Marketing to your Customers: Upsells

This is the first of a three part series entitled “Marketing to your Customers”. The theory here is a very basic one, selling to existing customers is far easier, and cheaper, than finding new ones. So in order to be successful, it’s vital that you master the basic skills of marketing to existing customers. And those skills are different in many ways than the ones required to market to non-customers.

Whether you do it at the point of purchase or at some time in the future, increasing the value of your sales is an important part of growth.

Let’s make up an example to start us off. I run a company that sells dog food online. The average sale is $40. If I can increase that average sale to $44, assuming the number of sales stays constant, then I can increase revenue by 10%. Clearly there are differences between companies in the products they sell and who they sell to, but this advice is meant to be general enough so that anyone can apply it to their current sales and pricing strategies and find success.

Now here is where we have to make a quick distinction between the two types of upsells:

  1. Point of purchase: this refers to increasing the value of the sale as the sale is being made, before the transaction is completed.
  2. Future purchase: this refers to a sale of a higher value product after a customer has already purchased a lower value product in the same class.

Point of purchase upsells have been shown to work well. Car salesman use this tactic with the add-ons not included in the base price of a car. Ecommerce companies will show customers what other customers are buying in an effort to get people to add things to their shopping carts before checkout.

The key here is to allow someone to make their own selection with minimal pressure. Once they do, and they’re ready to purchase, you’ve got them in a position of vulnerability. In their minds, they’ve already decided to purchase, so they’ve made a commitment. And if that commitment is for $40, asking them to spend another $4 doesn’t seem like that much.

Offer multiple versions of a product with higher costs associated with more features, offer product add-ons, or offer complimentary products that you can recommend the person purchase at the same time.

Future purchase upsells use the same philosophy as the point of purchase ones do, but here you get a chance to prove your value before you try to upsell your customer. Included in this kind of marketing is the marketing that “freemium” companies do to try to get people to become paying customers.

The advantage of the future upsell vs. the point of purchase upsell is that you’re allowing the customer to complete their original checkout with minimal distraction. You don’t risk losing the initial sale. The disadvantage is that you are not catching them at the opportune time, when they are most ready to buy.

Later this week we will explore two other forms of marketing to your existing customers to increase revenue.