How to Upsell With Extended Benefits

Today, mar­keters are scram­bling to find ways to increase cash­flow. Some will try to find new prod­ucts to sell. Oth­ers will try to drive more traf­fic to their exist­ing sales pages.

How­ever, one area most peo­ple tend to over­look is the abil­ity to increase their cur­rent sales by upselling their cus­tomers the moment they checkout.

But I’m not refer­ring to one-​​time offers or addi­tional prod­ucts offered in the same sales fun­nel. I’m talk­ing about offer­ing cus­tomers the abil­ity to upgrade their purchases.

I pre­fer “upgrade” rather than “upsell” because the lat­ter has received a bad rap of late due to a few overzeal­ous or unscrupu­lous marketers.

Sell­ing “upgrades” is an area that can become prof­itable for many busi­nesses in increas­ing their exist­ing sales. It’s by sell­ing extended ser­vices or ben­e­fits pack­ages before or at the time of check­out, also known as the “extended warranty.”

There are numer­ous ways to sell extended war­ranties (or what I pre­fer to call “extended ben­e­fits”). These silent profit cen­ters exist in almost any busi­ness, which can increase the size of a customer’s pur­chase by 50%, 100%, even 200% or more.

Very often, the sale of these extended ben­e­fits have higher profit mar­gins, too.

You may have seen extended war­ranties for cars. For a fee or a recur­ring sub­scrip­tion, you get addi­tional cov­er­age for your car in case it breaks down, needs repairs, or requires new parts — beyond its cur­rent war­ranty, if any.

The war­ranty cov­ers your bill or part of it when such inci­dents occur. Some will add extras, such as road­side assis­tance, operator-​​assisted direc­tions, and more.

Extended war­ranties are sub­tle forms of insur­ance poli­cies that guar­an­tee a prod­uct or service’s per­for­mance, espe­cially after an ini­tial period of time.

While guar­an­tees promise ben­e­fits, war­ranties promise the enjoy­ment of those ben­e­fits. The extended war­ranty thus promises that the enjoy­ment will con­tinue or is optimized.

In other words, a war­ranty is like a “guarantee’s guarantee.”

A war­ranty promises that a prod­uct will per­form the way it is sup­posed to for a very spe­cific period of time. If your prod­uct comes with a guar­an­tee, then con­sider sell­ing an extended war­ranty that ensures its continuation.

Par­tic­u­larly if your product’s ben­e­fits are lim­ited, dep­re­cat­ing, con­sum­able, or can­not be guar­an­teed for what­ever rea­son, con­sider sell­ing an extended warranty.

With phys­i­cal goods, it may take the form of future upgrades, addi­tional ben­e­fits, mem­ber­ship pro­grams, points clubs, repeat pur­chase incen­tives, or ser­vice packages.

For dig­i­tal prod­ucts, an extended war­ranty can take the form of spe­cial­ized, per­son­al­ized tech­ni­cal sup­port, time-​​limited licenses, instal­la­tion help, access to a pri­vate cus­tomers’ site, mul­ti­me­dia to teach you how to make the most of your dig­i­tal prod­uct, addi­tional edu­ca­tion or tips on how to max­i­mize the enjoy­ment of your pur­chase, and so on.

As for ser­vices, the extended war­ranty is a lit­tle dif­fer­ent since ser­vices are intan­gi­ble, do not break down, need repair, or depre­ci­ate in value. But they are just as profitable.

Ser­vice war­ranties can take the shape of mem­ber­ships, points clubs, pre­ferred cus­tomer pro­grams, pri­or­ity ser­vice pack­ages, extended ser­vice pack­ages, pre­pay­ment plans, pre­mium ser­vices, future dis­counts, upgrade plans, etc.

For exam­ple, if you’re a con­sul­tant you can offer pre­paid retainer pack­ages that include sev­eral hours of follow-​​up con­sult­ing after the ini­tial ser­vice is deliv­ered, or on-​​call pri­or­ity priv­i­leges, all at a dis­counted rate.

The most pop­u­lar form is to upgrade a pack­age to a larger one at a bulk rate.

For instance, say you’re a writer and sell a pack­age that might include writ­ing a num­ber of arti­cles for a cer­tain amount. You can offer exist­ing cus­tomers a larger num­ber of arti­cles at a dis­counted rate as they checkout.

But don’t give them the choice of adding an addi­tional, dis­counted prod­uct, which is a tra­di­tional upsell. You want to offer the abil­ity to upgrade their cur­rent order size for just an extra fee. Per­haps even opt for a larger, dif­fer­ent pack­age instead.

For exam­ple, you might want to name your pack­ages in a cer­tain way that strat­i­fies each pack­age on a qual­ity or size scale — such as a “bronze,” “sil­ver,” or “gold” package.

Peo­ple who decide to buy the sil­ver pack­age are then offered, as they check­out, the choice to upgrade their order to the gold one for the dif­fer­ence in fees, for a lesser fee, or with an addi­tional incen­tive, such as a bonus or add-​​on.

How­ever, you don’t need to limit your­self by sell­ing them the same service.

You can upgrade to one that includes addi­tional ser­vices, such as in addi­tion to writ­ing a num­ber of arti­cles you include writ­ing an autore­spon­der sequence, sub­mit­ting their arti­cles to edi­tors and pub­lish­ers, opti­miz­ing the arti­cles for the search engines, etc.

Or, you can sell them a dis­count — yes, a dis­count! — or addi­tional incen­tives, prefer­ably in the form of a cer­tifi­cate, applic­a­ble towards future purchases.

Sell­ing them a dis­count on, or addi­tional incen­tives deliv­ered with, future pur­chases “locks in” your cus­tomer and pre­vents them from going to the com­pe­ti­tion. That way, they are cer­tain to come back to you for their future needs.

Nat­u­rally, you want to tan­gi­bi­lize your upgrade in the form of a print­able cer­tifi­cate, coupon, let­ter, or email. Above all, you want to limit the time­frame in which they may exer­cise their option, in order to induce a sense of urgency and pre­vent them from cash­ing in beyond a longer, unfa­vor­able amount of time.

Nev­er­the­less, this is just one, sim­ple exam­ple of many possibilities!

On the other hand, if you offer repet­i­tive ser­vices such as a hair­styl­ist, you can offer a num­ber of pre­paid vis­its at a dis­count. If cash­flow is par­tic­u­larly low dur­ing a spe­cific month or sea­son, arrange your pack­ages so that they renew at that point in time.

If your busi­ness is typ­i­cally and pre­dictably slow, say, in the next three months or so, them sell three-​​month ser­vice pack­ages. When renewal time comes, you give your busi­ness an influx of cash dur­ing such slow times.

Another exam­ple: the sum­mer is a slow time for snow­plow­ing ser­vices. (Remem­ber, I live in Canada!) But with pre­paid pack­ages, which are sold in the sum­mer and renew­ing in the sum­mer, it cre­ates an income stream when things slow down.

In short, extended war­ranties are much like sell­ing ser­vice agreements.

Many mar­keters and busi­nesses shy away from them, but they fail to see it from their client’s per­spec­tive. These pro­grams are advan­ta­geous to the client for a vari­ety of rea­sons, beyond the obvi­ous price incentive.

For instance, the many ben­e­fits of offer­ing extended war­ranties include less billing, more con­ve­nience, pre­ferred ser­vice, faster deliv­ery, extra priv­i­leges, and many others.

Another is the feel­ing of “belong­ing” to a spe­cial, elite group of peo­ple to which higher atten­tion or pri­or­ity is given. They feel as if they’re join­ing a club. And in real­ity, they are.

That’s why pre­mium pro­grams, or “pre­ferred client clubs,” are very pop­u­lar. They have a mys­tique and a sense of extra value about them, which is being part of that elite group. As Amex’ slo­gan often says, “mem­ber­ship has its privileges.”

For exam­ple, club mem­bers might enjoy a members-​​only 1–800 ser­vice num­ber, extra pre­mi­ums, dis­counts on joint-​​ventured part­ners, express check­out ser­vices, pri­or­ity cus­tomer sup­port ser­vices, spe­cial members-​​only con­tests, and so on.

Online, clients can become mem­bers of a pri­vate web­site, access pre­mi­ums, receive addi­tional web-​​based ser­vices — such as reminder ser­vices, auto­mated ship­ping, real-​​time sup­port, even spe­cial soft­ware (like eBay’s Tool­bar), etc.

One dig­i­tal ven­dor I know includes one year of sup­port with all his prod­ucts. It’s a stan­dard part of his sales. But at the time of check­out, he offers a spe­cial “upgrade” for an addi­tional year — a pack­age that’s priced at about 10% of the product’s price.

Over 81% of cus­tomers choose the addi­tional warranty!

Now, some peo­ple will tell you to include sub­scrip­tions or con­ti­nu­ity mod­els as their upgrade offers. And con­ti­nu­ity seems to be all the buzz right now. A lot of peo­ple feel they need to offer some sort of con­ti­nu­ity program.

Granted, these can be great source of rev­enue. But don’t limit your­self to recur­ring pro­grams. Don’t ignore sin­gle, extended ser­vice pack­ages and sim­ple upgrades, too.

The sav­ings fac­tor, whether present or in the future, is often the great­est moti­va­tor. Con­sum­able prod­ucts and repet­i­tive ser­vices trans­late into repeat sales. So an extended war­ranty would be a repeat cus­tomer pro­gram — also called “rewards programs.”

This could involve a flat dis­count rate on all pur­chases made at a par­tic­u­lar store dur­ing a cer­tain time­frame. What this pro­gram also does is to pre­emp­tively reduce the pos­si­ble loss of a client to a future competitor.

These pro­grams can range from one month to a full year.

As an exam­ple, book­stores sell avid reader mem­ber­ship pro­grams. For an annual fee, they offer mem­bers a fixed dis­count rate on all sub­se­quent books pur­chased dur­ing the time that the pro­gram is in force.

Here are a few other exam­ples of extended benefits…

You sell com­put­ers. You may also offer a buy-​​back plan. For an addi­tional fee, cus­tomers “buy” the priv­i­lege and abil­ity to choose to trade in their sys­tems for a bet­ter model within a year fol­low­ing their purchase.

The plan, which appears in the form of an offi­cial cer­tifi­cate, coupon, or let­ter deliv­ered at the time of pur­chase, promises them a com­plete or par­tial refund of the pur­chase price that’s applied as a dis­count towards a future, more expen­sive upgrade.

If they choose to exer­cise their option, they only pay the dif­fer­ence when they upgrade to a later model. Nat­u­rally, when time comes for a new com­puter, they come back to you.

You sell an ebook that’s time-​​context sen­si­tive — such as one based on cur­rent events or tied to an exist­ing sit­u­a­tion. As an upgrade, you can sell future updates to the book.

While you may include one full year of free updates, you might want to also sell an extra year for an addi­tional sum at the time of check­out. Or, for a small, extra fee, you can ship them a phys­i­cal ver­sion of the book or a CD backup.

You sell website-​​based soft­ware. You sell it at a fairly decent price already, because it’s sold as a do-​​it-​​yourself script. But as an upgrade, you might want to offer instal­la­tion for a fixed price, addi­tional sup­port, or a license for a pre­de­ter­mined amount of time.

As a chi­ro­prac­tor, you sell pack­ages of a cer­tain num­ber of vis­its for a cer­tain price. You may there­fore offer larger pack­ages at a dis­count, or include a rewards pro­gram that enti­tles them to a num­ber of free ses­sions if they buy the larger packages.

Nev­er­the­less, while extended ben­e­fits are in and of them­selves profit cen­ters, they’re also pow­er­ful posi­tion­ing tools since they help to increase your core busi­ness, your brand rep­u­ta­tion, and the qual­ity of your cus­tomer ser­vice, at the same time.

Peo­ple love options and the feel­ing that they are being taken care of. They also want to reduce the ele­ment of risk in the buy­ing process. Peo­ple want to avoid pain, and that includes the pain that comes with the poten­tial or future loss of a benefit.

So, help them feel more secure with the knowl­edge that they will con­tinue to enjoy your prod­uct or ser­vice. Sell them extended benefits!

About the Author

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