At What Point Does Upselling Hurt Your Business’ Profitability?

By Rodney Laws | Ecommerce

Aug 13

Suppose you sell two products that do the same thing, except one is cheap and practical, and the other is expensive and luxurious. Along comes a prospective customer with an eye to buying the first one. Do you simply make that sale, or do you make an effort to push them towards the upmarket alternative? It’s the latter, surely — the price is higher, the profit margin is greater, and you stand to gain more from that exchange.

This is the popular art of upselling, and when it’s done well, it benefits everyone. You get to make more money, and the customer gets the indulgent experience of going away with something better than they anticipated getting. But you can take upselling too far, making it not just ineffective but actually counterproductive.

When does upselling start to make you less money instead of more? Let’s consider it:

How upselling can backfire

There’s a fundamental back-and-forth to the sales process. It’s easy to forget that when you’re dealing with ecommerce because it feels so disconnected from any traditional model of negotiation, but it still manifests in the wavering interest of the shopper. They want to feel that they’re getting a good deal, and every time their options change, their opinion does too.

With that in mind, here are some of the ways in which upselling can cause a shopper to be less interested in placing an order:

  • It can give them too many options. There’s such a thing as analysis paralysis where you have too many choices and you can’t ultimately decide. If someone has resolved to buy item A, but you start telling them about items B, C, and D, they might end up leaving without picking one of them.
  • It can confuse them. When you introduce someone to a higher-cost version of a product or service, they might not understand what the difference is — and if you bring up something like a type of warranty or support service as an add-on, it can easily lead someone to wonder why they need it.
  • It can feel heavy-handed. Depending on the execution, an upselling attempt can feel obviously self-serving on the part of the seller. If you conveniently offer a good alternative, it can be useful for the buyer — if you push it too hard (as a series of page-spanning pop-ups, for instance), it will become annoying, which will make the shopper dislike you and want to shop elsewhere.
  • It can ignore intent. There are times and places for upselling, and plenty of circumstances in which it just doesn’t fit. Take budget items, for instance. If someone is pointedly shopping for the cheapest version of something, they’re not going to be interested in being upsold, and seeing your eagerness to drive up their spending will make it clear to them that you don’t understand their needs.

It’s all about understanding context and making sensible decisions about what the shopper will accept before it stops being useful and starts being grating.

How to know when you’re going too far

Most of these factors are subjective and thus hard to gauge, so how do you know when upselling is starting to impede your efforts? The first and simplest method is to focus on the analytics. This calls for a lot of A/B testing: whenever you’re thinking about introducing an element of upselling to your sales funnel, add it as a variant and run it against the existing version of the page.

If you do this carefully as you roll out updates, you’ll notice when it starts to turn against you, because the metrics will reflect it. You’ll see more site visitors leaving after your upselling attempts — they’ll likely leave their original selections in their carts as they go. Naturally, you’ll see a decrease in the average order value: the very thing upselling is supposed to help with.

The reason analytics matter so much is that they move past your fallible impressions of what’s working and cut to the fundamental data: if they show that your upselling results in 2% more conversions, then it’s clearly working, no matter what you think of it.

The value of detailed feedback

In addition to watching your analytics, you should get into the habit of consulting customers to get their feedback about your operation. Ask them how useful your upselling attempts are: do they like being given opportunities to change their orders, or would they prefer to be given space to complete their orders?

This is important for the following reason: customer opinion is often a great predictor of future metrics. For instance, suppose that your analytics show your upselling to be successful, but your customers say that they’re starting to find it a little too much — it may be that making another update will hit the tipping point that turns it counterproductive. If sentiment is turning against your sales approach, you can change course before going too far.

In conclusion, upselling can go wrong in various ways, and starts hurting your profitability when you overdo it without realizing. To avoid this, track your performance carefully, and be ready to adjust your approach when the metrics demand it.

To learn more about building a successful ecommerce business, check out my blog and how-to guides for easy-to-follow advice.