What is cross-selling and up-selling – similarities and differences
Although both of these sales techniques are about increasing the amount of a customer’s order, they differ not only in the object of selling. cross-selling requires a different approach than that in up-selling. The two solutions also have a different target audience and are used in different circumstances.
Briefly about the up-selling technique
Up-selling is a strategy that involves offering the customer a product or service that provides more benefits, but is primarily more expensive. The idea is to slip the customer a solution that can help them more, meet more needs – like a computer with better specifications.
Example:
Mr. Gregory visited a stationary RTV store with the intention of buying a laptop computer. He asked the salesperson for help while stipulating that he was interested in the high performance of the device. The salesperson, seeing that Mr. Grzegorz was ready to spend PLN 5,000 on a laptop, offered the customer a slightly more expensive model, intending to entice him with better performance, a more pleasing screen and longer battery life.
Upselling is particularly popular for selling services. A simple car wash may cost 150 zlotys, but a premium package that includes waxing, ozonation of the cabin, upholstery washing and a range of additional treatments may prove more advantageous. To make a successful follow-up sale, dealers often offer discounts on additional services – in this case, each individual service would cost a total of PLN 600, but the car wash offers the package for PLN 450.
Read more about upselling and how to increase revenue with its help in our article: Upselling – what is it and how to use this method?
The basics of cross-selling
The goal of cross-selling is, of course, to increase sales (or rather, the value of a customer’s order), but in this case the approach is radically different. This is because cross-selling does not offer a better product at a higher price, but additional products that can complement the main one – for example, increasing its functionality or offering better protection.
Sticking to the theme of the computer, this can be demonstrated with a simple example:
Example:
Mr. Gregory did not decide to buy a computer in the amount of PLN 5,999 – he chose a cheaper model, for which he paid PLN 5,199. However, the seller is not about to give up – he uses the customer’s interest to offer him peripherals (mouse, headphones, monitor for work), as well as accessories (cases, screen cleaning cloths, etc.). This is what cross-selling is all about.
Mr. Gregory, who serves as our example, was thus treated by the advisor first with upselling and then with cross-selling. These techniques can be used together, but it requires a fair amount of sensitivity and delicacy – so that the buyer can imagine the benefits that the acquisition of complementary items will give him, and not feel cornered by additional options.
How to increase e-commerce sales through cross-selling?
And how do you drive sales in an online store? Most sales platforms offer this functionality, although not always in the basic version. Often the modules that allow you to set up cross-selling in your online store are offered as part of… cross-selling or upselling.
What does it consist of? All the customer has to do is add a product to the shopping cart – for example, a desk. Immediately after this step, the site will display a widget with the caption “customers who bought this product also selected” or similar. In turn, under the caption, the visitor will see several products that complement the offer. These could be a chair, a lamp, a matching dresser or anything in the same category.
Today, cross-selling modules in many cases work automatically – they independently select products that belong to the same category, while avoiding proposing purchases that make no sense – for example, a second desk.
Here is an example of cross-selling in the IKEA store chain:
Cross-selling for regular customers of the online store
Every time you visit your online store, it’s also a great opportunity to remind your regular customers about the products they still keep in their shopping cart, shopping list or so-called wishlist. Even if they are buying something else today, they may consider stocking up on products that piqued their interest earlier.
A prime example is Amazon – customers of this platform, when they go to the shopping cart to finalize a transaction, are informed about products that are still on the shopping list – even if they were added there weeks earlier.
What are the benefits of cross-selling?
Let’s start with the obvious – increasing sales. A properly executed cross-selling strategy will make customers eager to supplement their purchases with needed products or services. Targeted matching of products offered through cross-selling can also affect customer satisfaction and loyalty. Knowing that your store will always offer him or her a well-matched product will make him or her more likely to return to make more purchases.
Cross-selling, however, is not only offering products after adding them to the shopping cart, but also recommending them in emails, in a chat window on the store’s website or as part of retargeting activities. If you choose the time to contact your customers well, and use the form of contact that is most convenient for them, you can get much more sales this way.
Example:
Ms. Marcelina regularly procures supplies from one of the online stores. The retailer – knowing the nature of Ms. Marcelina’s business and her habits – can write her an email with products useful for her work. What’s more – he should do it at the right time – for example, a few days before the moment when Ms. Marcelina usually places a standard order. This will allow the businesswoman to calmly get acquainted with the topic and think about it. If necessary, the vendor can send a second message reminding her of her offer.
However, the above example will not work in every situation – the approach taken by the seller could be perceived as pushy by another customer. This is why it is so important to know the customer and his needs.
What can go wrong in cross-selling?
Cross-selling is a double-edged sword. On the one hand, an effective technique that in many companies significantly increases sales, but on the other hand, a solution that can irritate. The failure of cross-selling, however, is almost always due to mistakes made.
The first and most important of these is poor product matching. It’s immediately apparent when a retailer doesn’t properly configure a module for cross-selling, but instead allows random products to be displayed. The probability that a customer who has just bought a screwdriver will want to stock up on mosquito spray is close to zero (although, who knows, he may just happen to be planning to screw something in the woods). Instead, offer a related item – such as an extra battery or bit set.
You also can’t overwhelm customers with available options. In an online store, this problem is not so pronounced (just a widget displays a few products, and looking at more usually requires scrolling through the list), but in face-to-face sales it can spoil the blood – both for sellers and buyers. A customer who wants to buy a TV may just happen to need a wall mount, LED strips for atmospheric lighting on the wall behind the TV, additional insurance, a TV cabinet and a Google Chromecast player, but inundating him with all this is a simple way to lose a customer. Too many options served up in too short a time can overwhelm and scare away a customer who was planning to buy just one product. Once again, the need to take the right approach and get to know the customer makes itself known.
There is another element to consider, especially in cross-selling services. Introducing cross-selling can increase costs, if only because of the need to train salespeople to offer new services. This can be seen especially in financial services. A loan sales specialist should learn how to sell leases before starting to do so. A developer who has so far only offered websites needs to learn how to talk about web applications to reach the customers who need them.
How to properly implement cross-selling?
As in marketing, the only right approach in sales is to take action based on data. Relying on hunches often ends in disappointing results. To avoid this outcome, follow a few important steps.
Step one: analyze your store’s purchase history
This step assumes that you have been running your store for some time and have access to historical data. This will give you the most accurate data, tailored to your store’s profile, as it will be information obtained directly from your customers. However, if you can’t complete this step as stated, do a competitor analysis. Check how the other companies implement cross-selling, what products they offer, what modules they use, how the algorithm reacts to changes in the shopping cart.
To successfully convince customers to buy a complementary product to the one they chose themselves, you need to know what most often goes together. Which products are usually chosen to complement purchases – even when a store employee doesn’t offer anything? What sets of accessories are offered for devices? Headphones for smartphones, an extra pad for console buyers, a set of stylus tips for new tablet users – these are all leads worth exploring.
Step two: learn to identify customers interested in cross-selling
If you intend to limit yourself to implementing a module showing other products worth buying, this step will not concern you. However, if you want to launch cross-selling campaigns, you will need to learn how to target the right group. To do this, you will need to use the data you acquire, for example, by analyzing the customer journey map (and all its stages).
It is this analysis that will gain you information about the customer’s shopping behavior. You’ll be able to see whether he’s focused on buying one or two specific products, or whether he’s exploring the store’s website and checking out options on the fly. A purchase history will tell you more about your store’s customers than a thousand words. It will allow you to see how often they return to your store, how much they spend, when they abandon their shopping cart, and whether they use additional services.
Knowing that customer A usually rejects the option to purchase additional services, while customer B usually uses them, you have a starting point in hand from which to begin the conversation. It’s important not to try to approach these two extremes in the same way. Create individual messages for them, referring to their past buying experiences.
Step three: prepare and launch a cross-selling campaign
Already knowing who you want to target with cross-selling and having your customers selected, it’s time to act. Try informing customers about additional products during the shopping process (on the product card, in the cart view, on pop-ups). You can also send emails to customers who have recently purchased products or services that lend themselves to cross-selling.
As always – don’t get attached to a once-accepted course of action. Both sales and marketing strategy need to be analyzed on an ongoing basis. Check your customers’ reactions and don’t be discouraged when they are not what you expect. Make small changes, observe the results and improve again. In this way, you will eventually develop a system that proves optimal for your store.
Summary
When introducing cross-selling in your store, remember to always keep the customer’s best interest in mind. Offer him products that can actually be useful and work together with what he is currently buying. If you have the opportunity, ask questions to get a sense of the customer’s intentions. Don’t try to “push” him more unnecessary chargers – instead, find out if he needs them. Don’t offer insurance that protects against everything – instead, tell about specific situations in which buying insurance saved another customer. Be unobtrusive. Act based on data.
