Upselling

Upselling is a method of optimizing business sales and revenues by presenting customers with an alternative product range with similar or relative characteristics to particular types of products that customers intend to purchase. Upselling aims at influencing buyers to purchase multiple products, switch to higher-end products, get exposed to new products in the market, encourage add-on purchases, or purchase complete sets of products that are used together (such as a printer and inkjet cartridge). Many retail businesses practice upselling techniques in varying scales depending on the prices, qualities, and types of products on offer.

Upselling is a technique that has been synonymous with the restaurant businesses for many years. Restaurants are known to use upselling to initiate increased sales volumes at the point of sale while increasing customer satisfaction at the same time. More often than not, when customers place orders, waiters or waitresses suggest additional appetizers, drinks, or desserts suitable for accompanying particular customer orders. In situations where customers have to wait for a given period of time for an order to be prepared, waiters and waitresses always ask customers whether they mind taking beverages or appetizers to whet their appetites while waiting for their orders to be ready. Such initiatives prompt customers to purchase items that they may not have intended to purchase before, and as a result, sales volumes increase.

UPSELLING TECHNIQUES

The process of adopting upselling techniques in a business begins with establishing past trends with the objective of using the past trends to determine forecasts for future trends. Apart from facilitating the identification of top

customers to be targeted, tracking of past trends also facilitates adequate stocking of relevant varieties of product mix suitable for upselling campaigns. Intensive employee training must be conducted to ensure that all sales employees in the business understand the techniques of how to interact with customers and when to initiate sales pitches whether online, on the telephone, or across the counter. Firms can adopt two main types of broad-based upselling techniques to enhance sales revenues; value perception and information technology (IT) systems.

VALUE PERCEPTION

Creation of value perception among customers regarding particular product combinations or alternatives should be the guiding principle for promoting upselling initiatives. For example, the aspects of durability, convenience, and greater utility value should come out clearly when suggesting an alternative product that is of a higher price than that of a particular product that a customer intends to purchase. Microsoft uses such strategies to convince customers seeking to purchase old software versions of Windows operating systems (such as Windows 2000) to consider purchasing the latest but more expensive versions of the Windows operating system (such as Windows Vista) by highlighting the extra features of the latest versions of Windows operating systems that older versions do not have.

Therefore, the customer must be provided with adequate reasons as to why purchasing a given set of products increases the utility value of the products. Testimonials and recommendations from past customers can play a great role in shaping the perceptions of prospective customers regarding the utility value of particular products or product combinations. Many electronic retail stores such as Amazon.com have user interface elements in their electronic systems that allow customers to summarize the experiences they have had using products such as books, jewelry, shoes, electronic items, or clothes purchased through these systems. Prospective buyers refer to these testimonials and recommendations when seeking products with the best durability and utility values.

TECHNOLOGICAL SYSTEMS

Automated computer software systems are widely applied by businesses to perfect web-based and e-commerce upselling initiatives. Leading retail stores such as Wal-Mart and Tiffany's are perfecting the use of Web sites and e-commerce sites to utilize the full potential of upselling techniques and achieve high sales targets. Such web businesses enjoy the advantage of automated data mining and web analytics tools that analyze the purchasing trends of customers and determine product combination preferences. For example, Amazon.com and eBay online automated systems base product add-on suggestions on the browsing habits of online buyers.

Use of automated IT systems is more effective when combined with other forms of strategic approaches, such as providing free shipping for certain product combinations or product values and including a direct add to cart checkbox of additional product suggestions close enough to the main product. Amazon.com, in particular, uses its trademark tag, “Customers who purchased this item also purchased the following items” to prompt online buyers to make additional product purchases from three other suggestions provided by the system. Search engine optimization tools and Web sites can also be used to provide highlighted links to similar products of higher qualities and prices that customers can then view.

Managers must always strive to ensure that all upselling activities and initiatives fit within the overall framework of organizational structures and strategies. Employees who demonstrate increased sales and revenues through upselling techniques should be duly recognized and motivated. Generating of increased sales revenues, increased customer loyalties, and sustainable market share must always remain the overriding motives for upselling.

SEE ALSO Sales Management

BIBLIOGRAPHY

Chaffey, Dave. E-Business and E-Commerce Management 3rd ed. Marketing Insights Limited, 2007.

Clow, Kenneth, E., and Donald Baack. Integrated Advertising, Promotion, and Marketing Communications. Upper Saddle River, NJ: Prentice Hall, 2007.

Jobber, David, and Geoff Lancaster. Selling and Sales Management. 7th ed. Pearson Education Limited, 2007.

Kotler, Philip, and Gary Armstrong. Principles of Marketing, 12th ed. Upper Saddle River, NJ: Prentice Hall, 2008.

Smalley, Carrol. “Guide to Cross-Selling and Up-Selling Your Products: Maximize Every Sales Encounter to Increase Your Bottom Line.” 2008. Available from: http://www.business.com/directory/advertising_and_marketing/sales/selling_techniques/