What Is Upselling & How to Use Upselling to Increase Your Sales
Each time a prospective customer visits your Kajabi website, you want him or her to spend as much money as possible. That’s obvious, right? When you make more money per sale, you increase revenue without having to put forth more effort.
Upselling offers the perfect strategy to increase the amount of money your customers spend during each transaction. Instead of acquiring more customers, you’re convincing people who already want to buy to spend more cash.
That might sound simplistic, but companies have used upselling as long as businesses have existed. The methods and mechanics might have changed, but the psychology and benefits have not.
So how do you employ upselling to increase your revenue on your online courses and other digital products? It’s not easy, but our guide can help you boost sales tremendously while reducing the amount of work you have to do to generate sales.
What Is Upselling?
Think about the last time you went through the drive-thru at a local fast food restaurant. When you ordered your meal, the cashier might have asked if you wanted the medium or large version. This is classic upselling.
The company wants you to order a medium or large (versus a small) because they’ll generate more cash in the transaction. In exchange, you get a larger beverage and more French fries.
You’re not selling fast food, but you can port that strategy over to your online business. As an entrepreneur, you want customers to buy your most premium products and to pay more in the bargain.
Let’s say, for example, that you’ve created three online courses. The introductory course costs $99, the mid-level course costs $149, and the premium course costs $200. Ideally, you want customers to buy all three courses, and at the very least, you want them to buy the $200 course.
Upselling is the process of steering your customers toward the more expensive option. Obviously, you’ll have to overcome objections — specifically, the objection to spending more money — but a little knowledge can go a long way toward achieving this goal.
You can also use upselling strategies to convince customers to buy a customized or enhanced version of a product. For instance, maybe you offer three versions of the same online course. The more expensive options include more deliverables, from videos and audio content to white papers and other features.
In terms of customization, you could offer a course that’s optimized for a particular industry. You could also offer an extra benefit, such as a 30-minute phone consultation with you, to make it more appealing. These extra features cost more, but they also provide more value.
That’s what we’re going to cover so you can start using these strategies immediately.
How Can Upselling Directly Benefit Your Business?
As an entrepreneur, you only have so many hours in the day. You can’t spend all your time on customer acquisition because you have to create new digital products, manage existing customers, and tackle the dozens of other tasks on your plate.
Upselling keeps your business afloat while you manage every aspect of running an online store. It’s also an easy, affordable way to keep boosting your sales.
We’ll look at the five most compelling reasons to turn your focus to upselling.
1. You Can Build Profitable and Engaging Relationships With Your Customers
When a customer spends a significant amount of money on your business, he or she becomes instantly more engaged. That person has more skin in the game, so to speak, and will, therefore, spend more time and energy on your products than the customer might otherwise.
Think of it like this. You buy two pens at the office supply store. One is a $1 plastic pen that you’ll keep in your kitchen junk drawer in case you need to jot down a quick note. The other is a $200 Montblanc fountain pen that you’ve bought for your office.
Which pen feels more engaging when you use it? Which would you hate to lose? You’re automatically more emotionally invested in the expensive pen. Not only did you spend more money on it, but you perceive more value in its construction, craftsmanship, and ergonomics than you do the cheap pen.
As we discussed earlier, you can also customize products for upselling purposes. We used the example of the 30-minute phone consultation to drive upselling. When you communicate with your customers via phone or other means on a one-on-one basis, a relationship automatically forms. As long as you deliver value, your customers will appreciate the extra attention.
That’s how upselling helps you build profitable and engaging relationships with your customers. You’ll likely communicate with them more because they’ll have questions about your products. Plus, you might get a chance to cross-sell more products to them in the future, which we’ll cover later.
2. You Can Save Money and Time
Customer acquisition can drain your business of funds and purge you of energy. It’s difficult to find new leads, nurture your leads through the sales funnel, and convince prospects to buy. Upselling can relieve the strain that customer acquisition brings to your business.
Let’s say, for example, that you spend $20 to acquire every customer. You would make more money if you acquired one customer who bought $400 worth of your digital products than two customers who each spent $200. In the first case, you’d only lose $20, making your net profit $380. In the second scenario, you’d profit just $360.
This is why customer retention often proves preferable to customer acquisition. You want to keep your existing customers happy and encourage them to spend more with each transaction. If they buy your high-value products, you wind up with more cash in the bank.
Furthermore, you’ll have already developed a relationship with that customer, as mentioned above. You can nurture that relationship by connecting with your customer on social media, through email marketing, and during conversations in the comments section of your blog.
There’s no downside to upselling unless you alienate your customers. We’ll cover that a little later.
3. Customer Lifetime Value (CLV) Increases Through Upselling
Since we’re on the topic of retention, think of your customers not in terms of individual transactions, but with regard to customer lifetime value (CLV). Every customer has a distinct CLV based on how long he or she remains a customer and how much that person spends with your company.
A customer with a high CLV proves far more valuable to your business than one with a low CLV. For instance, a customer who purchases one of your least expensive courses and never returns doesn’t have much value. However, one who returns every other month and buys more of your courses becomes extremely valuable.
If you can increase average CLV across all customers, you’ll have a stronger business. Upselling offers an attractive way to do this.
If you can maximize the value of each transaction, your customers’ CLV will steadily increase. Additionally, you’ll likely improve the chances of your customers coming back for more once they experience your digital products and find they enjoy them.
4. Consumers Like to Feel That They’re Getting a Bargain
Upselling might seem like the farthest thing from a bargain, but it depends on how you position the product. Highlighting your most expensive course, for instance, should involve stressing value over cash.
Yes, it’s more expensive, but you can stress that the value of the course far exceeds its price tag. Provide evidence that you’ve put sufficient material in the course to justify its cost — and then some.
You might have noticed that web hosting companies often offer three or more tiers of services. They often stress the benefits, features, and value of their product with the highest price point to drive customers’ attention to it. Bluehost does this with its shared hosting service:
You’ll notice that Bluehost has made the middle and top tiers the same price as an introductory offer. The customer feels comfortable trying out the top tier because of the lower price point for the first year. After the introductory offer expires, many will likely continue to use that plan.
Bluehost uses a “Recommended” tab and a blue outline to visually draw attention to this plan. This is another strategy that you can copy on the sales pages for your online courses. Get people to buy in to your highest-priced product. Use a three-tiered strategy so that customers who don’t buy the high-end product might invest instead in the middle-of-the-road product.
5. You’ll Improve Customer Retention Rates
We touched on this earlier, but it’s important to understand the value of customer retention. You’re increasing customers’ CLV while improving your relationships with your customers and driving future sales.
Writing for FiveStars, Chris Luo emphasizes that customer retention proves cheaper than customer acquisition. However, it’s not that simple. Luo goes on to report that entrepreneurs should prioritize both avenues to generate the most sales.
In other words, you want to improve customer retention rates, but you also want to convert more prospects into customers. You can’t ignore acquisition altogether because you won’t have any customers to retain.
With that said, upselling helps with customer retention once you have customers in your database. Since your customers have spent more money on your business, they’ll prove more likely to return for subsequent purchases. If you continue reaching out to them via email, social media, and other marketing channels, you can increase the likelihood of retention even further.
Upselling Vs. Cross-Selling
There’s some confusion in the marketing world about upselling and cross-selling. The two words are often used interchangeably, but they actually refer to two different concepts.
Upselling refers to the practice of encouraging customers to buy a higher-end product in a single transaction and for subsequent transactions. Cross-selling, on the other hand, involves encouraging customers to add complementary products to their carts.
For instance, let’s say that you’ve written an online course and an e-book on similar subjects. You could suggest that customers buy both products to get the most value and to acquire the most information possible.
Amazon does this well with its algorithm. When you shop, Amazon displays products that others have bought with the item you’ve chosen to convince you to buy those items. That’s cross-selling.
Neither cross-selling nor upselling is better than the other. In fact, you should use both if you have multiple products available for purchase, especially if they don’t repeat materials or information.
Upselling Strategies to Try
Now that we’re clear on what upselling is and isn’t, we can delve into a few strategies to make it work for your business. You can implement some or all of these strategies to upsell to your own customers.
Upselling at Checkout
The shopping cart offers the perfect place for upselling in the e-commerce market. The customer has already decided to buy a product from your business, so you can suggest a more expensive, valuable product just before the transaction takes place.
You can implement several strategies for this purpose.
For instance, you could schedule a popup to appear when the customer accesses his or her shopping cart. It should offer a unique value proposition and a reason to switch to the more expensive product or to upgrade the product in some way.
Alternatively, you could use a plugin to automatically place upselling content on the shopping-cart page based on the customer’s behavior. An automated solution almost always works more efficiently than a manual one.
However you decide to do it, the shopping-cart page offers the perfect place for upselling because the customer has already committed to the purchase. If you offer something of higher value, your customers might take advantage of it because they don’t want to miss out on extra content or other features that could help them solve their problems or achieve their goals.
Upselling on Sales Pages and Other Internal Pages
While the shopping-cart page offers a great place for upselling, you can implement this strategy anywhere on your website. Ideally, you’ll place upselling features near products that are geared toward upgrades, customizations, and similar value-added features.
If you have a sales page for your lowest-cost product, for instance, you could include an upselling statement on that page that directs customers to the higher-priced options. However, you need to give them a reason to click.
Mention the upgraded product’s most impressive feature — or even a list of three to five features — to immediately capture the user’s attention. Alternatively, you could mention that there are customization or upgrade options directly from the sales page. Getting a customer to add extra features to the online course with add-ons might work better than directing them to an entirely new product.
Most importantly, draw attention to the upselling feature on the page. You could use a button or graphic, for example, that contrasts with other elements. Many customers won’t find themselves interested in upselling, especially if they’re new, but you want to convert as many customers as possible to the higher-end options.
Keep in mind that the same strategy won’t work for all businesses or all products. That’s where testing comes in. Test different offers with regard to upselling to see which ones boast the best conversion rates. Depending on your existing customer base, you can run tests for a few days or even a few weeks to gather as much data as possible.
Upselling Through Payment Plans
There are other options for upselling that can help overcome pricing objections. Some of your customers might want the most expensive product you offer, but lack the cash to buy it outright.Introduce payment plans through Kajabi to make those products more accessible.
Payment plans offer several benefits. First, more customers can take advantage of your upselling offer because they’ll break up the cost into several monthly payments. You can decide on the payment schedule that makes the most sense for your business.
Additionally, payment plans generally cost more than upfront payment. It’s kind of like giving a customer a product on credit. Since you’re waiting to receive full payment, you add an extra 5 to 10 percent (or whatever feels comfortable) to the purchase price and build it into the payments.
For instance, a course might cost $200 if the customer pays full price up front. However, if they want to break up the cost into three monthly payments, they might pay $75 in each installment. That brings the total purchase price to $225 instead of $200.
You have to wait longer for payment, but you wind up pocketing more cash.
Make your payment plans as transparent as possible when you introduce them. Explain when the payments are due and exactly how much the customer will pay for each installment. Additionally, you can decide whether the customer gets immediate access to the course or must wait until full payment has been made.
Upselling Through Customization and Personalization
Customizations are popular for physical products, such as electronics and home goods, but you can also customize or personalize digital products. You might have fewer options, but you can get creative.
We mentioned phone consultations as one example. All it costs is 30 minutes of your time during which you can foster deeper relationships with your customers. You could also offer a group call via Google Hangouts, Skype, or some other platform if you want to maximize your time and still deliver value.
Email consultations can also help drive conversions for higher-priced courses. You could let your members know that they can email you at any time and receive a response within a specific time frame, such as 48 hours or one business day. You’ll spend less time fielding emails than conducting phone calls.
Examples of Upselling on Kajabi
To see a prime example of upselling, check out Dr. Bro. Steve Harris’s Understanding Church Growth Course on Kajabi. Harris uses monthly payments as an upselling option to convince customers to buy his course:
Customers who pay the full price up front save $10 and get instant access to the course, but customers who don’t want to part with that much cash right away can break up their payments into more convenient installments.
Another Kajabi Hero, Nancy Landrum, offers a similar payment-plan upselling offer on her course for the Millionaire Marriage Club:
Customers who select the monthly-payment option spend $111 more on the course, but again, they get manageable payments instead of a large upfront cost.
Best of all, you can implement these upselling strategies directly in the Kajabi platform.
Upselling Best Practices
While upselling can vastly increase your revenue, there are a few important best practices that you should follow if you want this strategy to work well for you.
First, make sure that your upselling offer is relevant to your audience. If consumers can’t understand why you’re making an offer, they’ll get confused. Worse, they might leave your page entirely because they don’t understand your value proposition.
You also have to pay attention to timing. If a customer calls with a complaint, for instance, you don’t want to try to upsell that customer because you’ll only irritate him or her further. The same goes for online interactions. When a customer reaches out via email, live chat, or another medium with a question, don’t turn into an immediate sales person. Instead, put the customer’s needs first.
We’ve already covered the necessity of adding value to your upselling strategy, but you also need to build credibility. Adding social proof to your upselling offer can convince more customers to convert. Reviews from industry leaders and experts are ideal, but user reviews from past customers can work just as well.
Finally, make sure that you’re not overdoing the upselling or cross-selling on your website. It can look too spammy and greedy. Only make an offer when you know that the customer can benefit from it. Otherwise, accept the transaction that the customer already wants to make.
If you’re worried about venturing into spam territory, start slow. Simply put your high-profit-margin products first on your sales pages. Make sure they’re the first thing your customers see. From there, you can add upselling offers where they seem appropriate.
Value-Added Features for Upselling
Value is the most important component to any upselling strategy. If you’re not offering value-added alternatives to cheaper products, there’s no reason for your customers to bite.
How do you communicate value? Talk about benefits instead of features. Make it clear what the customer will gain by upgrading or customizing a product. Instead of listing the features of your online courses, speak directly to the customer about how the online course will improve his or her life.
You can also create a comparison chart that shows what customers will get from the cheaper option and what they can get from an upgraded option. Consumers can see the benefits in black and white and make an informed decision based on what they want to get out of your online course.
Just remember that you can’t hoodwink your customers. If you promise extra value and fail to deliver, you’ll lose that customer for good. Worse, word will spread that your online courses don’t offer as much value as you promise.
So how do you add value to your online courses?
For higher-priced courses, add more interactive content. Conduct live webinars, for instance, so you can answer customers’ questions in real time. Host a podcast just for course members. Archive videos for repeat viewing.
You could also add customizations like phone consultations, industry-specific course options, or email consultations. All of these features create value, but make sure that you translate them into benefits.
For instance, the feature might be a live webinar every Friday at 2 p.m. The benefit, however, could be that customers get to ask questions and hear your responses right away. Spinning the feature as a benefit helps the customer visualize how he or she can learn or grow from the experience.
What is upselling? It’s an affordable, easy way to increase the value of each transaction with your customers. Upselling can dramatically improve your bottom line with very little extra work on your part.
As a busy entrepreneur, you want to make sure to maximize every relationship with every customer. Upselling allows you to do that.
You’ll improve customer retention, help customers feel as though they’re getting a great bargain, and derive more value from each customer acquisition. Plus, you’ll increase customer lifetime value across the board.
Will everyone take advantage of your upselling offers? Definitely not. However, each conversion you make offers a new opportunity to upsell. You can combine upselling and cross-selling, as well, to further increase each customer’s value to your business.
Use as many upselling strategies as possible, but only when they make sense. Start with the shopping-cart page. Make sure customers know that a value-added alternative exists. Spread that message across the rest of your site with in-app upselling.
You can also add payment plans and offer customization options. Both tactics can lead to increased transaction revenue.
However you decide to implement these strategies, make sure they’re customized for your business. Think about your buyer personas and the customers you’ve already acquired through Kajabi. Use that information to decide how to appeal to current and future customers.
Have you tried upselling on your Kajabi website? What has worked best for you?
This article was originally published on the Kajabi Blog.