Cross-selling and upselling are two brilliant ways to nurture your current customer base and generate more sales. Since existing customers make up most of a company’s revenue, it only makes sense to use methods to boost sales and keep your customers happy.
Although upselling and cross-selling have similar outcomes, their techniques are very different. In this article, we’re going to explore the differences between these two strategies and the benefits they provide to helping a business grow.
WHAT IS CROSS-SELLING?
Cross-selling works by suggesting additional items that might complement the existing purchase. It identifies a product or service that gives additional benefits to the customer that the current item cannot. Often the complimentary item adds more value when paired with the existing purchase.
In e-commerce, cross-selling is often utilized on product pages or during the checkout process. The best chance to cross-sell is when the customer is committed to a purchase. Cross-selling can also alert users to products or services they didn’t know previously existed, further earning confidence that your business is trying to satisfy their every need. When the suggestion arises at the right time, the customer is more likely to consider adding those items to their primary purchase.
EXAMPLE OF CROSS-SELLING
Your customer has added a pair of headphones to their shopping cart. You display related product recommendations at checkout that would better enhance their current purchase. Examples include a headphone case, replacement buds, or an additional charger.
WHAT IS UPSELLING?
Upselling works in the form of adding an upgraded version of a product instead of the one they intended to purchase. The benefit to the customer is that they gain added value in exchange for a higher spend. When done correctly, it can improve the customer’s overall experience.
Successful upselling is based on understanding your customers’ needs and making their shopping experience more enjoyable. It focuses on helping your clients “win” by suggesting more premium products or services that give them a better overall value. The most important aspect of an upsell is to incentivize and reward customers for spending more money. Upselling helps businesses build a deeper relationship with customers.
EXAMPLE OF UPSELLING
Your existing customer has added a pair of last year’s headphones to their shopping cart. Before they check out, you provide images of the latest models of headphones from your current collection. These headphones are more expensive but offer more features than the current headphone they are seeking to purchase.
CROSS-SELLING AND UPSELLING: HOW THEY CAN HELP YOUR BUSINESS
The main advantage of upselling and cross-selling is to increase revenue and provide real value to your customers. Just as the phrase “happy wife, happy life” holds true, so does “happy customers, happy bottom line.” Here are just a few ways to utilize cross-selling and upselling to incentivize your customers:
Reward Customers for Spending More Money
One of the best ways to get customers to commit is by throwing in a “freebie.” Offer free shipping, a future discount, or a promo code for adding more or upgrading their current purchase.
Ensure Your Added Price Points Are Within Reason
Customers rarely pay more than 25% of what they were initially planning to spend. Make sure your add-on items or upgrades are within a reasonable margin. You don’t want to run the risk of outpricing your sale altogether.
Create a Sense of Urgency
Communicating in real-time initiates the urge the customer to make a final decision. Providing updates such as “low stock,” “only two items left,” or “offer expires in 3 days” creates a sense of urgency that the customer has a limited amount of time to decide.
Use Customer Data
Utilize software tools to help personalize the offers as much as possible. This data collection enables you to suggest products that are uniquely paired to the customer and add value to their purchase.
Show Comparisons or Similar Products
One of the best ways to nudge a customer to make an added purchase or upgrade is to showcase a good range of similar products to help them compare. It also helps them get a better visual of what they are getting and not getting with their current item. Be sure not to offer too many choices so it becomes overwhelming.
SUMMARY
Recurring revenue is extremely important for a company’s sustainability. Finding new customers can be an expensive process without a solid current customer base. That’s why cross-selling and upselling are excellent ways to grow your business and maintain customer loyalty. If you’re looking for more helpful tips or a strategy to help grow your own business, contact us for a consultation.