Whether or not you’ve ever done direct sales, you probably are already familiar with two fundamental sales strategies: upselling and cross-selling. You may not know that you are familiar with these concepts – but as a consumer today, you have definitely been exposed to them.
You might also be somewhat aware of the two terms, but maybe you don’t exactly know what they mean – or maybe you’re confused about the differences between the two.
Here is a brief description of each term, plus a few examples of both:
Upselling is a technique used to persuade the customer to buy a better version of the products or services about to be purchased.
Cross-selling is a strategy used to add more products or services to the original purchase.
Examples of Upselling and Cross-selling
- Upselling: “We have a special today of a double cheeseburger for $.60 cents more – would you like to buy that instead of the single burger?”
- Cross-selling: “Would you like to add fries and a coke to that cheeseburger order?”
- Upselling: “The mid-sized sedan is a popular vehicle, but our luxury sedan comes with added safety features and a better warranty.”
- Cross-selling: “For two hundred bucks more, I can throw in an engine block heater and a front license plate bracket with that new sedan.”
- Upselling: “This TV is great, but have you seen the latest model? It has added features I think you’ll appreciate.”
- Cross-selling: “That TV is great – but based on what you’ve been telling me about your family, you’ll probably want to take a look at our complete home theater system. It will change your home movie-viewing experience forever.”
Do you see the difference?
When done right, upselling/cross-selling is beneficial to not just the seller, but the customer, too. If you present options that you know will benefit your customer, everybody wins. How do you do that? Well, you need to take an intuitive approach. Listen to what your customers have to say about their wants and needs.
Put yourself in their place; if you were shopping for an economy car, would you want to hear about the luxury SUVs on the lot? Probably not. But you might want to know about the latest hybrid that could spare you from sending a ton of money on fuel…right?
If you listen to what your customers are telling you and then apply the strategy of upselling/cross-selling accordingly, you could provide them with solutions that make them happy. Often, people don’t even realize they need certain products or services – until you point it out to them. It’s a win-win situation for you and your customers.
Another advantage of upselling/cross-selling is that it’s easier to do than to sell to an entirely new customer. When you are marketing to a new lead, the probability of closing that deal is five to 20%. When you’re selling to an existing client, that percentage shoots up to 60 to 70%. So upselling/cross-selling is really a more efficient way to sell.
Here are our top tips for upselling and cross-selling like a pro.
Tip #1: Use the Technique in Moderation
You’ll want to maintain the trust of your customers, and you can’t do that if you make them feel overwhelmed by the upsells/cross-sells. Too many choices will confuse your customers, and that could backfire on you.
You could cause your customers to become suspicious and resentful if you throw too many options at them – and they might just give up on the idea of buying anything at all from you. Keep the options simple and straightforward.
Want to know what a real-life, hugely successful example of this marketing technique looks like? Ever shopped on Amazon? If you have, then you’ve probably seen the phrase “frequently bought together.”
According to an article at Fortune, the conversion rate for those recommendations on the site may go as high as 60%. This is an example of cross-selling in the real world that every marketer could learn from.
Tip #2: Bundle Relevant Items
This is a strategy that takes the “frequently bought together” concept to the next level. You make the shopping experience convenient for your customers by packaging necessary/relevant items together.
This is another instance when you need to be careful about your approach, though. You don’t want to offer irrelevant items or services that your customers aren’t likely to find enticing (so don’t try to dump your unwanted inventory on them). If you do that, it’s insulting and very counter-productive. Instead, offer valuable add-ons that your customers will find useful.
Tip #3: Know Your Customers
Think of your favorite restaurant. The owner or head waiter at that restaurant probably takes the time to get to know your likes and dislikes. Based on that knowledge, the owner/waiter makes suggestions based on your personal preferences.
You should do the same thing on your website. If your goal is to get people to sign up for your newsletters – but no one is responding to your pop-up box – try offering a free e-book on your landing pages when people register for the email list.
Also, think about how Amazon, eBay, and other major e-commerce sites track your book orders and other types of purchases. They recommend relevant products based on your previous choices, right? You should be doing the same thing.
Use Google Analytics to track user patterns on your website. One technique is to make use of the order confirmation pages via analytics. If a lot of people signed up for an online course you’re selling, you could send an email to just those people and upsell them with a related but more extensive course. See how that works?
Tip #4: Don’t Overdo It
Upselling/cross-selling only works well when you are solving your customers' needs (and it works even better when you make them feel privileged about receiving an offer). If you offer a discounted free shaving kit to all of the customers who buy your designer men’s cologne, many of them will appreciate that they are getting a deal that other customers aren’t.
On the other hand, overdoing it will irritate your customers and drive them away from you and your website. If your customers feel like they are only a marketing experiment to you – or that you care only about making the sale and not about what they want – upselling/cross-selling will have the opposite effect than the one you want.
Here’s another detail to keep in mind: There’s a “rule of 25” in business; you should avoid cross-selling items that are more than 25% of the original order.
When you try to upsell/cross-sell above that percentage, you will generally be perceived as out of touch with the needs of your customers (at best) and pushy or greedy (at worst) – and you will be more likely to repel even customers who were close to making a purchase.
Also, add-ons beyond 25% may simply feel overwhelming and like a second primary purchase – instead of add-ons.
Tip #5: Timing
Timing is always a crucial aspect of sales. You should only upsell/cross-sell when you have all the necessary information to secure the first order. This means that the shopper has already committed to buying and is less likely to abandon the order altogether. If you try to sell additional items too early in the shopping process, you could easily turn a customer off and thus lose the entire sale.
So remember to wait until the customer has already committed to the sale by giving contact and financial information – then, describe the benefits of the additional products/services you are trying to sell.
There are several ways to give upselling/cross-selling a try. For example, you can create an online store with Shopify (find out more on Shopify review) and try to improve your revenue with this strategy.
This is a marketing strategy that has worked for countless businesses and entrepreneurs, and it could serve your blog or business well. Just remember to utilize the tips I’ve illustrated here, so you can get the most from your upselling/cross-selling efforts.