How to use upselling and cross selling to maximise sales potential.
Strategies to Boost Revenue for Businesses as we approach the final quarter
Amazon has reported that cross-selling and upselling make up as much as 35% of its revenue.
Product recommendations are responsible for an average of 10-30% of eCommerce site revenues. There’s no reason why upselling and cross-selling shouldn’t work for you. What works between the two is something you can figure out with our powerful A/B testing tool.
Up-selling and Cross-selling
Upselling is a strategy to sell a superior, more expensive version of a product that the customer already owns (or is buying). A superior version is:
- A higher, better model of the product or the same product with value-add features raises the perceived value of the offering.
Buy this small jar candle for £9.99 but get a large for only £12.99
Upselling is the reason why we have a 54” television instead of the 48” we planned for. It’s also the reason you might have subscriptions which include services you don’t use.
Cross-selling is a strategy to sell products related to the one a customer already owns (or is buying). Such products generally belong to different product categories but will be complementary, like socks with a pair of shoes, or batteries for a wall clock.
There is another popular selling technique known as bundling. Bundling is the offspring of cross-selling and upselling. You bundle together the main product and other additional products or a higher price than what the single products are sold for alone.
- Buy the raspberry jam-scented candle and choose the wick trimmer too.
It is a psychological game, tricking the mind into ‘needing’ the additional or superior item.
Should you use Up-selling, Cross-selling or both?
Specifying a minimum order amount to qualify for free shipping is a great way to use bundling – but it’s important to choose the right minimum order amount that maximises conversion rates.
Amazon is a great example of this done well because it suggests products customers can buy in addition to their original purchase. For example, if a customer wants to buy a dash cam for their car, Amazon also shows different mounting kits they’ll need.
As a strategy, however, upselling and cross-selling should be used to ‘help customers win’. It’s about making recommendations that might better meet a customer’s current needs, and aiding them to make a choice by being fully informed about their options.
Increases customer retention
Leaving aside impulse buys, customers buy products and services to solve a problem. They are aware of the problem, but might not be aware of the best solution to the problem.
Steve Jobs was right when he said ‘people don’t know what they want until you show it to them.’ Upselling or cross-selling done right helps the customer find more value than they were expecting. It can increase revenues by up to 43%, thereby improving your customer retention.
Increases average order value and lifetime value
Cross-selling and upselling increase your average order value, creating revenue and profit at a very low incremental cost. You’ve already spent valuable money to get the customer to your website so maximising order value is key to ROI.
A Marketing Metric study reports that the probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%. Upselling to existing customers is a highly cost-efficient way to boost lifetime value.
If you use the checkout screen to share your upsell opportunity, customers have already entered their payment information so they’re in buying mode. You’ve convinced them to make an initial purchase but to get them to spend a little more, share a special offer. Since customers are ready to buy when they get to the checkout screen, show them how much more they need to add to their cart to qualify for free shipping. This acts as an incentive for them to look at products at specific price points to meet the minimum — these products might even be products they wouldn’t have bought otherwise.
Remember, customers are put off by unexpected shipping costs when they get to checkout — they’ll abandon their cart and possibly never come back. Make sure to add reminders about how to get free shipping on your homepage, your product pages, and the checkout page.
There’s no easy answer as to whether upselling or cross-sell is the best strategy. The best way to decide is through A/B testing and analysing the results.