The terms Upselling and Cross-selling might look totally unfamiliar. But, do you know, these techniques are practiced everywhere and every day? Each time you want to buy a product online or offline, you receive recommendations about the upgraded versions or other frequently bought-together products. All of them come under upselling and cross-selling techniques. Let’s dive deeper into these terms without any delay.
The end goal of any business is to make sales and generate profits. In the process of attracting new customers, it is obvious that you may forget the already existing customers in your sales funnel.
But, why do you have to care about the customers who have already completed the sales journey?
Let’s see what the 2022 data says about customer retention:
- Retaining a customer costs 1/6th to 1/7th less than acquiring a new customer.
- Retaining existing customers can increase your company’s profitability by 25% and can go even up to 95%.
- A 5% increase in customer retention can result in about a 25-29% increase in revenue.
- Repeat customers are likely to spend 67% more than new customers.
Re-engaging with your past customers is not only a cost-effective strategy but also helps you boost your company’s sales.
What is Upsell and Cross-sell?
Upselling is the practice of selling a superior, more expensive, and better version of a product that the customer is buying or already owns it. Upselling is when you shop for a bottom-tier phone but end up buying a mid-range or premium phone with added benefits over the former one. Upselling for an existing customer accounts for 60-70% of sales whereas the probability of upselling for new prospects is only about 5-20%.
Cross-selling is a strategy to sell products related to the ones that the customer is buying. These products belong to different categories but will complement the products you have bought. When you buy a mobile phone, the retailer recommends a new case to protect your phone. Cross-selling can enhance sales by 20% and profits by 30%.
Cross-selling is often done at checkouts to allow customers to purchase accessories or extended warranty coverage.
What Is The Difference Between Upsell and Cross-Sell?
Upselling and cross-selling are sales strategies with the objective to persuade the buyer to spend more money than they originally intended. Sounds selfish, right? However both upselling and cross-selling help customers in finding useful products that can ease their life. Both upselling and cross-selling may look alike. But there are a few key differences between them resulting in different application strategies:
- Objective
- Process
- Recommendations
The main purpose of up-selling is to enhance the average order value and profits by making sure that customer purchases the expensive version of the products or services.
The major purpose of cross-selling is to enhance the overall sales value by offering relevant suggestions for the other products/services to improve the usability of the original product.
Upselling motivates the consumer to buy the higher-end versions of products that they are willing to purchase. Whereas, cross-selling offers a broader scope. It lets you motivate people to buy other products that can complement the products they are interested in buying.
In Upselling, the recommended product must be a similar and an improved version of the original product. On the other hand, cross-selling recommends products that can be similar or different from the original ones as long as they improve the usability of the original product.
Benefits of Upselling and Cross-selling
Now that you are aware of what is upselling and cross-selling, it is time to know about the benefits they can offer and how they converge to higher sales and profits.
Increased Customer Retention
Through upselling and cross-selling strategies, your brand consistently strives to meet your customer's expectations. It sends a message to them that you are not taking away their money but, you are caring for their interests. As a result, customer relations are strengthened and customer retention is increased.
Improves The Average Customer Lifetime Value
Customer lifetime value (CLV) is the estimated amount of money a customer will spend on your product or service throughout the entire relationship. When you understand your customers and create personalized experiences based on their needs, you can increase the average customer lifetime value without offending your existing or potential customers.
Level Up Your Market Position
In today’s competitive market, you need to consistently show your work through your products and services. CRM system offers campaign analytics, real-time reporting, and easily understandable data visualizations so that sales reps can highlight opportunities and demonstrate to customers how can they benefit from your products and customers. As a result, your sales increase and your market position are improved.
Strengthen Customer Relationships
Upselling and Cross-selling are not about offering the next versions of your company’s products or promoting other products from your catalog. Effective upselling and cross-selling requires sales reps to have a deeper understanding of who the customer is, what are their demands, and what’s important to them. Once you have answers to the questions, the reps can tailor the product recommendations according to the customer’s specific needs. You can simplify the duties of sales reps by investing in a customer relationship management system. It helps the reps to store customer information, build profiles and review purchase history. The solutions will improve your relationship with the customers.
Cross-selling and Upselling Examples
- If your customers are not willing to pay high shipping costs, you can leverage an upselling opportunity and reduce cart abandonments by providing free shipping for orders above a certain limit. Free shipping is one of the best ways to upsell any product/service. See how Paigelauren company has offered free shipping on orders over $75.
- The frequently bought-together section encourages buyers to add more products to the cart. It provides customers with more buying methods that improve sales and elevates your brand value. Look into the example below. The “Add an Accessory” offers products that can elevate the usability of the Apple iPad.
- Domino’s does it right way of upselling. It offers an incentive of a 40% discount on purchasing a regular-size pizza along with a medium-size pizza.
7 Amazing Cross-Selling and Upselling Strategies for Better Sales
Follow these strategies to make the most of upselling and cross-selling opportunities.
1. Make It Simple
The less is always good. Suggesting too many products or services at once can create confusion and dilute the customer’s journey. Guide your reps to streamline their upselling and cross-selling efforts to limited items so that customer gets a clear understanding of the benefit. As the relationship with your customer grows, the opportunities to sell better and include additional products will naturally increase.
2. Track the customer’s journey
When a customer is serious about purchasing your products/services, he is likely to communicate through more than one medium. To make sure that you are upselling the right products to the customers, it is essential to keep track of the customer’s journey and identify potential upsells.
3. Foresee The Future
Perform research to figure out what problems your client might face ahead of time. Put yourself in the customer’s shoes and you will get aware of their perspective. It lets you identify what problems they are facing and also figure out the possible solutions for their issues. Once you know their needs and how can you fulfill them, it becomes easier to sell.
4. Perform Creative Bundling Techniques
Product bundling is a process of grouping several products together and selling them as a single unit for one price. It is one of the most effective ways of cross-selling. In this technique, you offer supplementary products to improve the usability of the primary product in a single package.
For example, if a customer is willing to buy a TV set, you offer him a bundle package with a sound system, wall mount, and HDMI cables at a discounted price. If the price of the bundle package is less expensive than the individual units, the customer will be interested in purchasing the bundle package. He will get benefited from a flat-rate shipping fee for purchasing the items together. You can also boost your sales by setting a minimum order value that makes the customers eligible for free shipping.
5. User-Generated Content
It is the most authentic version of product marketing. According to the reports, online users are more likely to trust reviews from other customers than brand marketers. You can incorporate social proof by gathering online reviews, product ratings, and testimonials from buyers who have bought premium products in your store. Give your customers a reason to share about your products. Simplify the process of posting reviews and let them tell your story through their experience. If possible, repurpose their reviews into customer case studies and success stories which makes them more popular.
6. Customer Segmentation
Customer segmentation allows you to recommend relevant products and create personalized marketing messages for your customers. It is highly beneficial for upsell marketing, cross-selling, and every other marketing initiative. For accurate segmentation, you need to have a good understanding of the buyer's shopping goals and challenges. You can create multiple customer categories such as demographics, location, occupation, age, gender, purchase history, or any other data available in your customer relationship management (CRM) system and segment customers based on these categories.
7. Sell At The Right Time
Generally, upselling and cross-selling occur at the end of the sales cycle when the buyer is ready to purchase a product. But, while making complex sales, it is advised to integrate the upselling and cross-selling process into the entire customer experience. Let our reps ask probing questions to find suitable products for the customers and recreate the right upselling and cross-selling opportunities. Remember that all these efforts converge to a single end goal of building customer loyalty and making sales.
Ready To Boost Your Revenue With Upselling And Cross-Selling?
If you can keep track of how the customer is feeling, what products or features they are interested in, and when will be the best time he will be more receptive to an additional offer, you can upsell and cross-sell to the fullest potential. You should understand that it takes optimal timing, close awareness, and empathy to achieve the desired results using convert selling. Thanks for reading!