It can cost four times as much to sell to a new customer as it does to sell to an existing one. Using cross-selling and upselling techniques to customers that you already have, companies can sell more products and services, reduce the cost of sales, boost customer loyalty and drive revenue.
Why should you upsell and cross-sell?
- Increase your customer lifetime value
- Increase your average order value per customer
- Increase your revenue
- Increase your profits
Advantages of Cross-Selling and Upselling
Cross-selling and upselling is profitable for sellers as it allows them to sell more, closely tie customers to their products and make them purchase gain. It is also beneficial to customers since they can buy required supplementary products all in one place.
Customers see cross-sell products as a useful and sometimes necessary add-on that they might not have thought of and therefore positively treat them as such. As a result, sellers can gain more trust and extend the lifetime value of each customer.
Difference between cross-selling and upselling
Cross-selling and upselling have the same origin, but their differences lie in the type of connections between products and how certain product parameters, such as price, features, and compatibility relate to each other.
What is Upselling?
Upselling is when the seller encourages the customer to spend more than they had originally intended.
Example: If you’re selling a laptop, upselling will be offering the same laptop with an additional 4 GB of RAM or with an additional 500 GB hard drive.
What is a Cross-Selling?
A cross sale is when you recommend that your customer buy a product that complements their existing purchase, but from a different category.
Example: If you’re selling a laptop, you can offer a mouse, a laptop cooling fan or a laptop bag.
Where should I use cross-selling and/or upselling?
- Before a purchase: in the product or category page below the main product or in the sidebars.
- During the purchase: in the shopping cart, at checkout and in abandoned cart emails.
- After purchase: follow-up emails.
Effective Upselling and Cross-Selling Tactics.
Automate Recommendations
If you have a lot of products sold in your store, you should automate the cross-selling and upselling process by choosing an ecommerce platform, which provides the corresponding functionality.
Bundle Products
Bundling products is a strategy to convince customers to purchase a whole set of complementary products. Most of the time, bundled products has a price break and allows you to sell items that would have probably never been bought in other circumstances.
Do not offer expensive add ons
The price of supplemental items should be directly correlated to the initial product price. Only offer items which cost no more than 25% of the initial product price.
The main feature of an effective upsell is being able to offer the customer some reason to buy the upgrade now as opposed to later or not at all. There should be a significant benefit to be gained or discount for purchasing the upgraded product or service. Keep in mind, that pushing the sale too much could potentially cause you to lose the sale.
Cross-selling encourages the customer to purchase additional or complementary products from your range. This can be effective in business to business selling where the buyer and seller relationship is well established. Consider the potential of being able to cross-sell to all of your customers.
When used effectively, upselling and cross-selling provide benefits to both the company and the customers. The key is to ensure that your upgrades or complimentary sales deliver on what they promise and add value to the initial purchase.
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