Upselling and cross-selling your products online can effectively increase revenue by up to 30%, according to a study by Accenture. Mastering these selling techniques can lead to significant business growth, regardless of industry.
Upselling involves encouraging customers to purchase a more expensive version of a product, while cross-selling suggests additional products that complement the original purchase. These online sales strategies provide many benefits, as they target existing customers who are easier to convert.
This online sales guide provides actionable insights and tips to implement upselling and cross-selling strategies effectively. By the end of this guide, you will understand the nuances of these strategies, learn effective techniques, and discover how to optimize your website and sales strategies.
Understanding Cross-Selling
Cross-selling occurs when a business or salesperson recommends additional products to complement the customer’s original purchase or service offering.
For example, a business selling pillows might suggest pillowcases to accompany their purchase. Or, if a customer books a stay at a resort, the resort might cross-sell by additionally suggesting to book a spa treatment.
This strategy aims to enhance the value of the original purchase by offering relevant, complementary products or services. It leverages purchase intent to introduce new products and increase the average order value.
Cross-Selling vs. Upselling
Cross-selling focuses on products that add value to the original purchase, while upselling encourages customers to purchase a more expensive or premium version of their original purchase.
For example, if a customer purchases a new laptop, you could provide the following options.
- Cross-selling: Recommend laptop insurance to protect the device.
- Upselling: Encourage the purchase of a model with more storage capacity and better performance.
Cross-selling and upselling opportunities vary across industries, but the strategy remains the same. Tour operators could cross-sell a bus pass with city tour options or upsell to a longer tour that includes lunch. Medical clinics could cross-sell vitamins and supplements with a check-up or upsell a premium health check-up with more extensive testing.
Benefits of Upselling and Cross-Selling
Increased Revenue
These strategies can significantly boost sales revenue without additional customer acquisition strategies and costs. According to Forbes, existing customers are 50% more likely to try a new product and spend, on average, 31% more than new customers.
Improved Customer Satisfaction and Loyalty
Providing a better customer experience increases satisfaction and needs are being met, there is a higher likelihood of repeat purchases. Strong relationships with customers further enhance the strong financial gains from these strategies.
Higher Average Order Value (AOV)
When customers add additional items or decide to purchase a higher-value item, the value of each transaction increases. According to Now Dialogue, e-commerce sites that employ upselling techniques see an average order value increase of 10-30% and typically experience an increase in customer lifetime value (CLV).
Preparing for Effective Upselling and Cross-Selling Online
Know Your Customers
When implementing new sales strategies, it is important to understand customer behaviour and preferences. There are plenty of tools available that provide information about customer behaviour like Google Analytics or a CRM like Shopify’s marketing analytics. Many businesses also invest in customer surveys that provide consumer insights directly from the source.
This data can reveal patterns in customer’s purchasing behaviour and preferences that help you tailor your upselling or cross-selling efforts to meet specific needs. Taking a data-driven approach allows companies to measure, test and improve the efficiency of their upselling and cross-selling over time..
Segment Your Audience
For cross-selling and upselling, segmenting customers by purchase history can provide better recommendations to prospects, effectively increasing conversion rates. For example, a customer routinely purchasing devices might respond to offers for accessories or a new model of their existing device.
There are endless possibilities for segmentation, including purchase behaviour or demographic segmentation by age group or by geographic location. For example, Canadian sellers might promote rain jackets to a Vancouver audience in February and parkas to a Toronto-based audience in that same month.
Combining data from multiple sources vastly expands segmentation criteria. Here are some examples of advanced segmentation criteria:
- Past purchases (e.g. family holiday vs cultural city trip, for tourism companies)
- Operating system (e.g. Windows vs Mac, or Xbox vs Playstation, for software sellers)
- Company characteristics (e.g. annual revenue and job title, for B2B selling)
- Financial ratings (e.g. credit rating, debt, and home ownership, for financial services)
Segmentation offers more personalized recommendations, and it works; around 91% of consumers are more likely to purchase from businesses that provide specific, relevant recommendations.
Upselling Techniques
Product Bundling
Product bundling is a very common upsell strategy. This strategy involves offering discounts on multiple products to encourage customers to buy more. For example, telecommunications companies often offer internet and mobile bundles or a tourism business might offer entry to multiple attractions for a bundled price.
Successful product bundles offer savings for customers and provide convenience, increasing the likelihood of making a purchase. It is important to highlight the bundle’s benefits, such as cost savings, to increase the conversion rate.
Premium Versions
Another upsell technique encourages customers to purchase a higher-tier product or a premium version of their original product option. For example, a software company offering a basic version of their product versus a premium version that includes additional features or enhanced support.
The standard version of an offering can initially hook customers and work well for budget-savvy individuals or organizations. However, if you want an upsell, highlighting the specific benefits of upgrading can encourage customers to consider a premium version. Some promotion ideas include providing customer testimonials and version comparison tables or offering special promotions that can positively impact conversion rates for premium offerings.
Limited-Time Offers
Time-sensitive promotions create urgency and encourage customers to make a decision quickly. Most people suffer from FOMO (the fear of missing out) and find these limited-time deals more compelling.
These upsell offers can include holiday-themed discounts on a premium version of software, free shipping for a weekend or even Black Friday sales. Countdown timers or limited stock badges can easily highlight the time-sensitivity of an upsell offer.
After-Purchase Upsells
After-purchase upsells can be especially effective for e-commerce brands. Email Marketing is a key tool to make this happen. There are plenty of plugins and apps that help brands create thank you emails that include a limited-time offer on the customer’s next purchase. For example, the company could offer a 20% discount to a customer if they purchase another pair of jeans in the next 24 hours. Aftersell is a Shopify upsell app that helps brands create a cart, checkout, & post-purchase upsell experience. Case studies have shown it to boost sales by up to 30%.
To effectively launch this email upselling strategy, it is important to send timely, relevant, and personalized emails to the customer. Reminding the customer of the benefits of upgrading or purchasing additional items with an exclusive deal will also help improve the upsell conversion rate.
Cross-Selling Techniques
Complementary Products
Not to be confused with complimentary products, complementary products can add value or enhance the original purchase. You can see this on all Amazon product pages in the “Buy it with” section. An example of a complementary product would be a screen protector for a smartphone or providing Google Analytics tracking services with Paid Ads services.
When marketing complementary products or services, highlighting how they enhance the primary purchase can increase their appeal. Product descriptions and images can show how the products work together and customer reviews or ratings for the complementary products can add credibility and encourage purchase.
Recommendation Engines
Recommendation engines are also popular for e-commerce cross-selling. Plugins or apps that use AI or algorithms can recommend products based on customer’s behaviours and suggest products that are most likely to be of interest. For example, a brand could recommend a product or service based on the customer’s past purchases or the purchase history of similar customers or even bestsellers.
There are plenty of different upselling options for brands. The best choice depends on the e-commerce platform used. WPSolr is an option for WordPress or Woo-Commerce. They’ve created a list of the top 5 recommendation plugins that boost WordPress websites’ upselling capabilities.
In-Cart Cross-Sells
When a customer views the cart, they have a purchasing mindset. This makes in-cart cross-sells an effective way to increase average order value (AOV) and boost revenue. This means suggesting additional products on the cart page. Below is an example of Tentree’s in-cart cross-sell that suggests a mystery box or bag to complement a sweater purchase.
When implementing this strategy, ensure the cross-sell suggestions are relevant and strategically placed to increase the likelihood of acceptance. There are plenty of ways to cross-sell in the cart. For example, below the original items and above the checkout button or in a pop-up that appears as the user hovers over the checkout button. Testing placements can maximize the conversion rate on in-cart recommendations.
Post-Purchase Cross-Sells
Similar to the after-purchase upsells, email marketing is a key tool for encouraging post-purchase cross-sells. Sending an email with complementary products a few hours or days after the initial purchase can encourage customers to make an additional purchase. For example, an extended warranty recommendation could be sent after a device purchase or a sleeping bag recommendation after a tent purchase.
Retargeting ads are another effective strategy for post-purchase cross-sells. They can be implemented across Google platforms or social media. These personalized ads remind customers of complementary products they might have missed during their initial purchase.
Optimizing and Iterating
Continuous Improvement
The key to any successful marketing strategy is continuous improvement. Cross-selling and upselling strategies should be reviewed regularly to evaluate effectiveness and optimize performance. Some techniques might not work for an audience, while others might noticeably improve KPIs.
Customer feedback is an effective way to gather feedback and identify areas for improvement. Post-purchase surveys or a net promoter score (NPS) survey can provide insights into what works or doesn’t work, while heatmaps or session recordings can allow marketing teams to review customer behaviour on a specific page or in a specific funnel. Gathering and analyzing this behavioural data can help brands continuously improve their upselling strategies.
A/B Testing
A/B testing or conversion rate optimization helps businesses evaluate different strategies. Experimenting with specific elements of a landing page or shopping cart can identify the most effective upselling or cross-selling techniques. For example, product bundle recommendations might not resonate with an audience but a limited-time offer could be very successful.
VWO is an effective tool for conducting A/B tests that allows you to create and run tests on key pages to experiment with the various upsell and cross-sell techniques shared in this guide. Running experiments to get statistically significant results allows brands to make data-driven decisions and significantly boost upsell performance.
Key Metrics
When implementing these techniques throughout the customer journey, it is important to decide on key metrics that measure performance. When upselling or cross-selling, the goal is to increase the average order value and customer lifetime value. The conversion rate of specific techniques can also help measure the success of specific techniques.
- Average Order Value (AOV): This metric tracks the average value of each order to measure the effectiveness of your upselling and cross-selling strategies. An increase in AOV indicates successful upselling and cross-selling efforts, suggesting users are taking advantage of the offers provided.
- Customer Lifetime Value (CLV): This provides organizations with an estimated total revenue a customer generates over their lifetime. CLV helps to assess the long-term impact of each strategy and gives insight into customer retention.
- Conversion Rate (CVR): This metric monitors the percentage of users that take a desired action on a site. In this instance, the desired action would be the upsell or cross-sell. An improved conversion rate suggests that your audience responds well to upselling and cross-selling techniques.
Implementing upselling and cross-selling strategies can help increase revenue, improve customer satisfaction, and boost the average order value. As a result, it also increases the ROI of online marketing channels and advertising campaigns. The team at 1UP Digital Marketing are experts at implementing and testing these techniques across many industries. Get in touch today to learn how to achieve your goals!
Whether you’re looking to improve your existing strategies or explore new opportunities, we’re ready to help you 1UP your competition.