Customer acquisition is expensive, yet it is the primary focus of many sales departments. While a steady flow of new customers is the lifeblood of any established business, customer retention should be a high priority as well.
In addition to creating and maintaining a flow of new customers, sales teams need strategies in place to make the most of existing customer relationships. As Marketing Metrics notes, while the probability of selling to a new customer is around 5%, the probability of selling to an existing customer is 60% to 70%.
Upselling is a great way to evolve and mature the customer relationship as your buyers’ needs become more sophisticated over time. Typically, an upsell begins when a customer buys a product or service from you and then continues to buy increasingly more expensive and detailed products. In many ways, it’s a deepening of the relationship. The purchase of a book might lead to buying a course, then a coaching package, and finally going all in for an expensive year-long mastermind.
Here are four strategies to help any business implement an effective upsell strategy:
1. Develop a Product Pipeline
The ability to upsell requires a very strategic approach to your product development. Upselling generally only works when you have a range of products available at different price tiers. For example, a service provider might offer a $20 book, $100-per-hour consulting services, and a $10,000 immersive weekend. As lower-level or gateway products build trust and confidence, they also pave the road to the customer recognizing the value and need for buying higher-level products.
2. Nurture the Relationship Outside of the Sales Process
In many cases, upselling is a long-term game. For example, a buyer who comes in today to purchase a starter kit of products isn’t going to invest in your master-level offerings right off the bat. But over time, as trust in both your brand and products improves, that customer will be more likely to embrace higher ticket items. Having a strategy in place to nurture the customer relationship—such as through a newsletter or customer success consultations—can help lay the foundation for successful, long-term customer relationships.
3. Create a Script That Focuses on the Customer’s Growth and Value
As customers consider a purchase, they’re often focused on how it will benefit them. Stated differently, they may be imagining who they will be after they attend the seminar, own the car, or learn the information in the course. An upsell typically represents a relationship that has deepened over time. For example, if someone has become interested in entrepreneurship and read a few books, deciding to take a course could be a critical step toward launching his or her own business. By focusing your messaging around the benefits and outcomes the person will see as a result of his or her own growth, your upsell is more likely to align with what your buyers are looking for.
4. Use Loyalty Discounts to Drive Conversions
Automobile manufacturers have mastered the art of the upsell through loyalty discounts. Many brands offer discounts to people who have previously owned one of their cars, and those discounts increase as buyers move up into a higher class of vehicle. Consider using a loyalty discount to drive conversions when you’re making an upsell.
Upselling can be a critical strategy for businesses looking to grow their revenue and establish better relationships with companies over time. By developing both a product line and a sales process that grows with what customers need, it’s possible to become the go-to brand in your space. In part 2, we focus on how to increase your average order value using a cross-selling strategy.