Increasing sales is great, but upselling and cross-selling aim to boost sales further by encouraging customers to buy more, better, or bigger products in each transaction, enhancing customer satisfaction.
Both new and existing customers can benefit from these strategies, which can significantly increase sales revenue by offering relevant product recommendations that guide shoppers along their journey.
Though similar, upselling and cross-selling have distinct differences.
This article explores both tactics, how to develop these offers, provides examples, and examines online tools for implementing them in your store.
Upselling involves offering a higher-priced version of the same product just before or after a purchase. This version might be more robust, feature-rich, larger, or customized. For example, a takeout restaurant might ask, “Would you like to upgrade to a larger size?”
Cross-selling, on the other hand, involves recommending complementary products. While upsells are different versions of the same product, cross-sells involve different products.
In the takeout example, suggesting mozzarella sticks with a meal is a cross-sell.
Both strategies encourage higher spending while delivering better deals. When executed well, businesses benefit while enhancing the customer experience.
Here are some key benefits of using these strategies:
Higher revenue
Increased sales lead to increased revenue. This is distinct from profit, which might vary based on your purchase process setup. However, overall sales revenue will rise.
Higher average order value
Revenue increases because the number of transactions remains the same, but each is worth more.
Not all customers will respond to these offers, but if even 5% do, your average order size will increase, boosting revenue.
Increased customer satisfaction
Customers enjoy feeling like they got a great deal. Effective cross-selling and upselling make customers feel special and valued.
These strategies should strengthen customer relationships.
Improved inventory clearout
Cross-selling moves more products, reducing inventory and keeping goods flowing. This is especially important if you manage your own inventory.
A more motivated sales team
Sales teams equipped with upsells and cross-sells have more ways to delight customers, especially new ones with questions and uncertainties.
Addressing concerns and offering irresistible deals can expand your customer base.
Not all products are suitable for cross-selling. Use these tips to find good opportunities:
Look for complementary products
Some products naturally complement each other, making great cross-sell offers. For example, buying plates might lead to buying bowls.
Identify related products in your lines to create natural pairings or groupings for cross-selling.
Find lower-cost products with high demand
Effective cross-sells don’t add too much to the purchase price. Match cross-sells with the original item’s price. For a $50 item, a cross-sell should be around $10, unless offered at a special price.
Use products with high profit margins
High-margin items make great cross-sells because even with discounts, they remain profitable. This offers flexibility in pricing deals.
Offer products with low buying resistance
Cross-sell easy-to-sell products, like items near checkout lanes in grocery stores. These add up in revenue without much effort.
Look for easy add-ons to larger purchases.
Use customer insights and data
Examine customer data and purchase history to find cross-selling potential.
Identify frequently purchased products, those delivering the best experience, and pair them with higher-priced items for cross-selling.
Past purchases can reveal natural cross-sells. Use this data to boost sales by offering one product as a cross-sell for another.
Analyze average order size to identify opportunities for cross-selling. If your average order is $60, find products in the $40-$60 range, attach cross-sells, and aim to increase the average.
Experiment with different approaches and monitor customer engagement to see which strategies impact revenue most.
After selecting cross-sell products, decide on the deals to offer. Multiple strategies can be used simultaneously. Here are some ideas:
Offer additional products at a discount, such as a percentage or dollars-off, or based on a purchase total.
For example, spend $75 and get product X at 50% off. Set
