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Are you Wasting Money on Customer Acquisition?


You have toiled to build a business; poured your blood, sweat and tears into creating a winning business strategy. You’ve dedicated energy to understanding your clients and offering valuable products. You’ve even considered opportunities to diversify your product line. You’ve done a lot of work and obeyed conventional wisdom. But despite your best efforts, the long-awaited, oft dreamed of revenue spike still escapes you. So, what’s the problem?

The key to unlocking more revenue might be simpler than you think. Current data reveals that when it comes to targeting more revenue, many businesses are getting it all wrong. The most valuable investment you can make is not a matter of finding more customers. In fact, your most valuable patrons are likely already doing business with you.

According to a roundup of customer stats by Invesp, the likelihood of selling more products to an existing customer is 60-70%. That’s compared to a 5-20% likelihood of closing a deal with a new prospect. Furthermore, existing customers are 50% more likely to try new products and spend 31% more than new customers. Yet despite these figures, 44% of companies prioritize customer acquisition over customer retention.

If your sales are not growing in proportion to your marketing efforts, it may be time to cast your net closer to home. Instead of trying to introduce more customers to your brand for the first time, perhaps it’s time to begin placing an emphasis on upselling.

Customer acquisition or customer lifetime value?


It’s possible that you don’t have perfect clarity on your new customer acquisition cost. However, you’ve probably got a pretty good idea about what it’s costing you per year to try and reach new customers. Using that as a baseline, consider the fact that  upselling costs only 24% of what selling to a new customer costs. This means that if you spent your current marketing budget on trying to reactivate new customers instead, you would get a 4x ROI (return on investment). The logic is simple: It is cheaper and easier to sell to someone who has already had a good experience with your business. Put yourself in the buyer’s shoes. Would you rather purchase from someone you already know and trust or take your chances going elsewhere?

What is upselling?

Oftentimes, there is an attitude of disdain when it comes to asking for “the sale.” This feeling only multiplies when it comes to asking for additional sales.

After all, everyone has experienced the cliche of a pushy, clueless salesperson who reeks of desperation at some point in our lives. For some business owners, the idea of upselling feels like the pushy salesperson insisting that you buy more, more, MORE! They fear upselling attempts will do more harm than good, pushing customers away. Contrarily, it’s pretty universally accepted that coercing someone into buying something they don’t want or need is the fastest way to create new business for a competitor.

When done the right way, upselling can actually serve as a powerful tool to make customers happy and enrich relationships. After all, what’s the harm in offering things that people need?

A mindset of service makes all the difference

Author and motivational speaker Brian Tracy, who is well-known for his titles “Earn What You’re Really Worth” and “The Psychology of Achievement,” puts it this way: “Approach each customer with the idea of helping him or her solve a problem or achieve a goal, not of selling a product or service.”

When you let a customer know why spending more money with your brand makes their life better, they will see you as a problem-solver rather than a pushy salesperson. While it is important to clearly convey how the customer wins as the result of an upsell, the reality is everyone wins. The customer gains access to useful products, and you gain the opportunity to further serve them (and reinforce their loyalty to you).


How to upsell customers?


Here are five common ways we see upselling in its many forms. If you would like to explore specific ways you can implement one of the following upselling techniques into your business strategy, schedule time on our calendar for a risk-free strategy session.

1. Upsell a premium product or upgrade

Encouraging a customer to purchase a higher-end product than originally planned for is the core definition of upselling. Furthermore, convincing a customer to purchase more than they originally realized is not a dirty task. For example, let’s say you’re shopping for a new car. Your salesperson offers you exactly what you want. They don’t try to sell you anything extraneous. You get through financing and drive away from the lot, satisfied that you’ve gotten everything you need.

The next day is a frigid, snowy winter day. In April? Yes.

Now you’ve got to hustle to find an extra 15 minutes to defrost your vehicle before heading into work. You rush to throw yourself together. Then, you run out to turn on your car so the engine can warm up. While your engine runs, you vigorously scrape the ice off your windows, hopping back into your car every few minutes to take off your gloves and warm up your cold, wet hands. Your car isn’t really warm enough to heat you through, but it’s warmer than outside, right? What a jarring way to start your day, huh?

Now imagine the alternative.

What if your salesperson had taken a few extra minutes to suggest that you opt for the model equipped with heated seats and remote start capabilities? After all, wouldn’t it be nice to warm up your vehicle while you are getting ready for work, instead of rushing through the morning and toiling in the snow?

The next day, you look outside and — with gratitude — you activate the remote start so that your vehicle can start warming up while you finish up your morning routine. That morning (and likely many mornings thereafter), you slide into your warm, cozy, defrosted car without an ounce of chagrin for the salesperson who anticipated your needs.

The potential positive outcomes of upselling far outweigh the possibility of being “pushy” if you’ve truly got the customer’s best interest in mind. Now, aside from a better experience with the product itself, consider the additional aftermath of this salesperson’s efforts.

When it comes time to buy your next car, who are you going to call? When your friend needs to buy a new car, what’s the chance that you’ll have a great recommendation for them?

Assuming that you understand a customer’s needs and that you offer a worthwhile product, upselling is not just an option; it’s a responsibility. Priorities vary from person to person, and servicing those needs are every business person’s core function. That’s the reason that additional features and upgrades even exist.

2. Offer savings to subscribers

Sometimes, upsells are not a matter of additional features. Sometimes, it’s the recognition that recurring orders are an inevitable part of your business model. Here, you can create an increased  customer lifetime value (CLV) by making it easy and attractive for them to continue purchasing from you instead of your competitors. The simplest way to create an allure for subscription customers is by offering a little savings with every order. For example,, a website that provides pet food and supplies, advertises a 30-lb. Blue Buffalo-brand bag of dog food for $49.98. However, if the customer opts into a subscription for the product, they only pay $47.48 (saving them $2.50 per bag). Chewy even offers 30% off of a customer’s first-time auto-ship order. While the profit made on a subscription order is a little lower than a one-time purchase would be, recurring revenue is more lucrative for businesses long-term.  Upselling into a subscription plan paves the way for customers to spend more money with your brand over time and increases the CLV. (By the way, in case you didn’t already know, we built native subscription extensions for Salesforce and  Magento. So, if you use either of those systems, check ‘em out!).

3. Cross-sell and bundle

Cross-selling is a powerful upselling technique because it showcases add-on products that complement something a customer has already decided to buy. These common-sense purchases can evoke a sense of appreciation from the customer who, without the cross-sale, may have never known the accompanying items existed.

For example, an online browser is looking for the perfect ensemble to wear to her 20-year high school reunion. She finds your website and decides to purchase a dress from you. However, without your help, she may not realize that you’ve also compiled a collection of accessories that would perfectly complete the look. As she makes her way to the checkout, she is exposed to product suggestions based on her shopping cart. She finds your collection of belts, shoes, bags and hats and creates an outfit that exudes sophistication and confidence. Needless to say, she buys more than expected (but without a moment of reluctance or disdain).

Cross-selling also creates a unique opportunity for bundled pricing. For example, if the dress-buyer adds on the shoes and earrings as suggested, they could receive $10 off their total cart. Or, (leading into our next point) maybe she receives 10% off her next order. Some businesses lend themselves more easily to this option than others, but if you’d like to see how this could work for you, schedule a complimentary chat with one of our strategists.

4. BOGOs, discounts or free gift with purchase

Another way businesses increase average order size is by offering a freebie. For example, purchasing 12 premium car wash vouchers rather than six seems much more appealing when a free oil change is included. This strategy also increases the perceived value of what you are selling. In the end, the customer walks away feeling good that they doubled their number of future car washes while getting an oil change on the house.

Just to drive this point home, how likely do you think it is that they will come to you versus a competitor for their next car wash? Creating a bundle like this keeps customers engaged and loyal, so you have an excuse to stay connected and to impress them with each interaction.

Another effective way businesses advertise freebies is through buy-one-get-one (BOGO) offers. The core of a BOGO deal is that when a customer purchases an item, they get the second for free or at a discounted rate. We’ve all been looped in by a BOGO here or there, so there’s no need for an exhaustive explanation. The point is that if you’ve got the flexibility in your inventory or your pricing, BOGO deals are a great way to get traffic and to move a lot of inventory very quickly.

5. Leverage pre-selling

Let’s pretend a perfume company is getting close to releasing a new fragrance. They decide to start selling the product before it is officially on the market. This is called “pre-selling.”

One of the benefits of pre-selling is that it gives a company the opportunity to gauge the demand for the new product. It also makes the customer feel a sense of satisfaction knowing they will be one of the first to gain access to it.

Pre-selling can also serve as an upselling technique. A business may leverage the upcoming fragrance by offering it at a 50% discount for existing customers who spend $50 or more.

Customer acquisition is important, but CLV matters more


The beauty of increasing your customer lifetime value is that you do not have to reinvent the wheel. You simply have to strategically showcase things you already offer at the right time during the purchasing process. Regardless of which upsell method is used, the end goal is the same for businesses — increasing the CLV and average order value (AOV). Using both of these key performance indicators (KPIs) can help you spend your money in a smarter way.

While upselling is an effective eCommerce tool, it is only one piece of a well-rounded business strategy. Tapping into recurring revenue streams and automating business systems can also reduce friction and help supercharge your sales. If you need guidance on putting together a well-rounded, results-driven business strategy, schedule time on our calendar for a risk-free complimentary brainstorming session with one of our eCommerce experts.