In this weeks blog post I’m going to show you how offering upsells grew my store’s Average Order Value by 20%.
I’ll use one of my smaller Shopify stores doing a little over $200,000/year as a case study for proof that this works on any size store, even one that only does 10 orders a day.
And the benefit of this blog post?
Upsells are one of the most cost-effective ways to add revenue for your store and value for your customers. And the more revenue you get from your average customer, the more money you can spend to acquire new customers and the bigger your store grows.
BeeFriendly: Why Upsells Work
The store I’m talking about is an organic skincare brand called BeeFriendly. We only get about 10 orders a day from the Shopify side—again, this store does a little over $200,000 a year.
But that’s the great thing about upselling. You don’t need 10,000 customers a month to earn some extra profit, and you can start upselling with the products you currently have in your inventory.
(There will be more about what works best to upsell below.)
Okay, so before we started offering upsells our average order value was $58.04. Not bad when you consider our main product sells for around $35, but not nearly as good as it was about to be.
When I started implementing post-purchase one click upsells I saw an extra $12.50 added to my AOV—almost overnight. Can you guess how interested I became???
And somedays it went as high as an extra $20 per order.
How Much Is an Extra $12.50 Really Worth?
You may be thinking $12.50 doesn’t sound like the sort of game-changing returns that brings me back to the Smart Marketer blog every week. Well, let’s do some simple math to find out how far my newly earned $12.50 really goes:
If we continue to do our average of ten orders a day, that’s an extra $12.50 x 10 = $125
So what, right? But extend that average across the year and you get this $125 x 365 Days = $45,625
For me that is a 20% increase in this year’s total revenue, because let’s not forget that this is on a store that does around $200,000 a year!
Do you have any idea what I can buy with an extra $45,000? That’s right, more customers.
When Your Customer Wins, You Win
While we love the extra revenue, the benefit of upselling goes way beyond making an extra 12 bucks. Upselling is an opportunity to engage with your customer and grow a relationship.
Because the name of this game is offering relevant upsells. If you buy a bicycle and someone tries to offer you vitamins and a beach ball, then it feel’s like they’re not paying attention to your needs.
But, if you buy a bicycle and they offer you a helmet, a set of road lights and a saddle bag it starts to feel like they’re trying to help get the most out of your purchase.
The Problem With Most Upsells
The problem with most upsells is that they happen too early in buying process.
You’ve just spent tons of money getting traffic to even find your product, so the last thing you want to do is put some other product in their way just when they’re about to buy it, and scare them off.
That’s why we wait until they’ve already made their initial purchase before offering our upsell.
Because if they’ve completed the initial sale, there’s a 0% chance of you losing it—it’s literally impossible.
3 Big Things We Learned About Upsells (that blew my mind)
Upsells work so well for my ecoommerce stores that we custom-built an app called OneClickUpsell to automate this process for us, and in the four months since we launched it we’ve learned some invaluable principles about upselling.
Concepts you can start applying to your business immediately, and that cost me over $100,000 in development cost to learn (so far).
Our sample size is growing every month as more stores implement OneClickUpsell, but as of now it’s generated 21,000 upsells across 412 Shopify stores for a total of $808,144 in additional revenue. And from this data we’ve learned:
Question: What is the best price point to offer on your upsell?
Answer: $21.05. This is the average price of the 21,000 upsells that OneClickUpsell has generated.
But know this: Your initial offer price always dictates the upsell. Right now I have an upsell offer on one of my stores priced at $500, and it works great. But I also have upsells in my stores that are $25, and they work great, too, so base the upsell on a per-offer basis.
Question: What is the highest converting upsell your store can offer?
Answer: More of the item they just bought.
Okay, this blew my mind. When our customers went through our upsell sequences, the upsells that converted better than any other was offering them more of the product they just bought.
So they’d buy one jar of our popular Face & Eye Cream, and as part of their check out process—again, after they’ve already confirmed their first purchase—we offer them up to 3 more jars of the same Face & Eye Cream for the price of two, and THEY WENT BANANAS FOR IT.
Question: How big of a discount should I offer on an upsell?
Answer: As big as you can afford.
Remember this is revenue that you have spent zero marketing dollars to get, because that’s already built into the cost of their original purchase. So all you have to worry about is not going below your production cost, and as a rule, I always discount at least 25%.
The bigger the discount the better your upsell will convert and the higher your Average Order Value will increase.
Which of course means the more money you can spend, the more customers you can acquire over your competition and the bigger your store will grow.
Don’t Read Unless You Want To Learn More About OneClickUpsell
Now I’ve just given away some great (and expensive) information for those of you who want to go out there and start building out your store’s upsells on your own.
But if you don’t want to higher a coder, a designer and an IT gal, then I recommend learning more about OneClickUpsell which is a Shopify App we’ve custom made for the exact purpose of automating upsell sequences.
We’ve outfitted it with professionally designed landing pages and full time in-app support, and at it’s peak it will cost you $37 per month which most of you will make back on the first day of use.
And there are some other great apps out there too that will help you grow your AOV like shipping & discount apps or other niche specific apps. To find these, just go to the Shopify app store or the store of whatever cart platform you use.
0:05 After someone purchases, we send them through an upsell sequence
0:25 An immediate 15-30% increase in revenue from upsells
0:50 The most important number in ecommerce: Lifetime Customer Value
1:25 What’s the second most important number in ecommerce?
2:15 How I increased my Average Order Value (AOV) by $12.50
4:10 What is the best upsell offer to make?
4:35 What’s the best price point for your upsell offer?
5:25 The bigger the discount, the better
6:05 Increasing AOV with cross-sells
7:35 Other apps for increasing your AOV
Click Here For Video Transcript
The next thing that happens is someone buys from us. We offer them an upsell sequence. And so what that is is basically immediately after the purchase, what most people do is they say, “Thanks so much. That was great. I enjoyed, you know, you buying my product.”
What we do is instead of sending people to a thank you page, we pop up an additional offer that’s related to the product that they just bought. And you will see, on average, an immediate 15% to 30% increase in front-end revenue, day 1, adding a relevant upsell. Now, you gotta do the upsell sequence well. But if you do it, you’ll see a big increase in immediate revenue.
So I know Buck Rizvi is just chomping at the bit to get this going, emailing us daily. Is Buck in the room? No? All right, he’s not here.
So do you guys wanna know what the most important number in e-commerce is? Anyone wanna guess?
Lifetime customer value. Well done. So what that is simply is how much money you’re going to make from someone over their lifetime as a customer, how much money you make from one customer over the lifetime of repeat purchases on average.
So if you can make more money from each customer, then you can spend more money to acquire each customer. And then the more you spend, the more you can acquire and the bigger you get. Pretty straightforward, right? That’s where post purchase, dynamic offers, and stuff come in like that.
Can you guess what the second most important number in e-commerce is? Anyone?
If you ask most people, they’d tell you it was your conversion rate or your acquisition cost.
Average order value. And that’s important. Conversion rate is important. Acquisition cost is important. But it’s not as important as average order value. The higher the average order value, the more you can spend to acquire a customer on the frontend. So if you can figure out how to make $75 instead of $50 for every initial customer, you’ve got an extra 12 bucks in profit, or something like that, that you can spend. So it’s very important to optimize the cart value.
Now, I was recently able to increase my average order value by $12.50 using the one-click upsell, which is a lot of money for every single order that comes in.
So check this out. Before, we were doing $58 an order on this store. So BeeFriendly will do about a million three this year, not as big as Boom, and a million dollars will come from Amazon. So the Shopify site only does about 300 grand a year. We just haven’t put a lot of attention on it. Recently, we’ve been sort of putting a little bit more attention on it.
So we get about 10 orders a day. This is the two-week period. So we added the OneClickUpsell sequence in there, and we immediately jumped in the next 2-week period to $70, so $12 up. And some days, we were as high as 80 bucks to about 10 transactions a day on that store. So what was interesting was that even though we had less visitors, because we didn’t have as much traffic running, we still made more money. We had less transactions, but our average order value jumped by 20%.
So check this out. We do 10 orders a day. An extra 12 bucks, $12.50, is $125 a day extra that we’re making. So over the course of the year, that’s $45,000 extra from just nothing but adding an upsell sequence. So normally, at 58 bucks, we do about 211 grand. Now, that store is gonna do $260,000 at that same run rate which it’s at. So like essentially that’s, you know, $30,000 in profit extra, because all I have to do is pay cost to good sold. There’s no additional marketing cost for that. So that’s kind of cool.
And in the last 4 months, the app that we created that does this for Shopify stores processed 22,000 orders. About 800 grand in revenue across 412 different stores. And we learned a couple of things about how to do upsells even better.
So what is the best thing to offer as a one-click upsell? What is like the most important thing? What’s gonna work the best?
Blew my mind. I could not believe that more of what they just bought was what you should sell them. I did not expect that. So bundles work really well. We do this thing where it’s like “Hey, you just bought one. Get three more for the price of two.” That works really well.
These are what the offer pages inside of our one-click upsell app looks like.
All right, so what’s the best price point to make an upsell offer? Well, the average price point across all of those orders, those 22,000 orders, was 20 bucks. However, I will say that the initial offer dictates the upsell. So for example, we have an offer right now that has a $500 upsell on it, works amazing. We got another offer that’s got a $25 upsell, works amazing. So whatever you’re selling will dictate what your upsell offer should be.
And what I like to do is offer at least a 25% discount on that one-click upsell. So basically, the way this works is they buy something from you. And then with one click, they can add more to their order. They don’t have to, you know, enter any information in to do that.
So you’re incentivizing them to do so by giving them a discount. So obviously, the bigger the discount, the better your offer will do. If you can offer a 30%, a 40% discount on whatever it is you’re upselling, it’ll do even better.
And the app that we’re using for this is an app that we built with Zipify Apps called OneClickUpsell. It does these little things where it builds these trees. It’s got all kinds of fancy stuff in there. It’s awesome.
Another common way to increase your average order value is with cross-selling. Now, people get confused about cross-selling and upselling. My viewpoint is that a cross-sell happens pre-purchase and an upsell happens post-purchase.
So cross-selling is the art of offering additional products before the purchase has happened. A lot of people do this wrong and like someone’s going into the shopping cart, they’re like, “Wait.” It’s like “Dude, just let them go into the shopping cart. Don’t interrupt them.” So I don’t like that. That’s why I like to do it pre-purchase or on the actual offer page, as you’ll see right here. That’s actually a picture of me. Yeah. I didn’t have a beard. I was rocking the Elvis wig.
So this is one of our first e-commerce stores. Notice the conversion testing we had done? Oh, damn. So we had this thing that was like add a wig cap for a better fit, and you clicked this button, and you could just add that to your order. You could just select it, and it would add $4 on to the price of the order. And we did, we made a lot of money on that cross-sell. So it was sort of inflating the average odder value by having a cross-sell on the offer page.
One of the things that we’re doing this right now… Remember, yesterday, I showed you this block in Zipify pages? Well, that block in Zipify pages came from a sales page we’re running right now where we’re doing what I call a bump cross-sell, where we’re offering the ability to buy one, two, or three of the same product. And we only get about 30% of the people who come to this offer page taking two or three jars. But it increases the average order value considerably, because 3 out of 10 people are ordering 60 bucks or 75 bucks instead of 25. So the clear winner for one-click upsells is obviously OneClickUpsell by Zipify.
There’s some other great apps out there like bundle apps, discounting apps, shipping and inventory apps, customizing apps, niche-specific apps. There’s all kinds of stuff. And what you wanna do is check out the app store that’s related to your shopping cart. Every cart out there has an app store.