How upsells can benefit your business in a big way
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As an online entrepreneur, you only have so many hours in the day. You can’t spend all your time on customer acquisition because you have to create new digital products, manage existing customers, and tackle dozens of other tasks on your plate. That’s where upsells enter the chat.
Upselling is an easy sales strategy that increases the amount of money your customers spend during each transaction. Instead of acquiring more customers, with upsells, you’re convincing people who already want to buy to spend more cash. It’s a sales technique that keeps your business afloat while you manage every aspect of running an online store.
Now, let’s look at the five most compelling reasons to turn your focus to upselling. You can thank us later!
1. Build profitable and engaging relationships with your customers.
When a customer spends a significant amount of money on your business, they become instantly more engaged. That person has more skin in the game, so to speak, and will, therefore, spend more time and energy on your products than the customer might otherwise.
Think of it like this. You buy two pens at the office supply store. One is a $1 plastic pen that you’ll keep in your kitchen junk drawer in case you need to jot down a quick note. The other is a $200 Montblanc fountain pen that you’ve bought for your office.
Which pen feels more engaging when you use it? Which would you hate to lose? You’re automatically more emotionally invested in the expensive pen. Not only did you spend more money on it, but you perceive more value in its construction, craftsmanship, and ergonomics than you do the cheap pen.
As we discussed earlier, you can also customize products for upselling purposes. We used the example of the 30-minute phone consultation to drive upselling. When you communicate with your customers via phone or other means on a one-on-one basis, a relationship automatically forms. As long as you deliver value, your customers will appreciate the extra attention.
That’s how upselling helps you build profitable and engaging relationships with your customers. You’ll likely communicate with them more because they’ll have questions about your products. Plus, you might get a chance to cross-sell more products to them in the future, which we’ll cover later.
2. Save money and time.
Customer acquisition can drain your business of funds and purge you of energy. It’s difficult to find new leads, nurture your leads through the sales funnel, and convince prospects to buy. Upselling can relieve the strain that customer acquisition brings to your business.
Let’s say, for example, that you spend $20 to acquire every customer. You would make more money if you acquired one customer who bought $400 worth of your digital products than two customers who each spent $200. In the first case, you’d only lose $20, making your net profit $380. In the second scenario, you’d profit just $360.
This is why customer retention often proves preferable to customer acquisition. You want to keep your existing customers happy and encourage them to spend more with each transaction. If they buy your high-value products, you wind up with more cash in the bank.
Furthermore, you’ll have already developed a relationship with that customer, as mentioned above. You can nurture that relationship by connecting with your customer on social media, through email marketing, and during conversations in the comments section of your blog.
There’s no downside to upselling unless you alienate your customers. We’ll cover that a little later.
3. Increase customer lifetime value (CLV).
Since we’re on the topic of retention, think of your customers not in terms of individual transactions, but with regard to customer lifetime value (CLV). Every customer has a distinct CLV based on how long they remain a customer and how much that person spends with your company.
A customer with a high CLV proves far more valuable to your business than one with a low CLV. For instance, a customer who purchases one of your least expensive courses and never returns doesn’t have much value. However, one who returns every other month and buys more of your courses becomes extremely valuable.
If you can increase the average CLV across all customers, you’ll have a stronger business. Upselling offers an attractive way to do this.
If you can maximize the value of each transaction, your customers’ CLV will steadily increase. Additionally, you’ll likely improve the chances of your customers coming back for more once they experience your digital products and find they enjoy them.
4. Consumers feel like they are getting a bargain.
Upselling might seem like the farthest thing from a bargain, but it depends on how you position the product. Highlighting your most expensive course, for instance, should involve stressing value over cash.
Yes, it’s more expensive, but you can stress that the value of the course far exceeds its price tag. Provide evidence (like testimonials and other forms of social proof) that you’ve put sufficient material in the course to justify its cost — and then some.
You might have noticed that web hosting companies often offer three or more tiers of services. They often stress the benefits, features, and value of their product with the highest price point to drive customers’ attention to it. Bluehost does this with its shared hosting service:
You’ll notice that Bluehost has made the middle and top tiers the same price as an introductory offer. The customer feels comfortable trying out the top tier because of the lower price point for the first year. After the introductory offer expires, many will likely continue to use that plan.
Bluehost uses a “Recommended” tab and a blue outline to visually draw attention to this plan. This is another strategy that you can copy on the sales pages for your online courses. Get people to buy your highest-priced product. Use a three-tiered strategy so that customers who don’t buy the high-end product might invest instead in the middle-of-the-road product.
5. You’ll improve customer retention rates.
We touched on this earlier, but it’s important to understand the value of customer retention. You’re increasing customers’ CLV while improving your relationships with your customers and driving future sales.
Writing for FiveStars, Chris Luo, emphasizes that customer retention proves cheaper than customer acquisition. However, it’s not that simple. Luo goes on to report that entrepreneurs should prioritize both avenues to generate the most sales.
In other words, you want to improve customer retention rates, but you also want to convert more prospects into customers. You can’t ignore acquisition altogether because you won’t have any customers to retain.
With that said, upselling helps with customer retention once you have customers in your database. Since your customers have spent more money on your business, they’ll prove more likely to return for subsequent purchases. If you continue reaching out to them via email, social media, and other marketing channels, you can increase the likelihood of retention even further.
The bottom line on the benefits of upselling
Here’s a quick recap of the benefits of upselling:
- Build profitable and engaging relationships with your customers.
- Save time and money.
- Increase customer lifetime value (CLV).
- Consumers feel like they are getting a bargain!
- You’ll improve customer retention rates.
The bottom line? Upselling is an easy and affordable way to boost your business’s revenue—minus the hard work required of gaining new customers.
Ready to incorporate upsells into your own online course or digital product sales strategy? Kajabi makes it easy! You get everything you need in one place to build, market, and sell your digital products. Easily implement your upselling strategy within the same tool for your websites, landing pages, checkouts, and payment processing.
As a result, your customer has a fantastic buying experience with no tech integration struggles on your part.
With Kajabi, you can add up to 10 upsells to your offers. That’s 10x the opportunity to make a sale without the additional work! As the pro, Brendon Burchard, says, “Use this feature! Don’t leave money on the table.”
If you’re already a Kajabi Hero, get into the app and start exploring upsells!
Fully explore everything Kajabi has to offer, and start building your business today - for free. Seriously. Take Kajabi for a 14-day trial spin at no cost to you!
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