Creating Additional Revenue Through Upselling

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  • 0:04 What Is Upselling?
  • 0:56 Benefits & Techniques
  • 3:18 Ethics of Upselling
  • 5:04 Lesson Summary
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Lesson Transcript
Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

In this lesson, you'll learn some techniques you can use to help you upsell, as well as the ethical issues you need to keep in mind to make upselling a profitable option for you.

What Is Upselling?

When was the last time you went shopping? Do you remember the cashier or the salesperson asking if you want to also purchase something else, such as insurance for that new phone you just bought? This is called upselling, an approach that encourages customers to buy or spend more than what they intended to because doing so will eventually benefit them. That insurance, for example, is an add-on to your phone. This type of upselling can actually be very beneficial to the customer. Just think what you would do if your phone broke 14 months after purchasing it. If you had purchased the additional insurance, you would be able to go back to the store and get a new phone or have the broken one repaired for free. But if you didn't buy the insurance, then you'd be stuck with a broken phone since most manufacturers' phone warranties are only good for one year after purchase.

Benefits & Techniques

If your upsell is legitimate, such as the insurance, then upselling is beneficial for the customer. It solves one of your customer's potential problems. In this case, the upsell is selling something that the customer can truly use but didn't think of purchasing when making the initial buying decision. Upselling done right actually increases customer satisfaction and customer retention for your company, increasing revenue. And it's easier to upsell to an existing customer than to a brand new customer. For you, the sales person, a successful upsell will give you a larger sale, and if you work on commissions, then you'll get a bigger commission for it.

The best techniques for upselling are those that show a clear benefit to your customer. You don't want your customer to think that you are selling to him or her. No, you want your customer to think that you care and want to help your customer get the most out of his purchase. So, what can you do?

One technique you can use is where you explain how the upsell gives your customer additional tools he or she can use. For example, a planning app has a basic version that is free. The upsell for this app is a sync feature that lets the app sync to all the other calendars the customer is using for $12 a year. The upsell also provides free cloud storage so the customer won't have to worry if his or her phone dies. The data will be safe. Can you see how a customer that finds the app useful already may willingly pay $12 a year for the added features?

Another technique you can use is that of giving an upsell at a discount. For example, a doggie day care usually charges $30 for a full grooming with bath. When a person comes in and signs their dog up for a day at the doggie day care, the upsell could be the full grooming with bath for only $10 more. The salesperson can present the upsell like this:

Would you like to add a full groom with bath for just $10 more? The full groom with bath is usually $30 but added to your day care, you save $20, that's almost 67 percent off.

The customer here will feel like he or she is saving money and getting an added benefit at the same time. It's a win-win. Of course, in order to do this, you'll have to figure out just how much of a discount you can give without losing money.

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