Upselling is a marketing technique used to influence customers to purchase more from you. That could be a more expensive, an upgraded version of a particular item or add-ons to make the product better. Upselling is the perfect strategy to increase the amount of money your customers spend during every transaction. When a prospective customer visits your site, you want them to spend as much money as possible to increase your revenue. For example, an online toy shop can suggest buying some playhouse accessories to decorate their new playhouse at an extra price.
Most businesses focus a lot of their efforts on finding new customers to increase their revenue however, upselling can be just as valuable if not even more valuable for your company’s revenue stream. It can be done with a lot less effort and costs than generating new sales. Instead of wasting time and energy on leads that may or may not buy from you, you’re convincing people who already want to buy from you to spend more cash.
You really don’t have to work hard for revenue with upselling. There is a few changes and adjustments you will have to do here and there for it to work well but it requires much less effort than bringing in new customers. These customers are leads that already made the decision to purchase something from you. You normally need to invest some money to get a potential lead to your website. This can be done by AdWords campaigns, SEO, Social Media marketing and many other forms in order to drive people to your website. Convincing them to purchase something is next and the question is do they want to buy more from you. Customer acquisition can drain funds and energy. It’s very hard to find new leads, nurture those leads through the sales funnel and get them to purchase from you. Upselling can relieve you of that. Let’s say you spend €30 to acquire every customer, more money would be made if you acquired one person who bought €300 worth of your toys than two people who each spent €150. In the first case, you’d only lose €30, making your net profit €270. In the second instance, you’d profit just €240. This is why customer retention often proves more valuable than customer acquisition.
Upselling leads to an increased Customer Lifetime Value which is the net profit a customer contributes to your business over time. The higher a CLV of a customer the better because they produce more income for your business without the business having to invest anything additional. This allows your company to have more money to spend on acquiring more new leads. Every customer has their very own distinct Customer Lifetime Value based on how long they remain a customer and how much they spend. A higher CLV is better than one with a lower CLV, for example, a customer who buys one of your least expensive products and never returns doesn’t have much value. However, a customer who returns every couple of weeks and purchases more of your products becomes extremely valuable. Upselling offers an attractive way to do this. The more a customer buys from you, the more of a connection and value they feel towards your business. If you can maximise the value of each transaction, your customers’ CLV will steadily increase therefore giving you a stronger business and an increased revenue.
Upselling is an e-commerce method that is often left unexplored by businesses. It helps you get the most out of the sales you are already getting. To see how we can use upselling to increase revenue for your business, visit us online today and book a consultation with us.