How to Use an Upsell Funnel to Increase Your Average Order Value
An upsell funnel is a sales strategy to get customers to add higher-value products on top of their initial purchase.
When customers add their favorite products to the shopping cart, you can display higher-priced products or services to encourage them to buy.
The proactive approach will enable you to foster long-term connections and increase sales. Creating an upsell funnel also helps you maximize revenue from each customer.
We’ll explore how upsell funnels work, their effectiveness, and how to implement them to get impressive results.
What is an Upsell Funnel?
An upsell funnel is a sales technique to convince customers to purchase an upgrade to the existing items in their cart.
Imagine a prospective client is interested in purchasing a car. Once they’ve finalized the deal, the sales representatives might suggest upgrade options such as leather car seats, a sunroof, or a premium sound system.
Typically, this would be the upsell — an enhanced version of their original purchase.
The entire process, from choosing a car model to considering the upgrades, is an upsell funnel. By strategically presenting these options, businesses can increase customer satisfaction and boost revenue. It’s also an effective method of enhancing average order value (AOV).
How Upselling Increases Your Average Order Value
Customers often view upselling as a better deal. For example, if someone adds a pair of boots, introducing additional products, such as boots made of superior leather, would be a good upsell opportunity. Since the price point for these would be higher, your average order value (AOV) naturally increases.
Upselling can impact your AOV in the following ways:
- It makes shopping more convenient: Upsells make it convenient for users to pick an item in less time. They don’t have to surf your entire product catalog to find an upgrade option.
- It makes customers feel better: Customers often think they are getting a good deal by purchasing in bulk. For instance, upselling shorts and high-quality jeans as a bundle or phone cases and luxury mobile covers together can entice customers to buy both items.
- It helps customers see the product value: Upselling helps potential clients visualize their savings during checkout.
- It increases sales: By presenting additional products, you can tap into customers’ FOMO (Fear of missing out) and drive more sales.
- It improves the profit margin: Upsells often involve higher profit margins, leading to a more significant profit per sale.
- It reduces cart abandonment: Well-crafted upsells reduce cart abandonment rates by adding value and convincing customers to complete their purchases.
The more upsells you offer in your marketing sales funnel, the more your customers will be happy.
Let’s review the steps to create an upsell funnel to increase your profits successfully.
How to Create Upsell Funnels?
Creating upsell funnels involves understanding your customers, crafting compelling offers, and optimizing the customer journey.
Here’s a blueprint for creating a strategic upsell funnel.
Identify Upsell Opportunities
Check if your upsell offer complements customers’ primary purchase. For example, if someone adds a phone to their cart, you can upsell a higher-priced phone to give them a chance to reconsider their decision.
Similarly, if a person checks out regular subscription, you can convince them to upgrade to the deluxe account. Providing users with a more compelling option can increase the chances of a sale.
You can also provide the following as upsells:
- Add-ons: Provide optional extras that increase product value, such as extended warranty or gift wrapping.
- Bundles: Create a package with similar products to increase product value.
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Once you have people’s valid email addresses in exchange for a valuable lead magnet, you can start to upsell products on top of the premium product.
Understand Your Customers
Before deciding on the upsell offers, know your customers’ interests and preferences. Divide your audiences into groups based on demographics, psychographics, or behavioral attributes.
This will provide insights into what customers value the most. Some people might be interested in eco-friendly products, while others could prefer luxury items. Knowing the key distinction will help you create the right upsell offers.
Craft Compelling offers
According to SEMRUSH’s study, existing customers spend more than new customers. In addition, acquiring a new customer can cost more than retaining an existing one. The best way to retain an old client is to give them compelling offers.
Practice these key strategies to create convincing offers:
- Offer a clear value proposition: Tell customers how the upsell will increase product value and reduce the overall pricing. You can include a subtle pricing structure to showcase how the bundle offers can provide additional value without spending more.
- Include limited-time offers: Promote a sense of urgency with limited-time deals. Campaign Refinery allows clients to add a third-party countdown timer to show time-bound deals.
- Offer discounts and bundles: Offer price incentives to encourage purchases. For example, you can offer an ‘X percentage off’ discount when someone adds the upsell product to their carts. This will increase the AOV and provide customers with valuable additional products.
- Use personalized recommendations: Comb through existing customer analytics and data to understand how to target specific clients with promotions and offers.
- Utilize video sales letters: According to Wyzowl’s survey, 88% of the respondents buy a product or service after watching a video. Video sales letters are sales pitches delivered via videos. You can make your brand stand out from the competition and increase customer curiosity.
Design Effective Upsell Pages
Keep the upsell information clear and concise. Highlight the upsell value by using high-quality images and videos. In addition, use email copywriting techniques to include crisp information and garner customer attention.
Once you’ve captured customer attention, guide them to a compelling call to action. This will encourage them to take the next step in the upsell process.
Optimize the Upsell Offers
Timing is crucial when upsells are involved. Present upsells at the right time in the checkout process. Typically, it will be after the user adds their selected products to the cart and proceeds to check out. You can include specific products and highlight the value before they are about to check out the original items.
This way, customers have enough time to think over the upsell item and re-consider their decision before finally making a purchase. Sometimes, buyers might need to be made aware of the existence of a certain product and upsell can guide them to the relevant item.
These 5 upsell best practices will take your cutormers to the final click and payment:
- Make the upsell offer prominent: Ensure your upsell offers are easily visible and accessible. The best place is on the checkout page, right above the pricing breakdown. You can also add the upsells to the product pages below the description.
- Test your offers: A/B test and experiment with different upsell options to determine what works best for your audience.
- Optimize for mobile: Ensure your upsell offers are mobile-email friendly. 76% of U.S. adults report purchasing products through smartphones. That number is even higher among adults under 50.
- Track and analyze upsells: Regularly monitor conversion rates, AOV, and customer lifetime value to understand the effectiveness of upsell offers. Watch out for the key email marketing campaign metrics for better personalization and relevance.
- Use data to refine strategies: Use insights from the analytics to refine your upsell strategies.
We’ll review an example of the upsell funnel to gain a deeper understanding of the process .
An Example of an Upsell Funnel
Below is an example of an upsell funnel selling a smartphone:
- Initial purchase: A customer adds a smartphone to their cart.
- Upsell offer 1: The customer is provided with the latest model with high-end features before checking out.
- Upsell offer 2: Based on the customer’s acceptance or rejection of the first offer, they might be provided with additional items, such as a protection plan or accessories.
- Post-purchase upsell: After the purchase, the customer may be offered a wireless charger if bought within 48 hours.
The upsell process can vary depending on your product and customer requirements. But how do you figure out if your business needs an upsell funnel right now?
In the next section, we’ll discuss the possibilities that your business might need one.
How to Know if Your Business Needs an Upsell Funnel?
An upsell funnel can be a powerful strategy for increasing profits, but it may not always be appropriate for all business types.
Surf through the indicators below to know if your business needs one:
- Low average order value: If your customers regularly purchase low-priced items, an upsell funnel can increase the total value of each order.
- High cart abandonment rate: Users who leave carts mid-way might benefit from additional offers or incentives.
- Product range: If you’re already cross-selling items, you can implement an upsell strategy to maximize the effectiveness of each sale. Cross-selling and upselling must complement each other to create a stronger value proposition.
- Customer loyalty levels: Building stronger customer relationships through upsells can increase repeat purchases. If you’re noticing a dip in customer loyalty, it’s time to build an upsell funnel.
- Competitor review: If your competitors use upsell strategies, you can employ similar tactics to retain customer interest.
Additional Questions to Ask Yourself
For in-depth knowledge on whether you need an upsell funnel right now, ask yourself the following questions:
- What products are currently performing well?
- What’s unique about the high-selling item?
- Can you identify upsell opportunities that can enhance customer satisfaction?
- Are there higher-priced items or bundles that will appeal to clients?
- Do you have access to customer data to personalize upsell offers?
- Are you willing to invest time and resources to test and refine an upsell funnel?
If you answered yes to most of the questions, your business will likely benefit from an upsell funnel strategy.
Let’s learn when to use upsells to increase effectiveness.
When Should You Use Upsells?
Upsells are employed at strategic points in a customer journey. Depending on customer preferences, you can offer different upsells to create urgency and increase sales.
The table below illustrates the different scenarios for using an upsell offer.
| Stage | Customer action | Strategy |
|---|---|---|
| Product page | The customer is viewing a product | Showcase upgraded versions or related products as suggestions |
| Add to cart | The customer adds a product to the cart | Offer ad-ons directly in the cart |
| Checkout process | The customer is in the checkout process | Provide limited-time offers |
| Post-purchase | Immediately after the purchase | Thank you page upsells or post-purchase email offers |
| Order confirmation | The client receives an order confirmation email | Include upsell offers in the order confirmation email |
| Subscription renewal | Before a subscription service is due for renewal | Offer an upgraded plan or additional benefits |
| Special promotions | During special sales or promotional events | Create bundled offers or special upsell discounts |
With many ways to reach customers, email marketing is a potent tool to nurture customer relationships and drive upsells. Combined with an upsell funnel, it becomes an effective strategy for increasing AOV and customer lifetime value.
We’ll look at how email marketing and upsell funnels can be a powerful duo.
How Email Marketing Supports Upsell Funnels
Email marketing allows you to micro-segment subscribers according to where they are in the customer journey.
Here are more ways how email marketing enhances the upsell funnel:
- It enables targeted communication: Email marketing allows you to segment subscribers based on purchase history, behavior, and demographics, enabling personalized upsell offers.
- It offers post-purchase engagement: You can suggest upgraded items in the thank-you email.
- It helps with automation: Email marketing automation enables you to send relevant and timely emails, increasing upsell opportunities.
- It allows you to incentivize customers: Emails will enable you to send specific offers and coupons to interested users. This improves customer experience and overall brand reputation.
Above all else, a solid email deliverability rate ensures your upsell offers land in customers’ inboxes. That’s why it’s super-important to use a reliable email marketing platform for your upsell funnels.
Benefit from the Highest Email Deliverability Rate With Campaign Refinery
A good email deliverability rate is the first step to getting more people in your sales funnel. The more emails that reach customers’ inboxes, the greater the possibility that they will take action.
Campaign Refinery offers the highest email deliverability rate on the market. We take extra care through a robust authentication system, constant deliverability review, and superior deliverability tools.
One of our premium tools is automatic email list cleaning — it removes harmful and inactive email addresses before you hit the send button. You’ll also benefit from the mandatory domain authentication and a first-rate sending engine that fastrack email speed to maintain consistent inbox placement rates.
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