MBA2454 Do Checkout Upsells Work? - The $100 MBA Show

Summary

Podcast Summary: The $100 MBA Show – Episode MBA2454: Do Checkout Upsells Work?

Host: Omar Zenhom
Release Date: April 12, 2024
Title: Do Checkout Upsells Work?

Introduction to Checkout Upsells

In Episode MBA2454 of The $100 MBA Show, host Omar Zenhom delves into the effectiveness of checkout upsells in online businesses. Drawing from over two decades of entrepreneurial experience, Omar examines whether incorporating upsells during the checkout process can genuinely enhance sales and customer experience.

Understanding Checkout Upsells

[01:14] Omar begins by defining checkout upsells as additional offers presented to customers during the checkout phase of an online purchase. He likens this strategy to traditional retail practices, where impulse buys like chocolates and magazines are placed at the checkout counter to encourage last-minute additions to the cart.

Notable Quote:
"Checkout upsells aren't just another sales tactic. They're a way to connect with your customers on a deeper level and provide them with added value."
— Omar Zenhom [08:21]

The Efficacy of Checkout Upsells

Omar explores the statistical backing for checkout upsells, emphasizing their proven impact on increasing average order value (AOV) and reducing shopping cart abandonment rates. He cites that 68% of online shopping carts are abandoned before completion, representing a significant loss in potential revenue.

Key Statistics:

10-30% increase in AOV for businesses implementing checkout upsells.
A 5% improvement in customer retention can lead to a 25-95% increase in profits.

Notable Quote:
"Trust me, the math works. Meaning if just 5% of those customers that normally abandoned cart didn't abandon cart, they actually checked out and bought your products and services, that could lead to up to 95% increase in your profits."
— Omar Zenhom [06:30]

Best Practices for Implementing Upsells

Omar emphasizes the importance of relevance and personalization in crafting effective upsell offers. He advises businesses to ensure that upsells are synergistic with the primary product in the customer's cart.

Examples:

E-commerce: Offering cufflinks as an upsell with French cuffed dress shirts.
Online Courses: Providing slide templates alongside a webinar training course.

Notable Quote:
"The secret sauce behind a successful checkout upsell is personalization and relevance. You gotta tailor the offer to match the customer's interest and preferences based on any data you have."
— Omar Zenhom [10:45]

Common Pitfalls and How to Avoid Them

Omar warns against the overuse of upsells, which can lead to a poor customer experience and decreased conversion rates. He advises limiting upsells to one per checkout process to avoid overwhelming the customer.

Key Points:

Avoid offering random or unrelated products.
Refrain from stacking multiple upsells in a single checkout.
Focus on adding genuine value rather than merely increasing sales.

Notable Quote:
"You can really kill your conversions if you overdo it. Now if you haven't caught it. The secret sauce behind a successful checkout upsell is personalization and relevance."
— Omar Zenhom [08:21]

Innovative Upsell Strategies

One of Omar's favored strategies involves presenting a high-value, low-cost offer immediately after a customer opts into a freebie or checklist. This approach not only generates additional sales but also integrates the customer further into the business's ecosystem.

Example:
After a customer downloads a free ski packing checklist, they are offered a discounted mini-course on enhancing skiing skills.

Notable Quote:
"Even if you just have a 5% conversion, meaning if a hundred people sign up for this thing to get the freebie and five people buy, that's five people that didn't buy before and you get them into your ecosystem."
— Omar Zenhom [12:15]

Conclusion: The Value of Checkout Upsells

Omar concludes by reaffirming that checkout upsells, when executed correctly, are a powerful tool for increasing revenue and enhancing customer satisfaction. He encourages businesses to implement upsells thoughtfully, ensuring they provide meaningful value to customers.

Final Thoughts:
"The best strategies are the ones that have been around for a long time. The ones that just work all the time, that have worked and continue to work and have lasted the test of time."
— Omar Zenhom [13:10]

Key Takeaways

Checkout Upsells Increase Revenue: Properly implemented upsells can significantly boost average order value and overall profits.
Personalization is Crucial: Tailoring upsell offers to align with the customer's primary purchase enhances effectiveness.
Avoid Overloading: Limiting the number of upsells per checkout prevents customer fatigue and maintains a positive shopping experience.
Strategic Offers Build Loyalty: High-value, low-cost upsells can convert new customers into repeat buyers, fostering long-term business growth.

Final Recommendations

Omar encourages entrepreneurs and business owners to experiment with checkout upsells, leveraging data and customer insights to craft compelling offers. By integrating thoughtful upsell strategies, businesses can unlock new revenue streams and elevate the customer journey.

Learn More:
For additional business lessons and strategies, visit The $100 MBA Show and explore over 2,400 episodes in the archives.

Transcript

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Omar Zenhom (1:14)

Business strategies you can count on with our practical business lessons. I'm your host, your coach, your teacher, Omar Zenholm. And in today's lesson you will learn. Do checkout upsells work? You know what I'm talking about. When you are at checkout online and they offer you a special offer, something to add to the cart, if it's E commerce, a one time offer, do these things actually work? Should you be implementing them in your business, on your website, in your checkout process? Some people love them, some people hate them, despite how you feel. Today we're going to plow through and we're going to discuss the facts. We're going to see statistically if this actually is good for business or bad for business. So let's get into it. Let's get down to business. Checkout upsells is nothing new. I mean, picture this. You're at the grocery store and you're going to check out. What do you see? You see chocolates and candies and gums and mints and magazines and tabloids. You get the point. This is not something new. This is something that's been around for a very long time. In retail. This is called point of sale. Upsells point of sales, where you actually make the sale, which is the register. And they know that people will buy when they're in the buying mood or when they're in the checkout process. And that's why they place those items at the checkout, you also notice that these are not high cost items, they're lower cost items. They're things like candy bars and gum, things that are, you know, under $10. And it's because they want you to buy these things without even thinking about it. Something that's not going to break the bank. Something that doesn't require, you know, a phone call back home to see if it's okay with your partner or for you to think about if it's worth buying. It's an impulse buy. So does this actually work? Well, the thing about business and the thing about the marketplace is that it's the ultimate equalizer. Meaning if something doesn't work, it's not gonna exist anymore. They would have removed these things if it didn't work, if it didn't actually make money, but it actually does. Even with self checkout, even with place with a lot of modern supermarkets and stores, these upsells at checkout still exist because they know it works. Now when we move to the online world, One of the biggest problems with online shopping, whether it's E commerce or you're selling courses or digital goods or books or whatever it might be, is shopping cart abandonment. This is when buyers leave the shopping cart. They leave your website when they're on that stage, when they have things in the cartoon. In fact, did you know that a staggering 68% of online shopping carts are abandoned before checkout? That's a huge chunk of potential sales slipping through the cracks. But don't worry, because checkout upsells might just be the secret sauce to turn those abandoned carts into cash cows. Sometimes the offer in checkout actually gets them to buy more than the actual item that they put in the cart. I know that sounds strange, but sometimes when it's such a good deal, when it's like, hey, spend another $20 and you'll get this free gift or you'll get buy one, get one free. So people add to their cart at checkout and checkout so they can get this great offer. Let me hit you with some more eye opening stats. Businesses that implement checkout upsells typically see a 10 to 30% increase in average order value. Now average order value is how much money you make per order or per customer when they check out. The more you can increase this, the more total revenue you can make. And it's exponential. This is what's great about it. That's just one sale. Every time somebody buys, they spend more. That more is multiplied by the number of customers that check out. That is huge for your bottom line. Even a modest 5% increase in customer retention can lead to 25 to 95% increase in profits. Trust me, the math works. Meaning if just 5% of those customers that normally abandoned cart didn't abandon cart, they actually checked out and bought your products and services, that could lead to up to 95% increase in your profits. Very little in percentage in conversion goes a long way for your business and your bottom line. Now, if that's not music to your ears, I don't know what is. Now, checkout upsells aren't just about boosting your bottom line. It's about adding value and enhancing the overall shopping experience for your customers. When this is done right, it's a win win situation for both you and your customers. This is what makes it work. Okay, There's a right way to do this and a wrong way. Let's talk about the wrong way first. The wrong way to do this is to offer things just to make money. Okay? Offer random offers, products, services. The best upsells are the one that actually work for the customer based on what they have already put in their car. For example, if I was teaching a course on how to run winning webinars. I have a lot of experiences in webinars. So if one day I decided to create this course, a great checkout upsell that would make sense for this customer. Buying this course would be templates, slide templates that they can use for their webinar, Not a different course that has nothing to do with webinars. Something they actually want because they're interested in this topic and something that they can use with what they buy. I'm not making this up or came up with this novel idea. I actually got it from e commerce. I used to run an e commerce store, a custom tailored clothing men's line. And one of the things people would buy were dress shirts. And these dress shirts were cuffed dress shirts, French cuffed dress shirts. And one of the upsells we would sell are cufflinks, because the cufflinks are needed with that shirt. Another upsell that would go well with that is a sports jacket. A sports jacket goes with a dress shirt. Ascots go with dress shirts. You get the point. So it's really important for you to use the power of upsells to your advantage the right way to make sure that there is synergy between your product that they're buying in the car and the upsell itself.