It costs about five times more to acquire a new customer than it does to retain one. Competition in eCommerce has made customer acquisition hard and its digging into the retailers' profits.
Chasing after new customers is financially draining. Upselling, cross selling and other strategies which involve the customer spending more and more each time are far better and more profitable.
If you’re not upselling on your Shopify store then you're leaving a lot of money on the table. Whether upselling is new for your business or you’re looking to upgrade your existing upselling strategies, this article will be of great help to you. So keep reading to learn how to successfully upsell on your Shopify store.
What is upselling?
Upselling is the sales technique which involves persuading the customers to buy a more expensive or premium version of the product they are already interested in buying.
Upselling is not new and has been in practice for a long time by businesses to encourage customers to spend more money, boosting their average order value.
Why is upselling important?
Although upselling may look like a "dirty" sales tactic at first glance, when done right, it not only enhances the customer experience but also skyrockets revenue. It is a powerful marketing strategy for few reasons:
1. Boosting Customer Lifetime Value
Upselling can lead to increased CLV by turning shoppers into very profitable customers. Merchants can increase the amount of money the customer spends with them over time by recommending upgrades or premiums that add value to the customer’s original order.
Upselling creates a win-win situation where the customer feels like they are getting more value and the retailer generates more revenue.
2. Cost-Effective Marketing
Acquiring new customers is a really expensive and hard practice. Upselling to existing customers is far easier and more cost-effective than acquiring new customers.
Since the existing customers already know and trust your brand, they're more likely to buy the premium or upgraded version of the products. Upselling can boost your revenue without spending as much on marketing and advertising.
3. Building Deeper Customer Relationships
When done right, upselling is far from a dirty sales tactic, it's a customer happiness tactic. It can actually help customers 'win' by providing them with upgraded or add-on products that enhance their original order and make them feel like they got a better deal.
Upselling also boosts customer retention by creating a positive shopping experience that adds value to customers, making them more likely to return to the retailer in the future.
Cross-selling vs Upselling
Upselling and cross-selling are both marketing and sales techniques used by retailers to increase sales, but they slightly differ in their approach and objectives.
Here the goal is to persuade the customers to buy a higher-end or upgraded version of the product they are already considering.
Like when a customer is considering a basic smartphone, and the website recommends a higher-end model with more storage and better camera quality.
The goal of cross-selling is to convince the customers to buy extra items that complement or enhance their original order.
Example: When a customer is buying a camera, and the website suggests a tripod, extra lenses or a camera bag that would complement the camera purchase.
The key difference between upselling and cross-selling is the objective. The aim of upselling would be to convince customers to upgrade to a higher-end product, while cross-selling aims to encourage customers to purchase additional products that complement their original purchase.
While upselling and cross-selling are both successful strategies to increase sales, they require different approaches and can have different effects on the customer's shopping experience.
How to upsell without being too pushy
While upselling is a powerful strategy to boost sales and revenue, many brands worry about coming across as too pushy or manipulative.
Upselling can be an effective way to increase your average order value. However, it's essential to avoid appearing too pushy or salesy when upselling to your customers. Here are few strategies you can use to create highly-converting upsells while remaining customer-focused:
1. Use upsells to help your customers
Rather than simply using upsells to boost your bottom line, consider how they can help your customers solve problems and meet their needs and desires. Your products either solve a specific problem for your customer or spark their desires.
To use upsells effectively, you should clearly explain how the upsell can help your customers address their problems or fulfill their desires. You'll be more likely to see conversions when you frame your upsell offers as a solution to their needs.
2. Create a genuine urgency or scarcity
Creating a sense of urgency or scarcity can be a compelling way to encourage customers to take action and buy the products.
FOMO or Fear Of Missing Out is a powerful motivator. However, you should ensure that any sense of urgency or scarcity you create is authentic and not fake or misleading.
If you are offering a limited-time discount, you better stick to the timeframe and not extend the offer beyond what was promised.
3. Always personalize your upsell offers
Don't try to upsell customers on products that aren't relevant to their interests or needs. Instead of pushing the same upsell offers to every customer, consider personalizing them based on their purchase history or browsing behavior.
You will not only build customer loyalty and trust by tailoring your upsell offers to each customer's unique interests and needs, but also see a massive boost in conversions.
How to upsell on your Shopify store
Upselling can be a valuable strategy for Shopify stores, but it needs to be done strategically to avoid overwhelming or annoying your customers. Here are some tips on when and where to upsell on your Shopify store:
1. Before Purchase
Your upsell strategy should be set in motion the second a customer clicks on any product on your store. Displaying recommendations before a customer makes a purchase is an effective way to introduce them to more products that they may be interested in.
Display these upsell recommendations on product or category pages. Ensure that these recommendations are personalized to each customer. Use AI to personalize recommendations based on the customer's browsing history, their search queries and other customer data.
For instance, if the customer is considering a little black dress. AI can upsell a more premium version of the same dress or an upgraded fabric that will make the dress more durable, thereby boosting AOV and enhancing the customer experience .
2. During Purchase
Your upselling strategy shouldn't just be limited to your product page. You could continue offering relevant recommendations to customers during the buying process to help them make more informed decisions.
You can recommend upsells in pop-ups, in the shopping cart, on the checkout page and in abandoned cart emails.
For instance, if a customer is buying a lipstick, you can offer more expensive lipstick in same shade that is better and helps keep the lips moisturized.
The key point here is to recommend products that are relevant and truly add value to your customer's life.
3. Post Purchase
You don't have to stop upselling if the customer has already placed an order. Upsell recommendations should also be displayed on the Thank You page and Post purchase page on your Shopify store.
After a customer makes a purchase, you can use personalized follow-up emails to encourage them to come back for more. You can drive repeat purchases by sending personalized emails with recommendations relevant to the customer.
With PersonalizerAI you can upsell anywhere and everywhere on your Shopify store. You won’t need any extra apps for upselling in cart, checkout, pop-ups, emails or post purchase. With a single app you can upsell before purchase, during purchase and after purchase.
Best practices for Upselling on Shopify
Your goal for upselling should always be to make the customer feel like they have gained something beneficial, whether that's a better product, a discount or an exclusive offer.
When done right, the customer will leave the transaction feeling satisfied and more likely to return for future purchases. Here are some best practices for you to follow:
1. Always personalize the upsell offers
Personalization is a necessity when it comes to eCommerce. The upsell product recommendations should truly add value to the customer's purchase.
To increase the chances of the customer making a purchase use AI to generate personalized product recommendations. AI and machine learning uses customer data to personalize offers and recommend products that are most relevant to the customer's needs, interests, browsing and purchase history.
2. Use side-by-side comparisons
Display clear and detailed comparison to show why the more expensive option is worth their investment. Show them how the premium option provides more value, is of higher quality or has extra features that are worth the investment.
3. Don’t be too pushy
Offer alternative options for customers to consider, but avoid being pushy and let them make their own decisions. Give them space to make their own decisions and consider the options provided.
4. Offer a range of alternatives but not too many
Display a range of upsell products for customers to choose from, but avoid overwhelming them with too many options. A good rule of thumb is to offer no more than 3-4 options to keep things simple and avoid decision fatigue.
5. Create a sense of urgency
When upselling, create a sense of urgency by highlighting limited stock or time-limited offers. FOMO is a powerful motivator and will encourage customers to buy sooner rather than later, reducing the likelihood of them leaving the site without making a purchase.
6. Encourage customers to spend more by offering rewards
You can offer free shipping, future discounts, or other incentives to customers who are considering purchasing the additional item. Like offering free shipping if they spend a certain amount or a discount on their next purchase if they spend more than a specific amount.
Understanding your customers' needs is crucial to upsell successfully. Effective upselling enhances the customer's shopping experience and offers them relevant and valuable products. A good upsell always leaves the customer feeling like they won.
Make your upselling more effective: How Personalized Product Recommendations Increase AOV for Shopify Stores