Table of contents
Up-selling and cross-selling are sales strategies used to increase the value of the shopping cart. Thus, profit and return on investment are increased in a single transaction. Although these strategies are significantly different from each other, they can be used simultaneously. If you want to learn more about the effective use of cross-selling and up-selling read on.
What is up-selling?
Up-selling is a sales method that is designed to increase the value of a shopping cart, purchase, or transaction. The goal here is to persuade the customer to increase the value of the purchase in exchange for getting some value: functionality, aesthetics, and the promise of something in the future. Upselling, then, is about convincing customers to buy an improved product or service. The idea is simple: you want the customer to pay you more, and you should offer more value.
The opposite of up-selling is down-selling, which is the strategy of offering products at a lower value, especially when the sales opportunity is receding.
Both of these strategies take into account the analysis of customer behavior during the buying process. This applies to both the desktop purchase and the online process. The better you can analyze data and behavior in real-time, the more effectively you will implement both sales techniques.
What is cross-selling?
Cross-selling is a strategy that relies on a related selling technique. Additionally, complementary services or products are offered to a customer who is in the purchase phase (or post-purchase phase). Timing is very important in this strategy. A customer will be more likely to purchase additional services or products during or just after the purchase phase, rather than after several weeks or months.
The huge advantage of cross-selling is the low entry threshold and the lack of negative consequences. If you offer the following as an option to the purchase of a cell phone: an additional warranty, data migration, or a cover, you can expect a positive reception, especially if the offer is attractive and for a limited time.
Cross-selling increases the repeat purchase rate. Studies show that companies using cross-selling techniques have a 60-70% repeat purchase rate, compared to only 10% for companies that do not cross-sell.
Recurring purchase rates are higher than those for companies that do not cross-sell.
Differences between up-selling and cross-selling
Up-selling in most cases encourages the customer to buy a higher quality product, a version with better functionality or with greater technological capabilities. In other words, we suggest to the customer that a higher price means more value. Cross-selling, on the other hand, involves suggesting to the customer additional products or services related to the one they have already purchased or intend to purchase. This makes the customer receive a ready-made set, a package, which together are supposed to increase customer satisfaction.
The main difference between up-selling and cross-selling, then, lies in what we offer the customer. For example, if a customer is going to buy a package of coffee, we may offer him specialty quality coffee. Cross-selling, on the other hand, involves offering the customer additional products that complement the original purchase. For example, if a customer is buying a new smartphone, we might offer him a protective case or headphones. Although the way the two strategies work is different, they share a common goal – to increase sales value, customer satisfaction, and higher return rates.
It is worth noting that up-selling and cross-selling can be used in both stationary stores and e-commerce In the online area, this will happen mainly through recommendations, emailing, social plugins, chat, or marketing automation systems. In stationary stores, these are mainly customer service incentives, but also the use of touch screens, or printed materials.
Want to implement a new marketing strategy for your business?
Tell us about your goals and expectations, and we will prepare a concrete proposal for cooperation.
When is it worth using up-selling?
Up-selling can already be applied when the customer has already expressed interest in buying a particular product. During the decision-making process, we should have a scenario prepared for selling higher-value products and ready answers to the question of why is it worth paying more. It is important for us to be sure that we are offering additional value – we are aiming to keep the customer as long as possible and get them to buy again and again. According to a study by SimplicityDX of 2022, the cost of acquiring a new customer over the past nine years has increased by 222%. This shows how costly the process is compared to retaining an existing customer.
When is it worth using cross-selling?
Key in implementing a cross-selling strategy is that we must have a prepared offer, trained staff, and data on complementary products. We need to be able to answer difficult customer questions and advise them on the best solutions. It is worth ensuring that our proposals are personalized. We need to take into account the preferences and needs of the customer in question, even those that arise only during the conversation.
Example of an up-selling strategy
One example of a frequently used up-selling strategy is the use of FOMO to convert users from free to premium. FOMO (fear of missing out) is a fairly age-old marketing tactic that always works, provided the target customer is interested in what you are selling. The premise is simple – customers only agree to a premium sale if they see the benefits it will bring them and don’t want to miss out on the offer. You can take advantage of this by, for example, giving them insight into what they lose if they don’t migrate. In other words, you can offer a free trial period for a few days up to the full version of the product, then only on the last day of testing offer a special price for keeping the premium package. As long as you have the right product or service, this strategy is unbeatable.
Example of cross-selling strategy
Encouraging customers to buy additional products is an effective cross-selling technique. You can use it by offering shipping discounts when a customer buys products together with a particular, specific product in a single transaction. How does this work?
For certain eligible products, you can offer free same-day shipping, as long as the customer buys the product in a bundle with an additional product or service. You can also add a minimum order threshold that meets your business goals. This marketing technique encourages customers to purchase additional products from the very first transaction.
How to measure the effectiveness of up-selling and cross-selling?
Up-selling and cross-selling strategies are effective sales tactics that can and should be measured with appropriate metrics, just like any marketing campaign or activity.
One of the frequently used metrics for measuring the effectiveness of up-selling is simply the increase in average order value. We can also permanently monitor the conversion rate of up-selling, that is, the percentage of customers who decided to purchase a more expensive product or service. On the other hand, you can evaluate softer data like purchase satisfaction surveys.
For cross-selling, we can analyze similar metrics to those used for up-selling. It is additionally important to monitor the cross-sell rate – that is, the percentage of customers who have taken advantage of a cross-sell offer. Cross-selling analytics also make use of lifetime LTV and customer return rates.
Frequent mistakes when implementing up-selling and cross-selling
First of all, it’s worth remembering that up-selling is about offering the customer more expensive versions of products or additional options that can increase customer satisfaction, but only if the customer can expect it. However, one of the most common mistakes is trying to up-sell to a customer who is looking for the cheapest solution, and this is where down-selling will work best.
When cross-selling, it’s a good idea to avoid being too pushy or aggressive in offering additional products. It is also important not to overdo the number of products offered to the customer. The ultimate goal is to increase satisfaction, deliver value, and achieve repeat business, not one transaction.
One of the biggest mistakes is trying to “come back after time” to customers for additional or cross-selling. Successful cross-selling strategies are based on initiating a discussion or presenting an offer early on. This is a period of greater opportunity to talk deeply with the customer and learn about their needs. This is when you have the greatest sales opportunities and the highest customer attentiveness.
Is it worth implementing up-selling and cross-selling?
Up-selling and cross-selling are definitely essential strategies that you should implement in your performance marketing efforts if you are not already doing so. With these strategies, you have the chance to increase revenue generation, customer satisfaction, and customer loyalty. At the same time, you need to be careful in your actions to avoid aggressive behavior and pushy pushing of additional products. Make sure to track metrics such as conversion rate from cross offers, cart value, or LTV.
Invespo brand has proven in a study that personalized cross-selling, despite accounting for only 7% of a site’s visits, can account for as much as 26% of a site’s revenue. if you properly leverage up and cross-selling you can certainly count on additional revenue!
CEO and managing partner at Up&More. He is responsible for the development of the agency and coordinates the work of the SEM/SEO and paid social departments. He oversees the introduction of new products and advertising tools in the company and the automation of processes.