Upselling: How It Helps Increase Average Order Value

Upselling is a common sales technique used by companies to motivate customers to purchase more expensive products or services similar to those they have already chosen.

Let's take a closer look at what upselling is and how to use it.

The online store suggests adding other similar products

The essence of upselling is to offer the customer a product with clear advantages compared to the originally selected option. You encourage the client to buy a more expensive product, upgrade the chosen option, or add additional features. The goal is to increase the purchase value and, consequently, the business's profit.

An effective upsell will increase the average order value or the customer's lifetime value, thereby boosting revenue both immediately and in the long term.

What Upselling is Used For

Upselling is a powerful tool for revenue growth across various industries, used in the sale of smartphones, household appliances, subscriptions, and even fast food.

Here’s How Upselling Can Benefit Your Business:

• Customers will start spending more. Upselling increases profit by raising the average transaction amount, and it also boosts the number of sales. This is achieved by recommending customers more expensive products or improved versions of existing ones.

• Customer loyalty will increase. By offering customers genuinely useful additional options, rather than just more expensive products, the company shows that it cares about their interests. This builds trust and makes the customer feel like they’re being offered solutions rather than just being exploited for profit.

• You retain existing customers. Customers who are already familiar with the company and the quality of its products are more likely to be interested in improved versions. It’s more challenging to sell expensive products right away to people unfamiliar with the brand.

• You gain a better understanding of your customers. Upselling reveals which additional products or services might interest customers and assesses their readiness to purchase more expensive options. Additionally, upselling shows how customers' needs change over time. For example, an online clothing store might offer customers dresses along with matching accessories. By analyzing customer reactions to these offers, the store can gauge interest in specific products and offer more personalized upsells in the future.

Upselling or Cross-Selling?

Upselling and сross-selling are different sales techniques, but they are often used together to increase the overall profitability of a deal or raise the average transaction value.

• Upselling focuses on enhancing or expanding the product that the customer is already planning to buy.

• Сross-selling involves offering the customer a complementary product or service.

For example, a cleaning service might offer the customer the option to clean more rooms (upsell) as well as carpet cleaning (cross-sell). A tech store might recommend a more expensive phone (upsell) or a smartphone case (cross-sell).

Both upselling and cross-selling are based on the idea that sales are driven by recommendations. The customer is already showing interest in the company and its products, and you offer them something else based on their preferences.

Types of Upselling

Let’s explore the different types of upselling.

Product Upgrade

Imagine you are choosing a phone or another similar gadget. The company, understanding your interest, shows you options with more storage, a full set of accessories, or additional services. These enhanced versions of the product are often displayed directly on the product page, encouraging the buyer to consider the potential benefits. Or, for example, when purchasing a plane ticket, you might be recommended a more expensive class. In the end, thanks to upselling, the customer gets a product that perfectly meets their needs.

Longer Subscriptions

Companies often offer discounts on subscriptions when paying for a longer period, such as a year. This is beneficial both for customers and the companies themselves. Additionally, the user has the option to choose a more expensive plan with extra features — such as an ad-free version or access to 24/7 support.

For the company, securing such a subscription means guaranteed payment for future use of the service, which directly impacts the customer’s lifetime value (LTV). It also gives your staff more opportunities to showcase the product’s advantages to a new user, build trust, and turn them into a loyal customer.

Great deals on longer term offers from Grammarly

Larger Packages

Stores offer familiar products in larger sizes at a more favorable price per unit. This way, the customer saves in the long run, buying less frequently but in larger quantities. This applies to any everyday items: laundry detergent, paper towels, or non-perishable food products.

BOGO

The method of “buy one, get one free” is based on the offer to purchase more units of a product at an attractive price. For example, a store might run a promotion like "2 for the price of 1." Many people will want to save money and buy more.

BOGO example from a footwear store

Enhanced Warranty

When selling certain products and services, companies offer customers an extended warranty (for an additional fee, of course). This option usually appears at the checkout stage of an already selected product. Warranties and insurance are especially relevant when purchasing expensive gadgets, cars, and plane tickets.

Chrysler extended warranty

Customization

Many companies allow customers to customize a product to their liking. This option is often available when purchasing cars, food, electronics, shoes, accessories, and jewelry. Restaurants frequently use this feature—for example, when ordering a pizza, you can add extra ingredients.

Casey's online ordering offers custom pizzas

Such a personalized offer often requires significant production costs, so companies usually provide ready-made components that customers can use to create their own design. It is important that the degree of customization is controlled and aligns with the company's capabilities.

How to Use Upselling Correctly Without Scaring off the Customer

Upselling is an effective way to increase a company’s revenue. However, it’s important to do it right, as you can easily push the customer away if you apply too much pressure. Here are some tips on how to use upselling properly:

• Don’t chase immediate profit. Upselling is not a magic wand for instant wealth. Don’t offer customers products that are significantly more expensive than their initial choice. If someone has selected a phone for twenty thousand, they are unlikely to want a device for ninety thousand. This approach may sometimes bring a one-time profit but will leave the customer dissatisfied. A disgruntled customer means lost loyalty and potentially missed profits in the future.

• Think about the customer. The main goal is not just to "push" more products but to build strong, long-term relationships with both new and existing customers. Understand their problems and offer an add-on that genuinely solves them. Don’t pressure the buyer — there’s no need to send dozens of messages suggesting they should buy a more expensive option. Before offering an upsell to existing customers, make sure they are satisfied. Do they like everything? Are they happy with previous purchases? For new customers, you can offer a trial period, so they can appreciate the benefits of the product and make an informed decision. To stimulate sales, offer bonuses like free shipping or a discount on a more expensive option.

• Educate, don’t sell. The best way to take the pressure off the customer is to turn the process into a mini-education (in a good way — it shouldn’t be a boring lecture). Know your products. Explain to the customer why they should consider an add-on, but don’t be pushy. Offer a product comparison so they can see the value of the premium version themselves. At the same time, try to focus on the customer.

Plan comparison

• Create a sense of urgency. Combine upselling with other techniques, such as promotions. Offer the customer a special, "limited-time" discount to encourage them to make a purchase. Yes, you may slightly reduce your profit, but you will still earn more than without the discount.

• Try social proof. Include feedback from satisfied customers to motivate the person to make a purchase.

• Provide a choice of several attractive options. Beautiful design and detailed information about several premium offers will attract customers’ attention. People are more likely to choose one of the enhanced services if they understand and feel its value. Offer customers three options: basic, standard, and premium. In this case, the buyer will likely choose the middle option—it’s not too expensive but still has some advantages over the basic version. Be sure to highlight the differences between the plans to emphasize the value of the more expensive ones.

Here, the middle option is highlighted as the most favorable one

When to Use Upselling

Many people are familiar with upselling before making a purchase, but in reality, it can be applied at every stage of customer interaction.

Before the First Purchase

Whether you run a business online or offline, effective upselling begins with the first introduction to the customer. If you have an online store, place comparison charts next to basic products to subtly introduce customers to enhanced or premium versions. If you operate offline, place upsell products on shelves next to basic alternatives. This way, you attract the attention of buyers and offer them more interesting and functional options.

At Checkout

Upselling can also be done during the checkout process. Inform customers about offers that can make their purchase even more beneficial: volume discounts, gift wrapping, or extended warranties.

After the Purchase

This type of upselling allows customers to enhance a transaction they’ve already completed. It is especially effective for digital products, where additional features can be easily added.

Disadvantages of Upselling

• A poorly presented upsell offer or excessive pushiness from the seller can irritate the customer, leading to refusal or even a loss of loyalty. It’s important to remember that upselling should be done delicately and presented in a way that is beneficial to the customer.

• Upselling does not yield quick results. It takes time to understand customer needs, build trust, and test different offer options. Don’t expect an immediate surge in sales after implementing upselling.

• There is a risk of creating offers that seem uninteresting or unappealing to customers. On the other hand, the options might not be profitable enough for the company itself. It’s essential to carefully consider the structure of the offers to ensure they are attractive to customers and beneficial to the brand.

Conclusion

Upselling is an effective tool for increasing sales by recommending more expensive options to customers. However, to achieve success, it’s important to consider customer needs, carefully develop offers, build trust, and implement the upselling strategy wisely.

Don’t underestimate the time required to test strategies and train staff. With the right approach, upselling can become a powerful driver of growth for your business.