Chandler Olson
April 20, 2023
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One of the most surefire ways of increasing revenue — and end-of-year profits — for your eCommerce store? Upselling. Sadly, though, a lot of Shopify merchants aren’t doing enough of it.
Let’s start with the basics: Upselling is when you convince customers to buy an upgraded version of a product, more of a particular product, or other complementary add-ons to a product as a method of increasing overall cart value. For example, upgrading your laptop to a version with more storage or adding insurance to a wedding ring are both examples of upsells.
Upselling is truly a win for both sides: the customer is happier with their upgraded or enhanced purchase, while Shopify merchants like you are happy with increased metrics across the board (increased AOV, LTV, and revenue).
Keep reading to learn our top five reasons why you should be upselling on your Shopify store if you’re not already.
Usually, upsell upgrades or add-ons are no-brainers for customers. While they might not initially think of them as something necessary to their purchase, they’re often times happier after the fact.
Take, for example, AppleCare on an iPhone. When you start shopping for an iPhone online, you’re not necessarily intending to buy a warranty. However, when you’re asked at checkout if you’d also like to add insurance to protect your precious $900 purchase, buying coverage just kind of makes sense (because let’s be real, an iPhone isn’t just a purchase — it’s an investment at that price point.)
With this type of upsell, one could argue that risk-averse customers might even feel grateful to Apple for having their back. “Upselling” feels almost interchangeable with “customer service” at this point.
It’s pretty straightforward: the more a customer buys, the higher the value of their cart. In other words, the higher their AOV — average order value. And at the end of the day, more money per cart = more money at the end of the day for you and your business. You don’t have to be an MBA student to understand this concept, right?
For more of a straightforward explanation, let’s go back to that iPhone concept. The cost of an iPhone 14 Plus is $899. Now the cost of said iPhone with an Apple Care upsell is $899 + $179, or $1,078. Thus, the order value of just one customer increases by $179 with this commonsense upsell. Now imagine even just 100 customers also AppleCare to their carts — that’s an extra $17,900 in the bank!
This goes back to our earlier “leads to higher customer satisfaction” point. How? Because happy customers are more likely to come back time and time again — especially when they feel like they’re receiving stellar customer service.
Why this is beneficial to your business: because it’s MUCH cheaper to keep customers than it is to acquire new ones. One study found that acquiring a new customer costs 5-25x more than acquiring new ones, while another found that increasing customer retention by just 5% can increase profits by 25-95%. Upselling is a pretty easy way to start ticking up that retention rate.
Customer lifetime value — LTV for short — is the revenue a business can expect from a given customer over the entire duration of their relationship. Given that upselling leads to customers who are both buying more and sticking around longer, it makes sense that the average monetary value of a customer would equally increase over time.
All roads lead to…higher revenue for your business. Think about it:
Higher average order value = more money in the bank
Increased retention = even more money in the bank
Higher LTV = (you guessed it) more, more, more money in the bank
And this all together? A lot more revenue at the end of the day for your eCommerce business.
For the sake of offering one final, more comprehensive example, let’s look at Akelare, an eCommerce retailer that sells skincare products. Let’s say you’re stocking up on some items for your daily routine and throw a gel face wash and a rosewater spray into your cart. Upon checking out, you’re asked if you want to also add a cream with hyaluronic acid to your order. (Hyaluronic acid is a daily MUST for the skincare savvy, FYI.) You add it to your cart, resulting in an extra $60 of sales for Akelare and a total purchase of $128.
Now let’s say you later come to fall in love with this trio of face products, particularly for how they function as a unit to cleanse, hydrate, and clear up your skin. When the bottles run out, you immediately head back to Akelare for more. This time, though, since you were SO pleased with the initial results of their products, you also buy a face mask to try out.
Month and month again, you keep returning to Akelare to restock your skincare goods. Their products have grown to become daily staples for you, and you’ve grown to become a very loyal customer for then.
Okay, now let’s break this all down in terms of “why upselling is good.” The initial upsell of the hyaluronic cream increased your first cart’s value by $60. Then, since skincare products often function best when used together, you came to love the results of your initial purchase and returned to Akelare later to buy more. In other words, they retained you as a customer.
Since you had come to trust Akelare’s products so much, you also occasionally tried out other products whenever you returned to restock your core set. Since you were buying more with every purchase AND coming back often, your lifetime value as a customer — LTV — also increased.
Now, what’s this mean for total revenue? Let’s say you had never been prompted with the initial upsell. You bought just two items for a total of $68. Upon trying them later, you weren’t as happy with the results because you were unknowingly missing a crucial hydration component (the hyaluronic acid). You came back to Akelare to restock these two products later, but just 2 times that year. In total, you spent about $204.
With the hyaluronic upsell, though, your initial purchase was $128 — $60 more. Since you were SO happy with the results, you returned 8 times that year to restock your goods and to try out more. That year alone you spent $1,204 at Akelare (if not more with the occasional face mask purchase), or $820 more than you would have had you not bought the hyaluronic acid. At the end of the day, that’s a lot of easy extra revenue for Akelare from one simple upsell.
The easiest way to implement savvy upsell techniques in your eCommerce store? Using the In Cart Upsell & Cross-Sell Shopify app.
This app, which uses AI to recommend products that your customers are most likely to buy, makes upselling on product pages during checkout easy.
Try out In Cart Upsell today with a 30-day free trial. With a 30-second setup and immediate results, your eCommerce you’ll be reaping the rewards of upselling in no time.
