Upselling and cross-selling are two key sales and marketing strategies that can help boost sales and grow your business.
Whether your business has a physical location, your conduct business over the phone or you have an online store, both of these sales strategies can help you increase revenue and your average order value. But what’s the difference between the two?
Upselling is when you encourage customers to buy a more expensive product or service while cross-selling is when you sell related products or services. Cross-selling identifies products that satisfy additional, complementary needs that are unfulfilled by the original item. For example, a comb could be cross-sold to a customer purchasing a blow dryer.
Both strategies can be effective at increasing a customer’s initial purchase and both lead to increased customer lifetime value, but it’s important to know which one to use in each situation.
Keep reading to learn more about upselling and cross-selling, and how to use them effectively.
1. Upselling is when you sell a customer a more expensive product or service than they were originally planning to purchase
Upselling is an important sales technique for increasing the average order value and increasing revenue. It involves a customer being made aware of better products or services than what they were originally planning to buy, thus helping the business generate higher revenues.
By upselling correctly, businesses can boost conversion rates and increase customer loyalty, ultimately bringing growth to the company and leading to more successful sales performances.
The success of an upselling strategy relies on understanding customers’ needs and requirements in order to meet their expectations.
An example of upselling in a business-to-business sale could be when a company offers their customer an additional service or product as an upgrade for their existing purchase.
For example, a business selling IT software may offer their customer an upgraded version of the software with more features and capabilities at an extra cost. This would give the customer access to more comprehensive features and services which could help their business become more efficient.
Upselling can be used to increase customer loyalty as well as drive revenue for the company.
2. Cross-selling is when you sell a customer additional products or services that complement the original purchase
Cross-selling is another key marketing strategy that businesses can use to grow their sales. This involves selling additional products or services that complement the customer’s original purchase.
It is especially effective when a company has various offerings that are related and thus provide added value to the customer’s initial purchase.
Cross-selling enables companies to increase their sales without the need to acquire new customers.
A cross-selling example in a business-to-consumer sale could be when a company offers their customer an additional product that complements the one they originally purchased.
For instance, if someone buys a laptop from an electronics store, they may also be offered extra accessories like a mouse or external hard drive to go with it.
The customer may not have originally planned on buying these items, but the store is giving them a better deal if they purchase all of them together.
In a business-to-business sale, cross-selling can be used to increase the value of a customer’s purchase by offering additional products and services that complement their original purchase.
For example, if a customer is buying software from your company, you could offer them a maintenance package for an additional fee. This would include ongoing support and updates for the software, as well as technical training for the customer’s staff.
This can be a great way to boost sales without having to acquire new customers.
Additionally, providing additional services and products will help build trust and loyalty with your existing customers.
3. Upselling can be more effective when done in person, while cross-selling works better online
Upselling and cross-selling can be highly effective tools for boosting customer satisfaction while driving up revenue. While cross-selling works better online — as customers naturally explore what else they may want or need within an online store — upselling is more effective in-person due to the experience of personal engagement and additional customer service given.
Cross-selling related or complementary products online is a great way to increase sales and improve customer experience.
When customers shop on your website, you can offer them other related items that they may be interested in at the right time in the customer journey.
Upselling works so well in person because it allows businesses to build a rapport with their customers and understand their needs better. This enables them to suggest additional products or services that are tailored specifically to the customer’s needs, increasing the chances of making a sale.
Moreover, upselling in person provides an opportunity for businesses to explain the value of their product or service and show the customer why it would be beneficial to them in the long term.
Additionally, when a customer is buying from a person rather than online, they may feel more comfortable making the purchase since they can ask questions and get advice directly from a knowledgeable salesperson. This allows customers to make informed decisions that are suitable for their needs.
4. Both upselling and cross-selling can increase your sales and profits, but make sure not to overdo it or else the customer will feel pressured
Upselling and cross-selling are important elements of a customer journey, as they help companies to maximize their profits.
However, it is essential to remember that customer satisfaction should always be at the forefront and too much upselling or cross-selling can lead to customers feeling overwhelmed and pressured.
Finding a balance between customer service, customer experience, and maximizing profits is key to making sure that you increase customer satisfaction.
It is usually best to map out the right times in the customer journey to trigger an upsell or cross-sell opportunity. This will keep you from presenting options too frequently. This can also help identify the optimal times to present the option to increase the conversion rate.
You may that by spreading out upsells and cross-sells over time, you are able to generate more revenue than if you tried to do it all at once. This in turn increases customer lifetime value.
Also, it is important to remember that upsells and cross-sells are valuable sales techniques with existing customers. If you want to increase the value of an existing customer, you can use the cross-selling technique to add value to your existing customers. Many times, your products or services have evolved beyond what an existing customer is aware of and they will gladly buy complementary products or services.
You can also use past purchases as an indicator of where you can develop new complimentary offerings. If you find one of your products or services is very popular, start to research what you could offer that would complement that item and offer additional products or services that add value or think of ways you can offer higher price points of similar products or services. You will find that by doing this you are able to increase revenue of existing customers.
5. Be aware of the different techniques used for each so that you can use them effectively
Cross-selling and upselling are powerful techniques used by sales teams to increase customer satisfaction and maximize revenue.
To ensure cross-selling and upselling are utilized effectively, it is important for your sales team to be aware of the different cross-selling techniques available.
This can include understanding what features or benefits may apply to each customer’s situation, being conscious of how the team communicates cross-selling suggestions and ensuring any cross-sell items tie back to the main product that the customer originally purchased.
With this knowledge, a sales team will be able to better identify opportunities to cross-sell in order to build strong relationships with their clients as well as boost their overall performance.
One way to ensure cross-selling success is to make sure that you always communicate the benefit to the customer. Why do they need the complementary item and how does pairing it with their initial purchase create exponential value for them?
Remember, your customers are trying to understand what’s in it for them. If you can demonstrate the value they will get from purchasing complementary products or services, then the purchase decision makes complete sense.
The same goes for upselling.
Your customers will buy a higher-priced offering if they can see the value for themselves.
Be prepared to communicate the added value of the upsell and your customers will see the value. The best example of this is when you go to buy a car. You go for the base model, but the sales representative shows you the premium version with leather and heated seats. Next thing you know, you are paying extra for that premium model.
Show your customers the premium option that you offer, and it will increase the perceived value which in turn will increase revenues.
6. Use upselling and cross-selling as part of your overall sales strategy to boost your business
Utilizing upselling and cross-selling as part of your overall sales strategy is an effective way to boost your business.
This powerful tool can help you maximize profits by offering multiple products and services to your customers.
Cross-selling techniques involve introducing customers to items that coordinate with the ones they have already purchased, while upselling encourages them to purchase an improved version of the product for more value.
By taking advantage of these strategies, businesses are able to generate more revenue and increase customer satisfaction in the process.
Upselling and cross-selling can be extremely effective tools to help boost sales and profit, especially when used as part of an overall sales strategy.
This blog post has provided an overview of the differences between the two approaches, as well as some tips on how to use them successfully. It’s important to remember that although upselling and cross-selling can increase profits, they should be done in moderation.
Make sure not to pressure customers or else it could have a negative impact on customer satisfaction.
If you plan to include upselling and cross-selling in your sales strategy, take time to map out your customer journey and identify any opportunities for these practices.
By keeping these key points in mind, you will be able to maximize the potential of upselling and cross-selling while earning loyal customers at the same time.
So take some time today to map your customer journey, identify opportunities for cross-selling and upselling, and start seeing a boost in your business’s sales and profits!
Want more tips on Cross-selling and upselling? Here are industry-specific recommendations for cross-sell products and services.
Cross-selling Techniques
Ecommerce site
Suggestive selling with “frequently bought together” message at Add to Cart moment.
Discounted price on shipping if user ads a complementary item while reviewing their cart.
Present complementary items that cost $10-20 while the customer is checking out and allow them to add to their order.
After checkout, offer a discounted price of one product if the customers add it to their order in the next 30 minutes.
Brick-and-mortar retail
Place smaller less expensive items near the checkout counter. Recommend complementary items based on the customer’s purchase.
Carry accessories that would be of interest to your core customer. Think gifts, candles, flashlights, knives, or other items that your customer base would be looking for. You commonly see candy and snacks in retail stores.
Offer warranties on the products that your carry if they are over a certain price point.
Professional services
Create packages or bundles of services that create a comprehensive plan to achieve your customers’ goals.
Offer services that support your core services. This could be a maintenance service, security, management, or monitoring.
Affiliate and referral programs can also be a great way to create pseudo-cross-sell opportunities. You may not be able to offer certain services, but there may be another company that does and has an affiliate program. You can recommend that company’s services and capture a small source of revenue.
Offering hardware or software that supports your services is a great way to not only create cross-selling opportunities but also streamline your operations. Overtime, you can also become a certified partner with the hardware or software company.
Upselling Techniques
Ecommerce site
At checkout, offer customers a higher-priced option with a small discount if they claim the offer at that moment.
Post checkout, take the same approach and give users 30 minutes to upgrade their purchase with a small discount.
Offer faster shipping options
Offer two more options that cost more than each other. This will leverage the law of averages to move customers from the lowest price to the middle price.
Brick-and-mortar store
Carry products that cost significantly more than your current products. This will leverage the law of averages to lift your average ticket price.
Professional services
Create multiple tiers of services that include more services or increase the frequency of service. This will leverage the law of averages to increase the average value of a service engagement.
Add one-time bonus services that are part of higher-priced service offerings.
Offer a discounted price when customers commit to long-term contracts
The sky is the limit
One common limiting belief is that your customers will not spend more money or buy higher-priced products or services.
Your customers will always spend more if they see the value for themselves.
Don’t be afraid to offer a more expensive version of your products or services. In fact, if you start offering more expensive products and services in addition to what you offer now, you will automatically see a lift in your average order value (AOV) due to the law of averages.
This is one of the easiest ways you can start generating more revenue today. Look for products or services you can offer that simply cost more than what you offer now, and by comparison, it will make your current offerings seem more affordable.
You can continue this practice long into the future because there really is not a limit. The price will need to justify the value, but there is always something more expensive and someone willing to pay for it.
The best examples of this are Starbucks and 7-Eleven. They continue to introduce larger coffee cup options and this carries their AOV higher and higher.
Originally, Starbucks offered tall, grande, and venti, then they offered the trenta. Similarly, 7-Eleven continues to offer outlandishly large fountain drink cups and customers continue to purchase them.
The law is the law, and the Law of Averages never fails.
Use these as inspiration to come up with your own ideas. At the end of the day, the goal is to build out your offerings to add value to your customers.
If you can do this, you will increase customer lifetime value, create loyal customers, and generate repeat purchases from existing clients.
