the difference in each technique is minor. All techniques adopted and effectively practiced within firms are important strategies that are used for increasing revenues among current customers.
An add on sale can simply be defined as a sale of additional goods or services to a buyer. In practice an add-on sale can be seen in a retail scenario; a customer could be buying a suit for a new job, after the sizes and colours are to the customers satisfaction the seller would assume that they would also need shoes, socks, a waistcoat and a belt to go with. This is a sales technique where by the seller is trying to encourage or persuade the customer to buy something extra, that may or may not be more expensive, but will still bring up the total amount of the sale. An add on sale is much more simpler than a cross sell or an up sell, this is because the new item that the seller is exposing the buyer to may cost less than the product they are purchasing, however the downfall of this technique is that saying “no” to the product being presented is more frequent. Usually two for one deals or “buy one pair and get the second pair half price” deals are the most common ways to transition your sale to that of an add on. From a customers point of view, adding on can be seen as the seller trying to make the buyer spend more money to bring up the point of the sale. This is why adding on can be difficult, familiarity and relevance of suggestions is important, seller wants to make sure that the items being shown still match the customers’ initial thoughts and ideas. If they do not there is a high chance of losing the sale.
As told in the Journal of Relationship marketing by Kamatura Wagner cross selling is valuable selling technique used by salespeople to increase the sale by transforming single product buyers to multi product buyers. Cross selling is a technique by which the seller will attempt to increase the value of a sale by suggesting an accompanying product. Suggesting related products or services to a customer who is considering buying something. Cross selling is mostly seen in restaurants or fast food joints, the terms “would you like fries with that?” or “would you like to up-size your order?” are examples of the cross-selling technique. Cross selling can be most effective when a customer is requiring assistance – where they come to the seller for the purpose of cross-selling. Since the customer has initiated the sale, the mind set would have already been on the firm and its products. This would make it easier for the salesperson to conduct the technique and have it be successful.
An example of an over the phone cross sell could be that a customer has just switched banks and is getting her account set up with her new bank. After the account is created the bank teller would offer her the cross sell of signing up to their internet banking app that would allow her to access her account details and pay her accounts online. If cross-selling is properly done, it will be viewed as a service, rather than a sales pitch. A downside to cross selling can be seen as the same as that of up-selling. This main draw back is known as “over-touching” the customer which in simpler terms means, giving too many cross selling options can result in the customer ignoring the efforts given, and can desensitise the customer to future cross selling offers.
When upselling for higher cost items or add ons to customers for goods and services it is advised not to push the sale as it may become unethical. There have been cases where pushing a sale onto customers have caused legal problems as some retailers may use confusing terms or say half truths so sell products while the customer is unaware of this happening. In New Zealand, the "Consumer Guarantees Act of 1993" states that if the customer is unhappy with the goods or services rendered, they are entitled to a refund, or the business in question must compensate them for their troubles.
|Look up upsell in Wiktionary, the free dictionary.|
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- List of marketing topics
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- Downloadable content
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