All else being equal, retailers that maximize the value of existing customers fare better than those who don’t. The chase to increase this value fuels a variety of strategies, from promotional pricing to the placement of “impulse buy” items near checkout counters.
Experienced sales members and entry level cashiers alike are often encouraged and incentivized to entice add-on purchases for customers. When done correctly, the upsell increases customer spend while also increasing satisfaction levels, making shoppers feel like they got a great deal, saved time, or satisfied a need.
But it’s almost never that easy. Upselling relies on sound strategy, psychological judgment, and authenticity; it’s all too easy for customer perceptions of upselling to move from helpful to sleazy on a dime when retailers fail to implement tactics that are designed mindfully. Even when upselling succeeds, it can result in buyer’s remorse if the customer later realizes the upsold item was not really wanted — that breeds resent, which erodes loyalty.
The risks associated with upselling are amplified online because of the channel’s nature as a self-guided experience. Without the benefit of engaging in two-way communication with customers, the ecommerce channel cannot analyze needs and attitudes in real-time and alter tactics accordingly. It is also extremely easy for online customers to abandon sites the moment they feel they are being hustled, even if it means ditching a full shopping cart. That happens in a split second.
However, the ecommerce channel offers some significant benefits to upselling that are not available in the brick and mortar setting.
Progressive ecommerce platforms offer upsell options that can be used very successfully when executed keeping a few best practices based on consumer behavior in mind. Following these tips optimizes the chances of converting customers on upsold merchandise and making sure they feel good about it.
Display the offer after the checkout process is complete: Online cart abandonment is through the roof. The most conservative estimates put cart abandonment rates at over 65%, so no element that could jeopardize finishing a transaction should ever be introduced. No matter how attractive an offer, anything that distracts a customer from completing a transaction presents a hurdle to conversion. Presenting upsell offers after transactions are complete removes the risk of the offer affecting the primary sale.
Upsell offers should be executable with a single click: Any extra step required to complete an upsell offer exponentially reduces its success rate. After a transaction has been completed, the ecommerce database has already been populated with all necessary customer and payment information. This makes it possible for customers to complete upsell offers with only a single confirmation click, minimizing opportunities for them to abandon the process. Simplicity is of paramount importance.
Only offer relevant merchandise for upsell: Random upsell offers feel forced and off-putting to customers, enforcing the perception that they are not understood or valued. The most effective upsell offers are relevant to consumers and can be based on items they just purchased, merchandise purchased over time, or using personalization algorithms to align offers with identified customer segments. Seasonal items offered around holidays or other events can achieve universal relevance and are useful when individual customer data is not available or for retailers that market merchandise that is heavily impacted by seasonality.
Promotional pricing should accompany any upsell offer: Discounts on upsell offers create a sense of urgency and are necessary to maximize upsell conversions. With so many choices available to consumers all the time, there is no motivation for them to make last minute purchase decisions on items that can be purchased for the same price at any point in the future. Not only do consumers need to be presented with relevant offers, they also have to feel like they are getting good deals that are exclusive and cannot be replicated at another time.
Despite the handicap of lacking two-way communication with customers, only the ecommerce channel can provide immediate upsell offers for any item inventory. Single click purchasing also offers a level of convenience that is difficult to reproduce in store. The self-guided nature of ecommerce makes unwanted upsell offers feel less pushy to consumers because they are easy to ignore or close without evoking a sense of guilt; there is no unwanted pressure. That makes them less likely to alienate existing customers, even if they miss the mark.
When online upselling strategy is implemented correctly, customers generally give serious consider to offers. But even if they don’t convert, the exit is so simple that they are unlikely to hold it against retailers for trying.
Zeke Hamdani is Director of Web Services for Celerant Technology.