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Psychology of upselling in hotels: here's what you need to know to sell more

Do guests' purchase decisions seem irrational? Use psychology and learn how to predict them!

How to use psychology to drive upselling in hotels | Smartpricing

Why do we often get seduced by discounts and special offers, ending up buying items or services we had not planned to purchase? What causes us to perceive a more expensive product as more effective than a cheaper one? And why does the word "free" seem to exert an almost magnetic appeal on us?

We think we are rational consumers, capable of logical decisions geared solely toward obtaining maximum utility. But this is not the case: according to recent research from Harvard University, 95 percent of purchasing decisions have to do with our unconscious.

Therefore, in order to sell successfully, it is necessary to know the psychological mechanisms underlying buying decisions identified by behavioral scientists. And even if they may seem irrational, they are in fact predictable.

Of course, upselling success in hotels is also influenced by consumers' psychological mechanisms. In this article, we will explore what they are and how to harness them to fine-tune upselling!

How do people make a purchase decision?

According to Daniel Kahneman, psychologist and Nobel laureate in economics, when the human brain has to make a decision, it has two available paths: slow thinking and fast thinking.

Slow thinking is the most strenuous because it is responsible for demanding mental activities such as reasoning or complex calculations and, therefore, requires considerable, continuous and voluntary cognitive effort.

Fast thinking, on the other hand, is automatically and unconsciously activated, requires very little energy and proceeds by association, quickly coming to a final conclusion.

Our brains are naturally programmed to select the "easiest" way, which is why fast thinking wins out when it comes to making a purchasing decision.

These fast mental processes are called "heuristics" or "cognitive shortcuts", and it is only by knowing them that you can influence purchasing decisions to your advantage.

The 3 most important cognitive shortcuts in decision-making

Cognitive shortcuts are universal but, very often, ignored. Below are the three most important ones to understand and apply strategically, with selected examples relating to the hotel context.

1) Availability

This shortcut is based on the ease with which a particular example or experience comes to mind. If something can be remembered quickly, it is perceived as more common or likely.

For example: if a guest easily remembers a positive experience they had with an extra service in the past, such as a spa treatment, they are more likely to consider purchasing a similar experience at your hotel. To take advantage of this shortcut, you could show reviews or testimonials from other guests who have enjoyed similar services and describe them. This can help you make the idea of booking such services more "available" in the customer's mind.

2) Representativeness

This is an automatic process by which people quickly associate a situation, product or service with a pre-existing image or concept in their brain. This shortcut leads individuals to perceive descriptions or offers that present more features in line with their mental representation as more useful and truthful.

For example: if a guest reads a detailed description of a package that includes gourmet dinners, exclusive spa access, and personalized extra services, they might perceive this offer as highly desirable and in line with their ideal representation of a luxury vacation, making them more likely to choose it.

Or, finding a package with images and descriptions that clearly represent the idea of a romantic getaway will lead guests to make predictions based on the similarity to what they already associate with a romantic experience (such as candlelight dinners, roses, or a luxury suite), making them more likely to purchase that package.

3) Anchoring and Adaption

This shortcut describes people's tendency to rely on an initial piece of information offered (the anchor) when making decisions, and then adjust their evaluations based on that information.

For example: If a hotel initially presents a high price for a luxury suite and then offers a slightly lower price for a similar package, guests may perceive the package as more advantageous, their perception being anchored by the higher initial price.

How to leverage psychology to upsell in hotels

Having seen what the basic cognitive shortcuts are and how you can leverage them, let's review some basic psychological principles that can be applied to upselling in your hospitality establishment.

1) Empathy and Personalization

Understanding and anticipating what guests really want is the key to successful upselling. By doing so, you don't just increase revenue; you create an unforgettable experience for guests, making them feel valued and understood. To achieve this, you must focus on active listening, observing your guests' behavior, and gathering feedback from customers after they have enjoyed an extra service.

2) Principle of reciprocity

This principle is based on the idea that by offering something of value to guests without immediate expectations, they will feel "obligated" to reciprocate. For example, offering a welcome cocktail upon arrival or a voucher for free coffee can instill a desire to reciprocate, perhaps by choosing to dine in the hotel restaurant or purchasing extra services. This strategy not only enhances guest experience, but also encourages additional purchases in a subtle and natural way.

3) Authority and Credibility

Guests tend to trust and follow the recommendations of respected and knowledgeable figures or, alternatively, may be positively influenced by a high number of positive reviews left by previous guests. The advice, therefore, is to make the most of reviews and, if you have the opportunity, to gather advice and recommendations from local experts for your restaurant or exclusive experience.

4) Scarcity

When guests perceive an offer as limited, they are more likely to act quickly so as not to miss the opportunity. For example, communicating that certain packages or experiences are only available to a limited number of guests and are selling out can stimulate an immediate purchase decision. The feeling of getting something unique or exclusive (and the fear of being the only one to miss out) is a powerful incentive, and knows it too: that's why under each offer, it clearly indicates the number of rooms left by writing, for example, "Only 1 room remains at this price on our site."

5) Urgency

Along with the principle of scarcity, the principle of urgency is one of the most widely used to boost sales by stimulating guests to buy promotions or services in a specific - and narrow - time frame. An excellent example is Amazon, which, under each discount, makes sure to add a countdown to show how much time is left to take advantage of the promotion. In your case, this could be a discount on a room upgrade or your spa packages that can only be enjoyed by those who book by a certain date.

6) Timing

The best way to ensure upselling success is to find the right time to offer it. One suggestion is to take advantage of times when guests are already mentally ready to complete a transaction and therefore more open to considering additional purchases.

For example, during the reservation phase or check-in.

How to apply psychology to upselling techniques

Applying psychology to sales techniques requires a deep understanding of your customers' behavior and preferences. In your case, you have an advantage: you don't have to invent anything! Use the data at your disposal (booking records, information contained in your Customer Relationship Management, results of customer satisfaction questionnaires, etc.) to perform an accurate analysis of the needs and desires of each customer segment you want to attract.

Also, do not forget that upselling should be perceived as an opportunity to enrich the stay. It is important both to create an offer that adds real value and to know how to communicate it persuasively and emotionally.

To be able to do all this in a way that makes the sale feel spontaneous and unobtrusive, it is important to know the best upselling techniques, but more importantly, to practice using them.

If you have a dedicated team, don't let them fall back on improvisation! Receiving propertraining will help them not only apply these techniques to increase sales in your hotel, but also to make the guest feel valued and respected and thus foster maximum satisfaction and loyalty.

As you have seen in this article, in order to sell more and better in your hotel, it is important not to leave anything to chance and to know how to harness the psychological mechanisms that influence decision-making. But this is not enough!

That's why we have created a comprehensive guide, where you will find not only the most important psychological principles, but also all the best and immediately applicable upselling techniques explained in detail. In addition, you will find a training program to educate your staff and make them even more proficient in selling!