Revenue Engines: Upsell, Downsell & Every Other Way You Can Build a Deeper Funnel to Make More Money

It costs up to 25 times more to get a new customer, compared to turning an existing customer into a repeat customer.

Qualified buyer leads are infinitely more valuable than just leads. The most surefire way to qualify if someone's a buying lead for your kind of business and your kind of product is if they've already bought something from you.

This is why the most effective thing most (already running) businesses can do to increase revenue is to get their existing customers to buy more stuff from them. In fact, it's one of only 3 possible things you can ever do, to make more money in your business.

Read on to see the exact strategies and funnel setups you can apply, to use this principle in your business.​

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If, during the following sections, you ever find yourself thinking "this is terrible! I can't believe Shane is advocating this stuff!!" - trust me, that's a good thing. Bear with me, to get to the good stuff further below. ;)

Build that Funnel!

Let's start with the basics: as a general principle, the deeper your sales funnel, the more money your business will make. This is fairly common marketing advice, so I'm assuming this doesn't exactly blow your socks off, just yet.

By the way, building funnels is one of the 3 levers for increased revenue in your business.​

Deeper funnel = more money is true​, but there are a few caveats:

  • The steps that matter are the ones where you sell something.
  • You have to be selling good products that are relevant to your customers' interests and needs.

In other words, the deep funnel we're talking about is one of the following.

Linear Upsell Funnel

In this setup, we start with the sale of a product. This is often referred to as the front end (FE) product. It's the product that is publicly on offer, on your site.

Once someone makes the purchase, they are immediately sent to another sales page. This is an upsell or a back end (BE) offer. When a purchase is made on the upsell, a further sales page with a further upsell offer is shown.

This can go on until you run out of products to sell or until you feel bad about hammering your customers with ever more offers.​

What happens when someone doesn't purchase an upsell? This brings us to a close relative of the upsell:

The Downsell

​A downsell is basically the exact same thing as an upsell: you direct your customer to another sales page, with a different offer.

However, the downsell offer is a different one and should be made with the context in mind. Which is that the customer just rejected an offer on the previous page.

Put very simply, in an upsell you offer more and ask for more and in a downsell, you ask for only a little more and make the offer accordingly.

This is the most basic revenue engine. And it works.

BUT...

It's far from the only one and in many cases, it's far from the most effective one.​

Linear Upsell Funnel - Pros & Cons

  • It's the simplest way to deepen the funnel.
  • It's easy to set up (no complicated tech needed).
  • Even if it's very basic, it will lead to more sales and revenue.
  • The more steps in the funnel, the more pissed off your customers get.
  • It can create the impression of "bait and switch", if your upsell offers aren't well differentiated from the front end product.
  • It relies on customers making an impulse purchase, because the subsequent upsell steps aren't accessible from your site's navigation.

As you can see, you have to take the good with the bad, in a linear upsell funnel. The good news is: there are many other revenue engines to choose from. Depending on your business and context, some of these will work better than others. Many of these can even be combined together, to form extremely effective sales funnels.

The Tripwire Offer

You gotta give it to marketers: they embrace the cringe when it comes to naming and branding stuff.

Yes, this offer is indeed named after something that is expressly meant to hinder, injure someone. But the name "tripwire offer" stuck.

The setup works like this: you offer something for free, as an opt-in incentive. As soon as a new subscriber signs up, you deliver the freebie and make an offer for a low-priced product at the same time. The goal is that new subscribers make a purchase immediately.

One of the advantages is that this brings some revenue into your business right away. Another is that you immediately segment buyers from non-buyers. If you buy into the idea that anyone who spends any money with you is more valuable than "just a subscriber", this is great. Personally, I think that's oversimplified.

Following Up

To build out a more complex campaign, you can split your subscribers into two groups after the tripwire: those who bought and those who didn't. The non-buyers get a series of emails that deliver value and have the goal of a tripwire offer purchase. The buyers get a series of emails that have a higher priced product purchase as the goal.

Tripwire Offer - Pros & Cons

  • Sales of the tripwire offer can help offset advertising costs, meaning you can spend more per lead, to build your list.
  • Some people are ready to buy right away. For them, a tripwire offer is better than a long nurturing sequence of follow-up emails.
  • Can also create a "bait and switch" impression in new subscribers.
  • If your free offer is no good, people who didn't purchase will get a very negative impression.
  • The paid offer distracts from the value of the free offer.

The "One Time Only" Offer (OTO)

As the name implies, an OTO is an offer that's only available once. It can be inserted as an upsell or as a tripwire offer, but the visitor can't ever go back to the page and take advantage of the same offer, once they close the tab.

In the Internet marketing space, the OTO term has been widely abused. Often, something will be advertised as a "one time only", but if you don't purchase, the offer will be available again later or you can just save the URL and go back to it anytime.

This happens when marketers want to eat their cake and have it, too, hoping that they get the added urgency of an OTO, but also don't lose out on sales from people who don't buy right away. Needless to say, this is a dumb way to do business.

If you're going to do OTO, then use it as a long term strategy. Make the offers truly one time only. Your audience will soon learn that you aren't kidding with your one time offers and the urgency will be real. You might still think that's a crummy way to get people to buy something (and I don't disagree), but at least real urgency actually makes a big difference to your revenue.

OTO - Pros & Cons

  • A form of extreme urgency, which can lead to significant increases in sales.
  • Will definitely be perceived as a high pressure sales tactic. Maybe belongs on a used car lot, more than on your website.
  • Doesn't work well for products that aren't suitable for impulse purchasing or for high priced products.
  • If you claim something to be a one time only offer, but it's actually not one time only, you lose trust and credibility.

The Delayed Follow-Up Offer

OTO, upsells and tripwire offers are popular with marketers. The terms are thrown around a lot and the idea of getting more money immediately is alluring. The good old follow-up offer doesn't get as much credit as it deserves, in my opinion.

It can look something like this:

The idea is simple: after someone signs up (or after they make an initial purchase), you send a series of follow-up emails, each one or more days apart. At first, you simply offer some value in your emails, such as:

  • Educational content or links to educational content in the emails.
  • Onboarding emails that help the customer make use of the product they initially purchased.
  • Unannounced bonus products, delivered after an opt-in or initial purchase.

These emails create trust and familiarity. Once the email with the follow-up offer comes along, the leads who open it are "warm" leads and thus more likely to buy.

There's one problem with this model:

As a general rule, each step in a follow-up sequence will get slightly fewer opens and clicks than the one before it. Even if your follow-up emails are well written and full of value, this will still happen. Over time, subscriber interest generally goes down.

This explains the popularity of the "sell immediately" models presented before. However, if you look at the graph above and think "I have to sell as soon as possible", you're missing an important point. The purpose of a follow-up sequence is not to get everyone on the mailing list more interested and more familiar with you. The purpose is to nurture the true fans.

Not everyone on your mailing list will ever be a true fan, but with a good follow-up sequence, some of them will be. Arguably, a small number of true fans are much more valuable to your business than a large number of people who "trip" over a $5 offer right after they sign up.

The way to think about the delayed follow-up offer is that you will sell a $1,000 product to 10 people instead of a $10 product to 100 people.

Follow-Up Segmentation

If you have more than one offer to make, things get even more interesting. In that case, you should segment your subscribers in your follow up sequence:

The segmentation could happen in various ways, such as:

  • Different opt-in offers that indicate a subscriber's interests.
  • Segmentation based on the responsiveness of your subscribers.
  • Send subscribers to a quiz, where you get additional information about their interests.

Delayed Follow-Up Offer - Pros & Cons

  • Sending valuable, non-sales content is a good way to nurture true fans and build your brand.
  • Segmenting your follow up lets you make more specific offers to the right groups of people.
  • You can potentially sell much higher priced products at the end of a follow-up sequence than at the beginning of it.
  • If you only send valuable content for a long time, you might lose interest from people who would have been potential buyers.
  • Not suitable for low priced and impulse purchase products.

Upgrade Offers

Upgrade offers are similar to upsells, but they are made before the initial purchase, instead of after it. The visitor adds a product to the cart and (on the cart page) sees one or several ways to upgrade the purchase.

This works best with upgrade offers that are low priced and don't require a lot of explanation. After all, the visitor has to be able to make the decision on impulse, without reading a whole other sales page about the upgrade.

Pre-Cart Offer

A variation is to show a pre-cart offer, by opening a lightbox with upgrade options immediately after a product is added to the cart. The principle is the same, the presentation is just a bit different.

Checkout Options

This is a further variation and if you've ever booked a flight, you've definitely seen this. This is sometimes presented as an opportunity to "customize your order". The difference to the previous variations is that the upgrade options are made part of the checkout flow, so they sit in between the cart page and the final payment step:

Upgrade Offers - Pros & Cons

  • Upgrade offers are less intrusive than upsells that happen after the initial purchase.
  • Suitable for low-priced, easy to understand upgrades and impulse purchases.
  • Upgrade offers are an effective way to mask the true cost of your offer. This has become a standard practice in price competitive fields. Whether you like it or not, it works.
  • Like upsells, it can turn customers off if they are sent through a long checkout flow full of upgrade offers.
  • If the upgrade offers aren't well chosen, customers may feel like you've cheated them by "forcing" them to pay more or withholding important product features from them.
  • Technically much more difficult to implement than other revenue engines.

Multiple Plans or Packages

As a general rule, you should offer more than one package, plan or level of your product. This is a revenue engine that works so well, I think that not doing this is a fundamental pricing mistake.

Also, it works so well that it's very common. Whenever you see a pricing table, you see this revenue engine in action.

Scaling Pricing

A variation of multiple plans is pricing that scales with usage. This is typical in the SaaS (software as a service) space. Think: an email marketing tool that charges you based on how many subscribers you have or a support system that charges you per user.

Upgrade Offers - Pros & Cons

  • Multiple prices create the anchoring effect - your low and mid-range prices look cheaper because of the presence of a high prices variant.
  • Ensures that you get more money from power users, large companies and super fans.
  • Opens the option to have a low priced option, to get more customers through the door (and have them hopefully upgrade later).
  • The price tiers, features and scale have to be chosen carefully. You have to make sure that customers feel like they're getting a good deal, no matter which price tier they fall into.
  • Multiple prices can be somewhat tricky to implement, while scaling pricing can be very technical.
  • The more choices and price tiers there are, the more likely customers are to experience decision paralysis.

Product Recommendations

This is a revenue engine that Amazon is famous for. There are two forms product recommendations typically take. The first is a gallery of related products that can be shown on product pages, on the cart page or during the checkout process.

The second is product recommendations based on purchases, sent in follow-up emails.

Product Recommendations - Pros & Cons

  • One of the least intrusive and most friendly revenue engines.
  • If you sell many products and you have a good system for making recommendations, it can be very lucrative.
  • There's a bit of social proof in the idea that "other people also bought" something.
  • Possible to set up manually if you have a small number of products, but very time intensive. Technically difficult and expensive to set up for a large number of products.
  • Because the offers are less intrusive, they won't lead to high conversions unless the recommendations are really spot on.

Cross Promotions

If you order a burger and the teller asks you "would you like fries with that?" that's an upsell. If the teller asks "would you like a Coke with that?" that's a cross promotion. The distinction is simply that in one case, the business is selling more of their own product and in the other, they are selling someone else's product.

Cross promotional offers can be inserted in various ways, but are usually most suited for follow-up offers. The easiest way to implement cross promotional offers in an online business is through affiliate links. However, also keep on the lookout for tighter promotions, such as creating bundle offers consisting of your product and someone else's or (in software) integrating your product within someone else's product.

Cross Promotions - Pros & Cons

  • Easy to add revenue engine, if you only have one product of your own to sell.
  • A cross promotion deal that goes both ways can add revenue to your business and also bring more traffic and exposure.
  • Cross promotions can distract from your own brand and products. In many cases, it means sending people away from your site, to someone else's business.
  • The "foreign brand" doesn't enjoy the same amount of familiarity and trust among your audience. That usually means lower conversion rates than if you sold something of your own.
  • Earnings per sale are usually lower on a cross promotion than if you sold your own product.

Mix & Match

Many of these revenue engines can be used within the same business and even the same sales funnel, in different combinations. For example, a funnel that's tricked out with multiple revenue engines could look like this:

Is that too much? Should you swap out one of those revenue engines with a different one, for better results?

There's no right or wrong answer to that. Which revenue engines make sense in what combination depends on your business and the market you operate in.

Takeaway

As you can see, none of these revenue engines is perfect: they all have their pros and cons. In principle, each one of them works. That means: if you take an existing business and you add one or more revenue engines to it, it will make more money, almost guaranteed.

The action you can take from this post is that you can look through the list and look out for revenue engines that you can and want to implement right away. Then, note down revenue engines that you could implement as a longer-term goal.

Then, get to work.

And don't forget to come back here and tell me about the results you got.

Do you have other revenue engine examples? Any questions about the ones listed here? Let me know by leaving a comment!

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About the Author Shane Melaugh

I'm the founder of ActiveGrowth and Thrive Themes and over the last years, I've created and marketed a dozen different software, information and SaaS products. Apart from running my business, I spend most of my time reading, learning, developing skills and helping other people develop theirs. On ActiveGrowth, I want to help you become a better marketer and product creator. Read more about my story here.

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