Wondering how you can drive sales while improving your customer value?

Let’s talk about upselling.

What is upselling in sales?

In sales, upselling is a strategy where a sales rep or business persuades a customer to purchase a higher-end, upgraded, or more feature-rich version of a product they wanted to buy.

It’s a less aggressive sales tactic that actually focuses on helping customers get what they need and make a better purchasing decision based on their needs. This also significantly helps your business.

The main goal is to make sure your customer’s interests align with additional value—it’s not about you pushing unnecessary products on them.

Here are a few examples:

  • SaaS companies can entice free-plan users to upgrade by highlighting premium features. These could be anything from advanced analytics and automation tools to priority customer support.
  • Consider an airline that offers customers the option to upgrade from economy to business class. The added benefits? Extra legroom, priority boarding, and better meal options. These make the upgrade itself appealing and the price justified.
  • Say a tech retailer wants to upsell a customer to a more expensive laptop—they’d highlight that the suggested model meets more of the customer’s needs by offering more storage, a better processor, or perhaps an extended warranty. 
  • Another example is streaming services like Netflix or Spotify. These platforms offer premium plans that come with features like offline downloads or ad-free content.  

Top benefits of upselling products and services

The key with upselling is that it’s beneficial for both businesses and customers. Here’s why this strategy works:

Increased revenue and profitability

By driving higher sales with every transaction, you can maximize your profits without even having to gain new customers. This comes in handy when customer acquisition costs are high.

Higher customer satisfaction

If your customers are getting products or services that better fit their needs, you can bet they’ll be more satisfied. Consider the customer upgrading from a standard hotel room to a high-end suite—more comfort, more perks, and an overall more positive experience.

Stronger customer relationships

When you give thoughtful recommendations to your customers, it builds trust and loyalty, which is great for business in the long term. A well-timed upsell could be the key to demonstrating to your customers that you understand their needs and are committed to improving their experience.

Cost-efficient growth

Acquiring new customers can be expensive, but increasing the value of an existing customer’s purchase is way more cost-effective. With upselling, you need minimal additional marketing spend, so it’s easier to grow your revenue.

The psychology of sales

Remember that humans aren’t purely rational—psychology influences every decision we make.

Sales is about understanding how buyers think as well as the influences behind their decisions. This includes the customer’s needs, wants, emotions, and motivations. You can then use this knowledge to sell products or services.

Think about it:

Your customers are much more likely to purchase an upgraded version of a product if they see the value in it and how that value reflects their needs and motivations. This means it’s much easier to upsell than it is to convince them to buy something entirely new.

Want to dive deeper into the psychology of sales? Read all about it in our blog post here.

The 4 stages of upselling

To be effective at upselling, you can take a structured approach. Here are the four steps you should take:

  1. Identify customer needs – Get to know your customer’s values and why they are purchasing in the first place. You can do this with surveys, accessing their past purchase data, or by directly interacting with the customer. 
  2. Present the upgrade – Make sure the way you introduce the upgrade to the customer is natural and beneficial to the customer. Focus on how the upgrade will serve them instead of harping on the price.
  3. Demonstrate the value – Your customers need to see the benefits clearly before committing to the upgrade. Using competitive comparisons, testimonials, or even limited-time promotions can be helpful to highlight the advantages. 
  4. Close the upsell – The upsell process should be smooth and straightforward. You can do this by providing clear pricing, making the purchase steps simple, and reassuring the customer by including factors that reduce the risk—that could be a money-back guarantee or a free trial. 

How to identify upselling opportunities

Here are some key opportunities to make your upselling more effective:

  • Customer purchase behavior – Pay attention to your customers’ buying patterns to see if a premium version of a product might be a good fit.
  • Product compatibility – Make sure you offer upgraded products that can enhance an existing purchase. This could be software add-ons or premium features that would benefit the customer.
  • Customer feedback and data – Use insights from your customers’ past purchases and interactions to customize upsell recommendations in a way that’s relevant to them.
  • Limited-time promotions – Special offers go a long way—presenting premium upgrades that add a sense of urgency (without pressure) is a great way to encourage customers to take advantage of the better deal.

Supporting your upselling efforts with CPQ

For upselling to be most effective, you need your pricing to be precise and your recommendations to be personalized.

That can be a tricky ask for sales teams, especially without a solid process in place.

CPQ (configure, price, quote) software is a great tool to leverage, as it streamlines the sales process resulting in faster, more accurate quotes. This makes it much easier to present premium options to your customers.

With PandaDoc CPQ, your reps can more efficiently manage upselling through automated pricing adjustments, which ultimately leads to a better customer experience.

Plus, our solution does this while tracking pricing data for insights on pricing performance and customer behavior.

This means closing deals faster and the ability to offer higher-value options based on your customers’ needs.

Take a look at how you can maximize your pricing strategy with CPQ here.

Upselling vs cross-selling

With similar names, these two terms can be confused. Let’s break down the key differences:

  • Upselling is about encouraging customers to buy a higher-end version of a product—for example, upgrading from a basic smartphone to a newer version with more features.
  • Cross-selling is about recommending a complementary product or service that still meets a customer’s needs. An example of this could be selling a phone case  with a new smartphone.

Both of these strategies work well together, and the right CPQ software can make the sales process simpler by providing custom pricing and product suggestions.

Read all about cross-selling here.

How to implement an upselling strategy

Decided you want to implement upselling into your sales strategy?

Here are a few best practices to keep in mind:

  • Understand your customers – Personalization goes a long way, so know your customer’s preferences; this will help you be more strategic when offering upgrades. 
  • Focus on value, not price – We can’t say it enough—highlighting the value your customer will gain from an upsell is key. Think: does it improve efficiency, enjoyment, or long-term savings? 
  • Use social proof – Demonstrate the benefits with customer reviews, testimonials, or case studies. 
  • Use strategic timing – Focus on introducing upsell offers at the right moment, like during checkout, after a positive customer review, or when your customer achieves a usage milestone.
  • Make upgrading seamless – The process should be simple and hassle-free, so minimize the number of steps required to accept an upgrade.

Upselling mistakes to avoid

There are some common pitfalls people fall into if they’re not smart about their upselling strategy. Here are a few to be aware of:

  • Pushing irrelevant upgrades – If your upselling doesn’t match your customer’s needs, it will feel forced and therefore reduce trust.
  • Being too aggressive – Never pressure your customers into an upsell, especially if they are unsure—let the benefits speak for themselves and trust they will make the right decision for themselves.
  • Overloading with options – Overwhelm is a real thing. Avoid offering too many choices, since that could potentially lead to no decision at all.
  • Neglecting follow-up – Always follow up after upselling your customer—this will help to maintain customer satisfaction and long-term loyalty, which, in turn, leads to more profitability. 

Final thoughts

Remember, upselling can benefit both your business and your customers, as long as you implement it strategically. That means focusing on the right opportunities and your customers’ needs. Want to see how PandaDoc can work for you? Request a free demo today.