Upselling has long been touted as one of the best ways to get your customers to spend more. We’ve all been prompted to purchase a second soft drink for an extra dollar or to spend extra for an extended warranty on that new TV or laptop. In-store promotions like these are ubiquitous.
Here we talk to Rob Hango-Zada, sales and marketing expert and co-founder of Shippit and award-winning coffee roaster and retailer Frank Andrews from Frankie’s Beans about the mechanics behind the upsell technique and how to drive sales without driving your customers around the bend.
It’s no secret that the key to successful upselling is to make your customers feel like they’re winning; that is, getting a better deal or more for their money. If you avoid the hard sell route, upselling can help your business win too, driving more sales and increasing cash flow.
“From a shopper psychology perspective, promoting better quality alternatives connotes a subconscious care and concern for the customer,” Hango-Zada says.
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“They feel more valued by the suggestion to trade up to a better alternative and therefore are more likely to purchase from the upselling merchant. Hard sells, on the other hand, are entirely different and have the opposite effect.”
Forcing your customers to hit a minimum spend can work against your business; there’s a real danger that upselling can turn into a deterrent for those who don’t want to spend more.
“Some sites try to extract maximum value from a customer to the detriment of making more sales,” Hango-Zada says.
“Retailers that attempt to be too aggressive tend to alienate customers who feel like they need to swat away offer after offer in order to make a simple purchase.”
He says offering incentives, such as free shipping, is one of the better ways to drive upsell behaviour, particularly online.
“It gamifies the experience for the customer to an extent and gives them a feeling that the additional expenditure will lead to incremental benefits,” Hango-Zada says.
“A multitude of research on this subject backs up the theory; 58 per cent of customers will actively add items to their basket to qualify for free shipping.
“Other studies have found that customers spent an additional $20 on goods to qualify for free shipping instead of paying $9 for shipping.”
And it can work for retail businesses too. Frank Andrews says he employs various upsell techniques at his Sydney-based cafe to give his customers more value while driving sales.
He says the cafe’s incentives to spend more include offering a free coffee with the purchase of a reusable coffee cup, a reduced price bacon and egg wrap with a takeaway coffee, and a free coffee with the purchase of a bag of Frankie’s Beans. They also give discounts on pastries and muffins with any coffee purchase after 2pm.
“This allows us to move stock we would normally simply throw out at the end of the day,” he says. “It works reasonably well as our customers often will buy even though they were only planning to come in for a coffee.
“(Also), if someone orders a bacon and egg roll we ask if they would like halloumi or avocado with it. This is very effective as often the customer would not even consider it as an option so by us suggesting it they are often open to trying it.”
Andrews said his business was careful to avoid the ‘hard sell’, instead focusing on delivering customers more value.
“(Upselling) can build resentment if it is not delivered correctly. We find a subtle suggestion is more effective than a hard sell,” he says. “The upsell usually allows us to further deepen our relationship with our customers as it gives us something further to engage with them about.”
Mastercard seeks to help as many Australian retailers as possible, to grow their businesses by embracing all forms of payment to provide customers the choice to make transactions whichever way they want to, with no restrictions.