Upselling challenge 1: You are only attracting the most conscious customers
A potential challenge with upselling is that you are only attracting some of the most cost-conscious customers. Some customers make purchasing decisions based almost exclusively on cost, and dimensions that increase this cost (particularly if the value-added is only marginal) may be ignored.
Of course, there are many examples of very cost-focused firms that do succeed via selling upgrades from their basic offerings. Budget airlines for example often include multiple upsell opportunities – allowing you to pick seats or buy in-flight meals. Thus while it is not impossible to sell upgrades as part of a cost-focused offering, it is still important to analyze the extent to which your customers are likely to be willing to pay for premium upgrades.
Upselling challenge 2: Your employees are not promoting the upselling
Another challenge with upselling is actually getting your employees on board to promote the additional features. If there is no-buy in that promoting the premium features is necessary the likelihood that customers will be aware of, or make the upgrade substantially declines.
Upselling challenge 3: Your upselling is perceived negatively by customers
Another danger of upselling is that the sale approach is perceived negatively by customers. Some upselling approaches can feel like hard-sell – and maybe especially if sales employees are pressured or strongly incentivized to make upsales.
At the extreme, it is also possible for upselling to feel like (or become) a bait-and-switch – potentially breaking customer rights or other regulations. Pushing customers from the initial offering that they wanted to a more expensive one, may leave customers feeling that they have been tricked into a more expensive product than they intended.
Upselling challenge 4: Your upselling is changing the way that your firm is perceived
A final challenge associated with upselling is that it may change the way that your company is perceived. If you have built your reputation around being a cost-leader, suddenly adding premium offerings may not be in keeping with this approach. Simply if you have a reputation for a simple offering, looking to upsell customers may add confusion to your process. There is a danger that the approach could result in you straddling two different markets – no longer as effective as neither a cost leader nor a more premium offering.
Final thoughts: The importance of monitoring performance
While monitoring performance is important throughout your firm, it may be especially important with upselling. It can help ensure that employees are actually on board with the upselling process, while also ensuring that they are not going too far, and putting pressure on customers to upgrade. Monitoring can also help ensure that the upselling is not perceived negatively by customers, and that brand’s reputation is not suffering as a result.