UPSELLING STRATEGY: A REVIEW

Dr. Mehal Pandya

Prof. Abhigna Dholakia
Abstract
The purpose of this study is to systematically review the existing literature on Upselling and
its major impacts on consumer behaviours. In addition, this study seeks to shed light on trends
and dynamics in Service sector and Retail sector, so as to find the effectiveness of Upselling
strategy. A systematic literature review of published peer-reviewed articles on Upselling was
conducted. A comprehensive search strategy was applied on different databases, including
Google Scholar, JSTOR, ScienceDirect, Pro quest, Emerald, Academia and the likes and the
renowned articles were then selected from leading journals published between 1995 and 2020.
The research finding suggest that a company may get the profitability at times but not all the
time using the upselling strategy. To get the profitability firm should focus on Customer loyalty
and satisfaction of the consumer for that the results show that there is a need to replace the
Upselling strategy with Up-buying strategy in studies focused on consumer behaviour analysis.
The studies included in this review are extensively based on peer-reviewed 40 articles
published in high-ranked marketing journals and articles within a span of 30 days which may
be perceived as a limitation in the present study. The relationship between Upselling and the
Customer satisfaction in many occasion prove to be negative hence there is a requirement of
change in strategy so as to shift focus from salesforce centric strategy to customer centric
strategy, of which the companies will have a considerable practical implication aiming to
increase profit and simultaneously increase in Customer Lifetime value along with Customer
Loyalty. The authors hereby expect the current review to significantly find the effectiveness of
Upselling strategy in consumer behaviour. This review provides a strong contribution to
Upselling literature by recommending the need to find the effectiveness of Upselling strategy
in Services and Retail sector. No exclusive paper is available which evaluates effectiveness of
UpSelling strategy which can be further studied for strategic purpose.

Keywords: Consumer behaviour, Consumer Retention, Consumer Loyalty, Profitability,

Upselling, Effectiveness.

Paper type: Literature review

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Introduction
Consumer behaviour study is required for the Segmentation and Targeting strategies. (Selçuk
Köylüoğlu, Saliha Eken İnan, & Acar, 2018) mentioned that Consumer behaviour is a
situation that ends up in purchasing or not. To make the study productive marketer needs to
device a marketing strategy. Marketing strategy differs with each segment and every marketer
is interested in repeat purchaser hence strategy for acquiring a customer and strategy for
retaining the customer differ completely , here the role of Customer Relationship Management
is extremely important as (Ekhlassi, Maghsoodi, & Mehrmanesh, 2012) used (Swift, 2001)
definition of CRM as an “Organizational approach to understanding and influencing on
customer behavior through a meaningful relationship in order to improve customer acquisition,
retention, loyalty and profitability processes.” (Abu Daqar & Smoudy, 2019) explains
Customer acquisition and Customer retention as Customer Acquisition is a process of
identifying the potential customers and building awareness for a brand with short term profits
which require different marketing strategy and Customer Retention aims at repeat purchases
and long term relationship with customer which require more of personal selling to retain the
customers and more focus on customer service. But the Marketer is also interested in
profitability. Cross selling and Up selling strategies provide a wider scope to the marketer to
earn profit at less service to the existing customer.
Upselling
As per the Federal Trade Commission (FTC) defines upselling in the context of
telemarketing as “soliciting the purchase of goods or services following an initial transaction
during a single telephone call,” the same thing was explained by (Aydin & Ziya, 2008) and
(Sharma, M.,Sharma,k, 2015) who defined Upselling as a technique offering the customer an
opportunity to purchase additional product after the recent purchase for a better experience.
Upselling is also seen as a reversal of decision from original to superior service option in many
industries as pointed out by (Wibke, H. et. al., 2017). Which (Singer, 2015)stressed upon that
Up-selling is the promotion of a higher level product or service than the one the customer is
thinking of buying. On similar ground, Stephan Schiffman defines Up-selling “is what
happens when you take the initiative to ask someone who already has purchased something
you offer to purchase more of it - or more of something else”. Superior option suggests moving
up the ladder as (Kubiak, Bernard, Weichbroth, & Powel, 2010) mentioned Up-selling
means moving "up" to a more expensive product or Service. Many researchers have also
stressed an importance of Sales persons’ role in Upselling like, (Sharma, M.,Sharma,k, 2015)
defined Upselling as strategy wherein the seller makes special efforts and induces the customer
to buy an upgradable version or an expensive additional items aiming to make a profitable deal
for the firm. Profitability aspect was addressed by (Ni,J.,Shen,Q.,Zhu,T., 2015) as well as it
can lead to high profit margin. But he also gave an indication that upselling is negatively
correlated with customer satisfaction. Because many times allegations have been made that
upselling is nothing but inflating the price with a new extension as cited by (Steele, 2013) The
researcher aims at identifying the upselling potential and effectiveness for the following
purposes:

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Objectives:
1. To critically evaluate and provide an integrated, synthesized overview of the current
stage of knowledge in the field of Up-selling strategy to marketers and customers.
2. To identify the research gap and future insights in making Up-Selling more effective
both for marketer and customers.

Research Methodology
The research methodology includes a systematic literature review (SLR) to determine the
dynamics of the field, potential research gaps and future research expectations. SLR is a
method that brings together and critically evaluates publications on the subject; it helps to
assess the replicability of findings and their possible inconsistencies (Siddawayet al.,2019).
The authors reviewed the articles, books, and 40 Research papers published in the marketing
journals between 1995 and 2020.
Process
Flow Results
Topic Formulation Based on purpose
Study design Literature review, Conceptual
Sample 40
Data collection Source: Pro quest, SSRN, Google Scholar,
Science Direct, Emerald, Economics
Times, Forbs, Harvard Business Review
Data Analysis Critically evaluate the Pros and cons of
implementation of upselling strategy both
for customers and marketer.
Reporting Reviewing literature, inferences,
conclusion, limitations and Future
research

Search Strings
Theme Search String
Stakeholders Customers, customers, competitors, users,
buyers, service provider, employees

Engagement CRM, Customer Equity, Relationship

Marketing , customer retention

Sectors Service, Retail, E commerce

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Inclusion and Exclusion Criteria

Criterion Inclusion Exclusion

Study type Empirical, Conceptual,
Conference Proceedings,
Articles
Language English Any other language
Date 1995-2020 Before 1995
Relevance Service and Retail sector Other Sectors

Evolution of Upselling
Relationship marketing, first appearing in the marketing literature in 1983, has been defined
by (Berry, 1995) as “attracting, maintaining and – in multi-service organizations—enhancing
customer relationships.” The focus was shifted from customer acquisition to Customer
Retention, when organizations learned that it costs, on average, five to ten times more to find
a new customer rather than retaining one. (Borna, 2000). Customer Retention is a part of
Customer Relationship management (CRM) (Wubben, 2009) and one of the most common
strategies for customer retention is the practice of Up-Selling. As (Wirtz, J.,Lovelock,C.,
2016) pointed out that to move the customer up the ladder from Lead to Iron category, upselling
has turned out to be the most cost effective channel to communicate and motivate the existing
customers. Apart from these concerns (Peter, 2013) found out that the increasing number of
distribution and marketing channels which expose savvy Internet shoppers the ability to
find the best deal ,Dramatic swings in economic conditions , Mobile and e-commerce
channels have shortened the booking cycle, limiting forecasting ability for revenue and
reservations. The same point of transformation was pointed out by (Sharma, M.,Sharma,k,
2015)as market scenario , bargaining power of customers and suppliers, the widespread of
distribution channels as given a way to Upselling. The same has been defined in graphical way
as below:

A Model developed by Researchers: Upselling

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Consumer
Behaviour

Customer Customer
Retention Acquisition

Customer
Satisfaction

Motivated & Marketing

Dyamic Relationship
Brand Name Trained Environment
Marketing Mix Marketing
employees Swings

M and e- Increasing Limiting

Dramatic
Savvy commerce number of forecasting
swings in
Internet channels have distribution ability for
economic
shoppers shortened the and marketing revenue and
conditions
booking cycle channels reservations

Upselling

Scope of Upselling
For the upsell stage to occur, (Aydin & Ziya, 2008) implied that a customer has to first arrive
first to buy the regular item. And the additional item should be a substitute of the original
product as cited by (kwiatkowska, 2018) that products and services sold as part of up-selling
are substitute goods, which means that they substitute each other and meet the same
needs.(Cohn) addressed in one of the article that upselling is a popular sales strategy in many
industries which encourages a customer to purchase a more augmented model in the same
product family with additional features. Apart from features timing is also critical, offer the
higher priced product as soon as the customer has already committed to purchasing an item.
(kwiatkowska, 2018) studied that one of the principles of up-selling is the fact that it is used
when the customer has not yet purchased the basic product and what is more crucial is that the
purchase transaction has not ended. Upselling also helps in expanding a business relationship
with the firm over the long term. In the ongoing process of improvement, for the customer
relation management it should not be restricted only to the sale of more products (Kubiak,
Bernard, Weichbroth, & Powel, 2010).

Effectiveness of Upselling
As the aim for any marketer is to increase revenue and minimise the cost cited by (Guillet,
2019) that Upselling has the potential to increase revenues (Kamakura. W.A, 2008) and cut
down selling costs (Rothfeder, 2003). Up-selling focuses on increasing the transaction size
per customer rather than acquiring new customers, which helps to cut down the selling cost

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(Ebster,C.,Wagner,U.,Valis,S., 2005). The similar point was discussed by (Andrews) that
upselling strategy increases average order size, and turns single-buyers into multi-buyers .The
similar point was raised by (Aydin & Ziya, 2008) that to increase revenue per each customer
visit is one of the goal of upselling. but this objective is served only when the retailers typically
try to sell each customer an additional product related to the one the customer just bought, and
the other purpose of Upselling could be as cited by (Aydin,G.,Ziya,S., 2005) and (Aydin &
Ziya, 2008) liquidation of excess inventories wherein the marketer identifies slow moving
product having excessive inventory and tries to liquidate the same to the customers who has
just bought the products. But sometimes it is not about getting profit or getting rid of unwanted
inventory as pointed by (Sharma, M.,Sharma,k, 2015)that to deliver delightness as a part of
customer post purchase behaviour Upselling is useful. It is also treated as a driver for sales
productivity. (Khwaja, 2014) A firm using upselling has one valuable piece of information
about the customer who is about to receive the upsell offer, hence in upselling, knowing that
the customer bought a product at a certain price has informational value to the firm when
offering the promotional product. (Aydin & Ziya, 2008)
Upselling in Service Sector
As cited by (Wirtz, J.,Lovelock,C., 2016) services having features of intangibility,
perishability, variability and inseparability requires to maintain cordial relations with
customers through relationship marketing to ensure loyalty, for that the service provider needs
to segment using selectivity and tiering the customers based on the value created by them to
the firm. To deepen the relations to each tier of customers firms offer bundling, cross selling
and upselling as part of strategies with the help of CRM software through their share of wallet.
(Dai, Bing Tian, 2014) studied that a cable TV provider uses the concept of tiering the
customers as per their respective value because for cable TV service providers to retain their
customers, instead of launching promotions for all customers, to create value for their
customers they need to specialize their promotions and make marketing strategies accordingly
hence encourage them to purchase more services. This process is called targeted upselling as
(Kim, 2002) pointed out in telecom services, customer usage history is treated as valuable
information to generate new revenue through targeted upselling strategies, targeted upselling
increases the willingness-to-pay of specific customers as the provider’s marketing strategies
will be tailor-made for them, they will be more satisfied. To satisfy the customers, employees
play a vital role as mentioned by (Khwaja, 2014)with respect to car rental services that there
is exist a causal relationship between engagement and sales productivity in the form of
upselling, as employees often interact directly with customers hence engagement based on
customer-centric issues and among employees that directly face customers has a stronger effect
on upselling than all other forms of employee engagement. Apart from employee engagement,
(Wiesman, 2010) studied the influence of performance feedback on upselling which turns out
to be positive one. (Gallego & Stefanescu, 2009) cited that in case of managing the demand
and supply upgrades and upsells are especially useful to tackle the mismatches. To manage the
capacity decisions in long run and the daily fluctuations in demand, Revenue Management in
pricing is required, as an upgradeable and upsell product allows the seller to fulfil it at the same
price with a more desirable substitute from a prespecified set of alternative products. For
service provider upselling is a need of an hour because the competition is intense and the

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database maintenance cost has decreased as mentioned by (Kim, B., Kim, S., 1999),it has
become difficult to acquire customers so firms are focusing on retaining customers using the
database try to sell more of the products / services (Upselling) and other related
products/services( Cross selling). (Gupta, 2018) studied demographic variables and found that
technology is major contributor in deciding on upselling for e- banking, which enables banks
in providing customized offering to right customers. In many of the services as researched by,
(Wibke, H. et. al., 2017) that upselling is a two-stage process wherein the process of selecting
the first purchase affects the final decision. The contemporary service provider wants to serve
his customer holistically that is possible only through upselling and no other technique can
serve the purpose. (Peter, 2013). Whereas (Wibke, 2016)researched hat upselling is three step
process. (Manchanayake, 2019) stated in their research that telecommunication industry is a
kind of industry where for the purpose of churn reduction and stabilizing the customer base,
upselling is used. In case of service cancellation, finding late-arriving customers who agree to
pay a significantly higher price compared to the price paid by the early-arriving customers can
also be done as a part of Upselling strategy. (Xie & Gerstner, 2005). Upselling can be
beneficial if the selling firm faces a mismatch between supply and demand. (Steinhardt,
2012)
Upselling in Retail sector
According to Philip Kotler- “Retailing includes all the activities involved in selling goods or
services to the final customers for personal, non- business use.” According to David Gilbert
―Any business that directs its marketing effort towards satisfying the final consumer based
upon the organization of selling goods and services as a means of distribution. The retailing
industry is being driven by a dynamic equation with the changes in the environment such as an
increasing number of dual-income families, a decreasing amount of available time for
shopping, technological revolutions, and shopping choices (Pookulangara, 2008). Up-selling
means selling more expensive items, such as steaks or seafood instead of chicken, which
likewise increases sales per check. (Tan & Netessine, 2019) One of the prime examples for
that is a Mobile phone. Mobile phone is a kind of a product which the contemporary generation
keeps on changing and every time they change, they always go for the upgraded version with
more features and better specifications. So, while getting more value, the customer ends up
paying a little more money each time he or she buys a new and a better phone. If the retailer
enjoys Monopoly then also he can use upselling as in the case of Apple. As referred by,
(Geradin & Katsifis, 2020)Apple is a monopolist in the market for app distribution on
iOS, hence there is no strong competitor ,such as Android app stores or the web. As a result
of that app developers have to go to Apple as it is the gateway to reach iOS users. This position
gives Apple leverage and power to engage in anti-competitive practices. Apple charges
excessive fees for the services it provides. Along with Monopoly, Revenue management play
an important role in upselling strategy implementation as (Gallego & Stefanescu, 2009)
studied that mismatches that occur when capacity decisions are fixed for the long run, for
example the travel and leisure industries, as the number of seats on a plane, the number of
hotel rooms of a given size, the number of cruise cabins with a view, and the capacity of a
theatre are all fixed and difficult to change in the short run as demand fluctuates over time.
Mismatches may occur due to seasonality effects. As studied by (Kubiak, Bernard,
Weichbroth, & Powel, 2010) that to increase value of single sales transaction and to increase

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switching cost, upselling technique is presented, as the behaviour of consumer is driven by the
Attitude towards behaviour and Theory of Reasoned action play a major role as mentioned by
(Pookulangara, 2008)Many catalogue retailers such as Lillian Vernon, based in Rye, NY
(1999), Corona Cigar Co., based in Ocoee, FL (Ferriolo2003), toy and novelty cataloguer
Oriental Trading Co., and apparel cataloguer DM Management (Miller 1995) use upselling.
Online retailers like Buy.com and Amazon along with Traditional retailers use the practice of
upselling by recommending additional products to customers who just purchased an item. Most
people can recall being offered an additional items that will be perfect for the purchased item.
(Aydin & Ziya, 2008) Capacity providers often give upgrades free of charge when it is to their
advantage to do so. However, car rental companies such as Hertz are starting to push customers
to voluntarily buyup to higher grade products by offering upgrades at attractive prices at the
time of fulfilment. Similarly, airlines may offer attractively priced business class upgrades to
economy customers either at check-in or just before completing the purchase of an economy
e-ticket. (Gallego & Stefanescu, 2009)Upselling is a common practice in business that is
associated with high profit margin. Yet empirical evidence suggests that upselling is negatively
correlated with customer satisfaction.

Inferences

Effectiveness of upselling programme can be achieved by providing the right offer to the
right customer at right time to ensure profitability and Customer loyalty together. From the
study the researchers have inferred that by trying to sell something which is not relevant to the
customers or if the timing is not proper of offering the augmented product, that can affect
adversely to the brand image for which customer may doubt the credibility and may switchover
to the alternatives. Instead marketer should focus on creating a recurring income from relevant
products wherein the customers involvement is high, which can solve their problems and
provide them assurance and guarantee which is more important in upsell. So, it is better to have
a customer driven transaction so rather than training an employee, one should train the
customer so that he willingly up-buy the product which enhances his/her loyalty along with
company’s profitability. As studied by (Parihar, 2012)the customers are empowered to share
their product/service/brand experiences in a whole new way and there has been a
fundamental power shift in the traditional CEM model: from being ‘company centric’, to
the version 2.0 of CEM which has now truly become ‘customer centric’. The marketer needs
to create situations like, scarcity of the product or service demanded, manage the capacity with
respect to demand so that customer willingly would pay more to get the desired product or
service. For that he has to work with AIDA model (Attention, Interest, Desire and Action) The
AIDA model was developed by the American businessman, E. St. Elmo Lewis, in 1898. Which
has been modified frequently over the years. The product or service should have a distinctive
place in the Desire stage so that customer would readily pay more to get the offering. Which
calls for shift from Upselling to Up-buying.

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Conclusion
The great thing about upsells either in services or in retail is not only higher profit margin but
also retaining the customer longer can also be the objective, from the literature reviewed ,the
researchers have reached to the conclusion that to serve the purpose of profitability and loyalty
both simultaneously, firm must shift focus from upselling to up-buying as the customer if
willingly purchases higher priced product or service he would not only be profitable but would
help firm in combating the churn. As long as the firm provides superior value with strategic
selling it can have pleased customers. To make a transition from upselling to up-buying firm
must consider factors like the training to employees and customers, the nature of the product,
position in the desire stage, scarcity of offering, monopoly, revenue and capacity management,
quality of offering, social and psychological factors like, attitude and motives.
Limitations and Further Research
The studies included in this review are extensively based on peer-reviewed 40 articles
published in high-ranked marketing journals and articles within a span of 30 days which may
be perceived as a limitation in the present study. It is recommended to further research drivers
and consequences of up buying strategy for the strategic purpose in Consumer behaviour

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Dr. Mehal Pandya, Associate Professor – B.K. School of Professional and

Management Studies, Ahmedabad
Email Id: [email protected], Contact 9712940069
&
Prof. Abhigna Dholakia, Research Scholar - B.K. School of Professional
and Management Studies, Gujarat University, Ahmedabad
Assistant Professor (LJIMBA), Email Id: [email protected],
Contact Number: 9879113791

March, 2021. VOL.13. ISSUE NO. 1 https://hrdc.gujaratuniversity.ac.in/Publication Page | 168