Optimized Ecommerce EP 034 – Boost Your Average Order Value with These Upsell & Cross Selling Strategies
Today on The Optimized Ecommerce Podcast, Dominik Meiu joins Tanner Larsson to discuss the importance of upselling and cross-selling and how to use these strategies to boost your Average Order Value and Average Lifetime Value. Tune in today’s episode and learn how you can use upselling and cross-selling to maximize both your Average Order
Welcome to Episode #034 of Optimized Ecommerce – Boost Your Average Order Value with These Upsell & Cross Selling Strategies. I’m your host, Tanner Larsson, CEO of BGS.
BGS means Build Grow Scale! It is a community that we founded where eCommerce entrepreneurs and physical product sellers come to learn how to take their businesses to the next level.
Today, Dominik Meiu joins us for the second time around, he is the youngest team member in BGS is and one of the most effective Revenue Optimization Experts in our pool of experts in our optimization team. Some of our biggest accounts rely on Dominik’s technical skills to boost their sales and scale.
Here’s just a taste of what we talked about today:
We talked about the importance of upselling and cross-selling.
Upselling is a method used to invite customers to purchase a more expensive item or an upgraded version of a certain product. While cross-selling is a method that adds value to the original product.
Upsell cross-selling are important tactics for businesses to take to increase their Average Order Value and the Average Lifetime Value.
Then, Dom discussed the specific kinds of products that can be used as upsells.
The biggest thing to keep in mind with upselling is it needs to add value to the original product. For example, adding washcloths that go perfectly with the glass cleaner.
Upselling goes the same way as upgrading, an example of this is a 16-ounce bottle to a 24-ounce bottle, that extra eight-ounce is going to provide value to the customer because they can get more of it.
As long as businesses provide value in their upselling method. They are going to see a good take rate and it’s not going t hurt the customer’s journey.
And then, we dove into the best ways to offer and position the upsells.
One of the most successful way to offer and position upsells are through order bumps. This helps boost conversion rates and adds so much value that makes people want to buy and spend more money.
We also discussed a few other fun topics, including:
- What is priority processing?
- Why do upselling products need to be simple and relatable?
- How can businesses know whether or not their upsells or order bumps are working?
- The importance of simplifying the product and the offer itself.
- How do businesses deal with optimizing their upsells?
But you’ll have to watch or listen to the episode to hear about those fun topics!
How To Stay Connected With Dominik Meiu
Want to stay connected with Dominik? Please check out their social profiles below.
Also, Dominik mentioned the following items on the show. You can find that on:
- Order Bumps – is an App that often appears on the checkout page sidebar check box to add another product to the customer’s initial order that compliments the product in the checkout.
Tanner Larsson 0:07
What’s up everybody? Welcome back to the Optimized Ecommerce Podcast. I’m Tanner Larsson, your host and today we have a returning guest, which is pretty cool. He is the man with the biggest hair in the company. Out of 64 employees and team members, there is nobody who has more hair on his head than Dom does. So Dom today, last time, we did like a really long, awesome episode where we talked about all kinds of really cool stuff that you should listen to. He’s funny, he’s intelligent, and he actually is a wizard. At this revenue optimization stuff that we specialize in. And love to claim fame for Dom is He was the youngest person we’d ever hired. I think he was almost 11 when we hired him. And I made the same joke in the last podcast. So if you don’t laugh, it’s okay. Um, but yeah, so now, he’s a rock star. And today, Dom is going to take us through some more important stuff, and specifically upsells and cross sells, and why they’re important, but also, how do you use them to maximize both your average order value, and your lifetime customer value. One of the things that many many stores struggle with is boosting that AOV, above what their acquisition cost is for their traffic costs for this per sale. And the cross sells and the upsells are one of the easiest ways that you can it are things you can implement to help boost that AOV in a massive way, and help you offset that traffic cost so that you can afford to keep buying traffic. So Dom thanks for being here.
Dominik Meiu 1:32
Yeah, thanks for having me.
Tanner Larsson 1:33
Absolutely. So let’s just kind of dive in, right. I mean, we already know who you are, what you do you know how handsome you are all those things. We know that. But let’s go ahead and dive into what are upsells? And what are cross sells? And then why are they important. So let’s do start with what each one is first.
Dominik Meiu 1:49
Cool. So I’ll start with upsells. So upsells are basically just a technique, like you were saying to increase the AOV, and or LTV kind of depending on how you’re doing them and what you’re doing. But the definition of an upsell is basically a method where you’re inviting the customer to purchase a more expensive item or upgrade from what they’re originally buying. So like an upsell would technically be, maybe you’re buying a 16 ounce bottle of glass cleaner, the upsell would be the 24 ounce bottle of that glass cleaner. So it’s basically the same product but a more expensive version a a plastic razor to a metal razor, things like that, where a cross sell is going to be more complimentary items to that product. So using the same examples, it’s going to be maybe wash cloths to go with that glass cleaner or additional razor heads to snap on to that razor things like that. So the thing with cross sells is they have to or they don’t have to but they definitely should provide value to the original product that the person is actually purchasing were upsells is basically just a better version of that product, more of that product, things like that. So
Tanner Larsson 3:11
Now as a clarity piece, guys, for those of you who are you know, familiar with, you know, clickfunnels or Russell Brunson books, or even my first ecommerce evolve book where we talk about a lot about funnels and stuff upsells get used as like the the catch all, it’s like the Kleenex, right? There’s other brands of Kleenex, but we all we just call it a Kleenex. When it comes to upsells we kind of label everything either an upsell or a down sell, even if it falls under the cross sale category. And that’s okay. When you’re upselling someone you can upsell them to the the traditional term is the similar or upgraded version of the product, but you can just as easily upsell them to a complimentary product. So understand that we’re not saying like cross sales are really that different from an upsell from the perspective of their being positioned to upsell the customer to an additional purchase. So if you’re new to this, you’re listening to it and wondering kind of why we’re talking about them differently. We’re explaining the two main types of ways that you can get people to upsell to a higher price product.
Dominik Meiu 4:12
Right, right. That was addition to products. Right? That was the technical definition. But yeah, like you said, I basically call them all upsells. When I’m talking to clients, it’s all an upsell. As far as the technical definition that that is the difference.
Tanner Larsson 4:27
So let’s go into why they’re so important. Now we touched a little bit on it. But why don’t you go a little deeper?
Dominik Meiu 4:31
Yeah, so like you were saying earlier, a lot of people struggle with their average order value on that first purchase above that acquisition cost. So the power of upsells is actually going to be boosting that AOV to where that first purchase is going to be higher than the acquisition cost, which is absolutely key to a lot of businesses to every business, right? Because if you’re returning customer value, you’re returning Customer rate is low, then you definitely need that AOV to be significantly higher than the acquisition cost. So what upsells will do is take that initial purchase price, and significantly boost it through, like you’re saying other products, things like that. Oh, yeah,
Tanner Larsson 5:18
I know, I mentioned that it was a, you know, upsell to a higher priced product. But it doesn’t always have to be that guys. So it can, it could be like, as Dom was saying, you know, you’re buying a razor, the razor might be 25 bucks, or whatever, if it’s a high quality razor, and then the upsell is an extra pack, or two, three packs of razor heads. And maybe it’s a five pack of razors, and there’s their 399. That’s technically an upsell. But ideally, if you’re going to do something like that, you’re better off bundling that to get that little that price point higher, but the upsell price does not always have to be higher than the purchase the original purchase price or the original Add To Cart price, you it’s a good idea to do that in a lot of cases. But testing will show that sometimes the sweet spot is to have it be just under or at the same level as that. So keep going on Dom.
Dominik Meiu 6:05
Yeah, um, to just add on to that. You can see significant grades on those complimentary add ons, even if they’re cheaper on like, let’s say, like you said, the $25 razor, but a three pack of razor heads is 999, that can have a significant take rate. And with a $25 purchase, you know, taking $25 to $35 is a significant investment. So it doesn’t always have to be bigger, there’s a lot of different strategies, you can definitely do and test to see different kinds of take rates upsells downsells, even like I said, where you could hit them with a high purchase upsell, and then the down sell could then be that lower priced item. So, as far as how important they are, they’re, in my opinion, one of the most important business tactics to take, and everybody should be doing them in one way or another, there’s really no reason to not be, especially if you have products that do complement other products on your site, and you can make them if not. Totally. So one example that we’ve actually done and created a new product just to upsell is priority processing. So we’ve actually take rates from anywhere from like 5%, to up to 15, 20% on this one. And all priority processing is is giving the customer the option to choose it and actually processing their order a little bit faster than others. So moving there or to the to the front of the line and shipping earlier than the others. Like I said that was a new product that we basically just created in order to upsell and increase that AOV. And we’ve seen price ranges on that go from 299 I think on the cheap end to 2499 on the high end was still a credible take rate
Tanner Larsson 7:59
Totaly. Now with priority processing. Guys, this is a good example of let’s say you are a one product store or a you know, one product and a few variations or you know, color differences or whatever you’re like I don’t have any complimentary products. Well, that’s where priority processing, that’s honestly where we came up with it was back in the early funnel days were like man, we need something else. And we originally use it as an order bump. And we’ll talk about that in a little bit. But we’re like we need something else to boost that AOV a little bit that has a high take rate. So we said priority processing. Now again, it’s not shipping, we’re not upgrading their shipping, we’re upgrading the fact that, like we’re guaranteeing that your product will go out the door within 24 hours or bump to the front of line and we’ll ship faster. And people want that convenience, they’re willing to pay for it. And like Dom said anywhere between 299 to I think five or six bucks is what we’ve tested for years and years and years, we did it at the 399 price point. And we had 18 to 20% take rates all day long. And it was just an extra you know little bit during the holidays, it was much easier to raise that price, because people are you know that much more time conscious about their product, their purchases. So it would be like oh, take rate goes up. But we also raise the price because of the holiday crunch. So you can take a offer that runs at $2 and 99 cents or 399. All year, all of a sudden, it’s 699 or 799 during the holidays and people don’t bat an eye. So but again, that’s a completely like made up offer, if you will, it’s we’re legitimately offering that and legitimately getting it out the door faster. But it didn’t require any inventory or product cost or any kind of r&d to do. So you can take that add it to a one product store, which is one of the places that we use it quite a lot. And it does wonders and it can also be used in conjunction with other actual product upsells as well.
Dominik Meiu 9:49
Yep, yep. And the beauty behind it. Like you said, there’s no cost. That’s printing money.
Tanner Larsson 9:55
Right. So let’s build on that a little bit. So we talked about priority processing, which is super awesome. We’d love that one. It’s one of our favorites. But let’s talk about some other kinds of products that can be used specifically as upsells. That tend to make good upsells.
Dominik Meiu 10:08
Yeah, so I kind of covered this already a little bit, but I’ll go a little more into depth. So the biggest thing to keep in mind here is it needs to add value to the original product in one way or another. So it either needs to be like the cross sale example where, you know, we’re adding wash cloths that go perfect with this glass cleaner or something like that. You don’t want to upsell, like totally random things like an earring with a glass cleaner, like nobody’s going to take it needs to serve a purpose and provide value to the original product. Same thing, as far as upgrading, it’s the same thing. So I’ll use that example from a 16 ounce bottle to a 24 ounce bottle, that extra eight ounces is going to provide value to that customer, because they’re getting more of it. So um, as far as more products like priority processing, I don’t have any on the top of my head. But the biggest thing to keep in mind there’s just provide more value. And I’ve seen this done in a million ways. For example, there’s, I’ve seen brands that sell key chains to go with their, they have like emblems, basically and they’ll they’ll sell the key chain upsell the key chain to attach the emblems to and things like that. So as long as it’s providing value, you’re going to see a good take rate, and it’s not going to actually hurt the customer journey.
Tanner Larsson 11:37
Oh, so yeah, so yeah, a couple others that we could talk about. One another one that’s kind of a easy upsell with a minimal cost is to offer gift wrapping as well. Now that works better in different holiday times. And you may not even be set up to do it if you’re using third party fulfillment. But if you are offering gift wrapping as an upsell can be a pretty high profit thing that really doesn’t take a whole heck of a lot of time, especially if you standardize the way you gift wrap on the on the fulfillment side. So that’s another one that works hand in hand with priority processing they can do really, really well. Another thing is just build off what Dom said when we talk about you know something that adds value, it needs to be relatable. So when we talk about this one of the examples that like we give is like if someone buys a flashlight, you know, an upsell could be regular batteries. Okay, now that is an okay upsell because yes, you need more batteries for your flashlight but it’s not a great upsell because chances are they have batteries at their house or they can go to Walmart and get them it’s not something great but if you offer them rechargeable batteries that with a charger that specific to that flashlight that like their high high storage, high discharged batteries that you know and they speed charged with the speed charger. Now you’re saying okay, Hey, I know you can get batteries anywhere. But this works really well and then you tie it in the with the upsell like hey, these batteries will extend the life and the brightness or the whatever, you’ll get more light on a longer charge whatever it is you build in those benefits now that upsell makes total sense, okay, and it’s going to have a higher take rate than just selling them a wholesale pack of batteries that you bought from Duracell or from someone else. Now on the other side of that if they buy the flashlight so like another thing could be an upgrade to a complimentary type flashlight so more of the same actually works really well. We used to sell a ton of tactical knives and stuff like that. And the upsell that always seemed to work the best was more tactical knives just a different type or a different style. You think why? They just bought this one like Rambo looking knife? Well, yeah, selling a different style Rambo looking knife as an upsell. And it works. In the flashlight game. It works as well. I’m just giving you simple examples here. But we sold a custom designed tactical 600 lumen flashlight, which is it’s a pretty big flashlight is about that big. And it was an awesome, awesome flashlight, but it’s big. So one of the upsells that we had was a pin light, which was a very skinny, almost the size of a pin. I usually have one sitting around here, but I don’t right now, but it was about it’s about this size. And it was only 80 lumens. So it was a very small one. But it was when they could throw in their pocket and it wasn’t going to be bulky and we sold them on that like Hey, have the big light for the situations that you need it but have the pin light for all your everyday stuff. And it was an easy $24 upsell on top of the $89 flashlight they were buying. Now, where does it get weird? Where do people screw up? upsells and Dom’s seen this a lot too. But they’ll do something like let’s stick with the flashlight example. And they’re selling a flashlight and then all of a sudden the upsell is a tent. You said hey, you love a tent or a hammock? It’s a way Yes, of course you could make extrapolate and say that someone who has a flashlight is going to be outside and they might need to attend. But you’re you’re really stretching that point to try to think that every person or the majority of people are going to need that. So you need to make sure they’re very relatable and then Also from a supplement or consumable standpoint Dom talked about a little bit about the, you know, a bigger bottle, right? Well, one of the that works great. But let’s say you can also do more of the same one of the most successful upsells in the supplement industry is taking someone from one bottle to three or six bottles as the first upsell. Now, if you’re selling continuity on the front end, that’s the one of the biggest full pause people make is they sell continuity to get I sell Dom a subscription to a testosterone booster, not that he needs it, because he’s super young. But let’s say he buys it, and he’s on a subscription, monthly subscription. And then I upsell him three or six bottles at a huge discount. Well, what what’s Dom gonna do, he’s gonna immediately cancel the subscription, because he’s got more testosterone booster than he’ll ever use. So, but we see that a lot, because people just take the upsells as like, Well, I have to do it. And they don’t consider the methodology of how they’re applied. There’s a whole lot of psychology behind why upsells sales work, and it has to do with the buyers high and the dopamine rush that comes into effect. And we’re going to kind of get into that right now. So Dom, now that I’ve rambled for a while, let’s pull back on topic, and have you talked about the some of the best ways different options of offering and positioning these upsells.
Dominik Meiu 16:13
Yeah, so there’s a million different ways to actually offer these, I’m going to dive into a couple that I’ve seen the most successful with, that’s going to be order bumps, and post purchase. So order bumps are my favorites. Personally, I’ve seen huge, huge success with these. And they actually don’t impact the customer journey. If they’re done right, they won’t affect conversion rate, and they’ll only affect AOV, I’ve actually added order bumps that have boost the conversion rate, which I’ve been able to wrap my head around why maybe. They’ll take it. They add so much value that makes people want to buy even more and spend more money. So order bumps basically are is they’re just gonna be stagnant areas on either the product page cart or Checkout, that’s just a very simple, like one click to add to cart. So for an example, let’s say I add the razor a nice metal razor to my cart. Inside that cart, there’s just going to be a little section that says, you know, want to add three razor heads for a 20% discount, and then there’s going to be a simple button there to add that straight to cart. So I’ve actually seen take rates on this up to 25%, depending on what I’m offering, I actually worked with a client that had a cleaning product. And I ups I was cross selling another cleaning products, It was for a car on a different style of that product for the glass on that car. That was I think 34.99. And I was seeing a 25% take rate on that in the cart, which was nuts, their adding the original product, which was like $40, I think to the cart, and then a quarter of the people that were heading there actually added a another $30 product straight to their cart and bought, which was just crazy.
Tanner Larsson 18:12
So let’s dive into that a little more, I want to expand for like someone who’s not used to order bumps, talk about the importance of like the simplicity of the product and the offer itself and an order bump.
Dominik Meiu 18:23
Yep. Yeah, so the product needs to be really simple and really relatable, you couldn’t be upselling anything that’s complicated, or needs a big description, because it needs to be very simple. Like the example you’re saying with the batteries, like that’s very simple and doesn’t need a huge explanation. It just rechargeable batteries with charging pack. And what you can actually do if you want to get more in depth is have like info, icons, pop ups if the user decides to click on it, things like that. But I’ve seen the best success like the one I had. And that last client didn’t have that it was just a very, very basic product that didn’t need a description that obviously provided value to the original product.
Tanner Larsson 19:07
And the idea is that with these order bumps, they’re not supposed to take the attention away from the sales process. So they need to be metal, like he said simple but they need to be unobtrusive and be able to be described in like one to two sentences with a very small image. And ideally, something that doesn’t have variations, right? Because the example that we always give is apparel. If a lady adds a dress to cart, and you trying to upsell them through an order bump, another address. That’s not something a woman is going to just click a checkbox and add it to her cart, she’s going to need to go back to the page, read about the dress, see all the different images make sure figure out what size fits her decided if she likes it. There’s a whole lot more thought process that goes into a product like that versus something like adding batteries, adding razor heads, adding a cleaning kit for your sunglasses, things that are very simple and easy or like glass cleaner to a car cleaner, makes total sense doesn’t require a lot of explanation and doesn’t cause cognitive load on the buyers part. Because the idea is to keep the buying habit and the whole buyers journey process subconscious, we don’t want them to consciously thinking because if they start consciously thinking, then they start trying to talk themselves out of the purchase,
Dominik Meiu 20:21
You don’t want to interrupt the customer journey, you want to keep it as simple as possible as clean as possible, like you said, don’t take attention away from the actual sale. Um, I’ve ran tests with both I’ve actually ran tests offering pop up upsell where the take rate is okay, but it absolutely crushes the conversion rate. As it interrupts that user journey. And people, a lot of the times people will actually get upset about that kind of stuff. Whereas just those very simple minimalistic upsells never had an issue those.
Tanner Larsson 20:53
And that actually brings up a good point that we should touch on is that most if you’re on Shopify, specifically, it happens on other platforms as well. There are ways to aggressively offer like in cart, upsells, and things like that, using apps that look on the surface, like they’re actually helping, but in fact, are hurting it, Dom going to talk about that in more detail in a little bit. But just because your AOV goes up does not mean it’s actually helping. And for that reason, most of the time, we don’t do a lot of in cart upsells, as opposed to doing on product page upsells, or post purchase, which he’s gonna talk about those two in a minute. So if you’re using an app, and it’s really aggressive in the cart, chances are it’s more healthy. Because again, the only focus we really care about in the cart is getting them to proceed to checkout, not continue shopping or adding more products. And we’ve done a lot of testing. And I know Dom gonna talk about some data stuff in a minute. But it’s very, very critical that you realize that just because an app allows for an upsell on a specific place, doesn’t mean it works or doesn’t mean it works. It might work on the superficial level, but on a deeper level, it may not be helping.
Dominik Meiu 22:08
Yeah, absolutely gonna make itself look good. Yeah.
Tanner Larsson 22:12
Oh, yeah. Where they pull data from is a whole another story as well, they can attribute their data from a whole bunch of sources that aren’t even upsells. But anyway, that’s getting ahead of ourselves. So we’ve talked about order bumps, anything you want to add there, more about wearables before we jump over to post purchase.
Dominik Meiu 22:28
No, not really. Okay, well, then transition on. It’s purchase, as this is another strategy that I’ve seen work incredibly well. So if you’re familiar with one, click upsell, which I’m sure a lot of Shopify owners probably are. That’s the platform that we’ve typically used to use our posts to do our post purchase upsells. When a post purchase upsell actually does is offers the upsell after the user has already purchased the original product. So there’s absolutely no interference with the customer journey, because they already bought the original product. So if they say no to the upsell, it just runs their credit card for the original product. If they say yes, that upsell, then it just adds that to the original order. So again, you want to be relatable here, you want to offer products that add value to what they already purchased, whether that’s more of it, a complimentary product, something like that. And then you don’t want to go crazy with this too. I’ve also seen funnels where they have, you know, like four upsells four down cells, and that’s just going to piss your users off big time and they’re not going to come back. You want to keep it simple, I would say at most two upsells two down cells. And like I said, the more they actually add value, the less you’re going to make your customers mad
Tanner Larsson 23:50
So on that the upsell because it’s post purchase, meaning that they’ve clicked the purchase button they’ve already entered their credit card details is the next screen they see before they see the thank you page, you’re actually showing them a page. Okay, if you wanted to do that upsell like we go back to the dress example and you wanted to offer an additional dress like it’s really complimentary or it’s cute and people or you your data shows from a basket analysis that people who buy dress A also wind up buying dress C if you want to offer dress C as an upsell, the post purchase upsell play is the best place to do that. Because you have time and you have space to actually get their attention. You can show all the different versions of the dress, you can show a video of it you can let them look at sizing the sizing guide there’s time there to show a more complicated offer. So if it can’t fit that one click order bomb opportunity. The post purchase upsell is the best place to do that. And there’s no reason not to you can have a long page that presents the upsell. It could be another sales page are another lengthy product page. That’s totally acceptable. Providing that it’s designed in a way to you know capture an interest and guide the person along the sales process to either making the necessary sell them But make the right decision for them whether they want it or they don’t. If they want it, they click the add to cart the buy button and buys it. If they don’t they click the No thanks button, and it takes them on. If there is like Dom was talking about multiple upsells, the way that works is upsell one, they see that right after the checkout. If they say yes or no to that, if they say yes, and there’s another upsell, it’ll take them right to that next upsell. If they say no to upsell one and there’s a down sell, they’ll take them to the down sell. And then from there, it will take them to the next upsell. So it can be if someone says no to both, they could potentially see four different offers, even though there’s really only two main offers because there’s two downsides with it. And a down sell is just a cheaper version or a like if you’re selling a six pack of something, maybe have a down sell as a three pack, it’s usually a lower priced offers a version of the same upsell. So you know where he’s going with these these, this is where you can really really maximize that AOV, because the customer is already committed to buying, they’ve already given you their money. They’re that buyers high and that dopamine rush is at its highest point of the sales process, their mind is feeling euphoric, they’re excited. And their barriers to buy more stuff is at its lowest possible point. So all those guards that they normally have raised are down. So this is when you present those other higher priced offers, and you get your take rates up. And that’s where your AOV can really maximize.
Dominik Meiu 26:26
Yep, well said.
Tanner Larsson 26:29
So now we talked about how to use it. Actually, you know what, before we go on, I want to talk a little bit more about downsells. Just to make sure we kind of fully explain those. So a down sell happens after an upsell. And so if let’s say there’s only one upsell, you’re upselling, a six pack of supplements, six months supply of supplements for 100 bucks. If they say no to that the down sell could be Hey, you don’t need six months, how about a three month supply for 50 bucks, or 45 bucks or whatever. And the idea there is to try to salvage that sale because hey, just because they don’t say no to six doesn’t mean they don’t want three or still want more than the one bottle that they purchased. It’s a great thing to use, but down sells can be overused. More so than upsells. Because people think, oh, I’ve got an upsell that I have to have a down sell to try to get them get that sale. It’s not the case, only use a down sell if it’s truly relevant and going to provide value to the user. Not is it going to make me more money is it going to provide value to the user because the problem is this sales funnel mentality that the market has is that I can get rich off a sales funnel. And I can make all this money off a sales funnel. So people build their sales funnel. With every possible monetization piece in place, like Dom was talking about four or five, six upsells. Lots of down sells just stupid. Now, yes, you might make more money from that one sale. But Dom alluded to the other part of it is you’re going to piss your customer off. And what we’re going for here is a business, not a one off sale. So a business relies on repeat customers. And if you treat them badly in that upsell funnel, where they just get abused by you trying to hit them with all kinds of offers, they may not ever come back more than likely they won’t come back. So your AOV is your LTV at that point and you don’t have a business you have an income stream that will not be sustainable in the long term, nor will it really be able to grow the way you want it to. So upsells are great use them as a way to liquidate your act, your acquisition costs, make some profit, but don’t try to you know, you don’t have to squeeze every last dollar out of every upsell and potential because you’re actually going to hurt your future sales. right and down cells are where they really screwed that up. Okay, so talk about that a little bit. The other piece I wanted to get into with you Dom was how do they use data to decide whether or not and actually interpret whether or not their upsells or order bumps are actually working, because that’s a big thing that we realized stores don’t have any idea about.
Dominik Meiu 29:04
Yep, so my biggest advice would be to pay attention to the key KPIs in addition to AOV. So you don’t only want to focus on that AOV because obviously, the upsells are going to increase your AOV. But if they’re increasing your AOV and destroying your conversion rate, destroying your customer lifetime value, destroying things like that, then they’re hurting a lot more than they’re actually helping. So one thing I would definitely recommend, if possible is to test it. And pay attention to those KPIs. Make sure you’re looking at that conversion rate between showing the upsell versus not showing Yep, so this is obviously more relevant on the kind of front end journey and not post purchase. But pay attention to that conversion rate are the variations converting around the same is one is the one without the upsells slightly higher than the one with the upsell, but do those kind of counteract to the AOV be significantly higher with the upsell. So there’s a lot of analysis that you actually need to run and a lot of kind of opinion based on that, right. So maybe this cross sells hurting your conversion rate by 2%. But it’s increasing your AOV by 15. So that’s obviously going to be your call to where, you know, my AOV is up, you know, 20 bucks, but my conversions are down five a day, something like that. So it’s just going to have to be your analysis based on kind of what you want. And then as far as measuring customer lifetime value, that’s also incredibly important, but also a lot harder to do. For sure. The general rule of thumb is, like you were saying earlier, don’t be too aggressive with them. Because the more aggressive you are, the more you’re going to be hurting your customer lifetime value. You can compare and contrast dates, things like that, but it’s not going to be entirely accurate. So this has to just be again, a rule of thumb and know that if you are just blasting blasting, blasting your customers with upsells, chances are it’s going to be hurting your LTV, how much again, it’s very, very hard to measure. But yeah, my my main point would definitely be pay attention to those KPIs. And don’t just, you know, blast and aggressively hit your users with upsells, you know, back to back to back to back, because that that is going to hurt more than it’s going to help.
Tanner Larsson 31:31
And one one’s fairly similar, not it’s not direct data, but it’s a good test that you can use with your upsells. If you have, let’s say you have one main upsell that that’s kind of your your baseline upsell, and you add one to add a second upsell, okay, when you add that second upsell, when you’re pulling out your data out of your store, and you’re looking at, okay, customers who bought our normal repeat customer rate is that a customer buys on day one they buy again by day 30. That’s the average within 30 days, they’ve made their second purchase. Well, once you’ve add that added that second upsell in, you start you let the data run and you say okay, these new customers bought and and bought the second upsell or saw the second upsell is the repeat rate within that 30 day window or did it extend or also look at do we start losing people who didn’t purchase again, it takes a little bit more analysis. But that’s how you can start to kind of see how those things are performing. It’s really important to do that. And I can honestly say that almost nobody does that because it’s not something that Shopify or Magento, or whatever will tell you, you actually have to do a spreadsheet sort and kind of look at the data and dig into it manually. But if you do, you might find that, hey, people who buy the second upsell are so much happier they buy again in 15 days. So Wow, that’s a big perk, sometimes crazy stuff like that happens, it’s not always a negative. But you definitely want to know what it’s doing. And then the thing to test again, when you take that second upsell off, does it go back to normal? If it goes back to normal, okay, now you can test a different second upsell. And you know, eventually if that second upsell doesn’t work, you just say, Hey, I’m gonna leave the second upsell off because it negatively impacts my repeat customer rate. And I don’t want to do that.
Dominik Meiu 33:19
Yeah, so it’s a lot of general analysis, a lot of opinions based on, you know, what’s best for your company, your model, things like that. But like you’re saying too, I may have made it sound fairly negative, I’ve actually seen incredibly positive results even in those other KPIs from upsells. Like I was saying earlier, adding that cross sell was actually that cross sell to the cart that had the 20% rate, it not only improved AOV significantly, it actually improved the conversion rate, which is amazing. So not only were they spending more money, but actually more people were buying because of it. And again, that was a little bit easier to measure because that was pre funnel that was pre purchase. So I could actually test showing that upsell and one variation versus not showing that upsell on the other and comparing those stats where post purchase is going to be a lot more general analysis, like you’re saying comparing those dates of the average customer lifetime value when they’re returning when they’re buying again, stuff like that.
Tanner Larsson 34:26
So, okay, let’s talk about the next phase of this, okay, just because you have an upsell in place, whether it’s the checkbox order bump upsell or a post purchase, just because you set it up doesn’t mean it’s going to work. Or it doesn’t mean that it even if it is working, if it’s working as well as it should. Right? So how do we how do we handle that? How do we deal with optimizing those upsells?
Dominik Meiu 34:47
Yep. I’m going to say get data from your customers know what they want. And test it, test it, test it, test it, test it. Um going back to actually that same story that happened 25% upsell, that wasn’t the first upsell I threw in there, I didn’t hit a homerun in store, I think that was the third or fourth, actually different products that I tested, as well as the maybe third different variation of actually displaying it. So as the products test, where you’re showing them, test how you’re showing them, test price points, test all that stuff, until you develop this supreme upsell, that’s just knocking it out of the park. So yeah, like you were saying, just because you add one and you think it’s working well, I guarantee you it will be working even better.
Tanner Larsson 35:41
And you know, there are also guys, there is a point of diminishing returns on an upsell, or on actually on anything, you basically you can get to the point where you’re, it’s like the Pareto principle or the 80,20 rule, you get it, you can do so much to get the massive lift, and then everything else is just takes a ton of time to get even a marginal impact. So with upsells, it’s the same thing, just because let’s say you start an upsell, post purchase upsell, and it converts at 8%, which is pretty good for depending on price points for a lot of upsells. But you’re like, Okay, I’m going to test this I’m going to do what Dom says I’m a test price point and all this different thing. And let’s say you get it up to 10%. And then from there, you get you have a couple Aha’s, and you all of a sudden you get it up to like 20%, okay, when you have an upsell converting at 20% or so you can still try to test it. But what you’re going to start finding, and it’s not that it’s bad, but realize that as you start testing new things on there to try to get to that 20 to 25 26%, it may not be the best use of your time versus focusing on adding a second upsell, a different order bump or optimizing a different process. Not all upsells what you hear people talking about, oh, my upsell converts at 68%, or 28%, or 52%, or whatever that’s contextual. It depends on so many other factors, you can’t use somebody else’s upsell percentage as a baseline to call your own. One thing you can do though, is you can know that pre purchase a well deployed order bump on the product page can convert anywhere between, you know 10 and 20%. If you’re in that range, you’re doing pretty good. But again, if your product, let’s say your product is just a very unique or you know, high priced or a very customized or whatever, and your overall store conversion rate is sub 1%. And you’re doing good, which a lot of there are stores out there that are like that, you may have a 2% take rate on your order bump, and that’s good. It just really depends on the store in general. So you can’t, the moral of that story guys is Don’t, don’t try to over optimize, where as you’re just getting minis miniscule results, go focus on something else where you can make big impact. And also don’t listen to anybody else’s upsell percentages and conversion rates and stuff because they don’t mean shit to your store.
Dominik Meiu 38:01
Yeah. exactly. There’s definitely a threshold there, you want to get it as optimized as you can. But once you get that threshold where like you are just hitting those diminishing results, you know, you’re hitting test after test and nothing’s really happening. Definitely spend your time on something else. Because you know, taking the upsell, like you said from eight to 20 is going to provide a huge difference. But taking it from 20 to 21, 22 is that going to be as valuable as spending your time adding another upsell and optimizing that or getting your Add To Cart percentage up and actually getting more people to do that up so and things like that.
Tanner Larsson 38:39
Upsells guys are not a magic button. They’re they’re pretty awesome in a way to just really boost your AOV fast. But just like anything else in the store, it has to be treated correctly. It has to be done in the right way. And it has to be optimized and tested. There’s no just throw it up and call it good and it’s gonna work. I mean that’s that’s a that’s a hail mary that doesn’t doesn’t get caught very often.
Dominik Meiu 39:01
Tanner Larsson 39:04
Well, cool, bro. So this was this was great. We covered a lot of stuff. I want to thank you for helping everybody guys right now what I need you to do is make sure you click the subscribe button. If you’re on iTunes or over on YouTube, subscribe to the channel. Remember, this is a video podcast. So a lot of times we share stuff on the screens that you’re going to want to see. So you can listen to them and then hop over to YouTube as well. But whatever. Make sure you subscribe, leave us a review and if you need the show notes or you want the links to the different things we talked about in the episode, go to build gross scale.com forward slash podcast and everything you need is there including links to all the platforms where you can get this podcast with that guys. Thanks and we’ll see it in the next episode.
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