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

Avatar of Michel Fortin
Michel Fortin is a certified SEO consultant, content strategist, and marketing advisor helping plastic surgeons, cosmetic surgeons, and medical aesthetic clinics attract more patients. Since 1991, he helps cosmetic and aesthetic professionals increase their visibility and grow their practices. He is the author of the More Traffic Memo™ SEO email newsletter.

Want More?

Looking for something to read next? Below are some related articles.

Be a Patient Magnet!

I share tips, thoughts, and links on how plastic surgeons can attract more ideal patients.

Get these in your inbox.

Michel Fortin Marketing Consultant