This is an in-depth comparison of cross-selling and upselling.
In this guide you’re going to find out:
- What are the key differences between cross-selling and upselling?
- What are the benefits of upselling and cross-selling??
- Where are the best places to use upselling and cross-selling offers?
- What and how should you upsell and cross-sell??
- Cross-selling and upselling examples.
- And so much more.
So, let’s get right into it.
- Cross-Selling vs Upselling: What Is the Difference?
- Upselling vs Cross-selling Comparison: Key Differences
- What Are the Benefits of Upselling and Cross-Selling?
- Where Are the Best Places to Use Upselling And Cross-Selling Offers?
- What And How Should You Upsell And Cross-Sell?
Cross-Selling vs Upselling: What Is the Difference?
Upselling is a sales technique that encourages the customer to buy more expensive items, upgrades, or other add-ons of a product than what they originally intended to purchase, while cross-selling is a sales technique that involves offering an additional product or customer to an existing customer.
Though often used interchangeably, both offer distinct benefits and can be effective in tandem.
They both increase the merchant’s profit, although in different ways. Upselling grows the revenue by promising a higher-level product, while cross-selling does the same by suggesting more products to buy.
The difference between these techniques lies in the customer’s intention.
When a buyer is cross-sold additional items, usually they have no intention of buying additional items before.
Meanwhile, upselling appeals to the customer’s desire to buy something. Sellers offer to buy a better quality product for an attractive (but higher) price.
What Is Upselling?
Upselling is a sales strategy aimed at persuading customers to purchase a more expensive, better, or premium version of the chosen item.
This technique works by showing clients an upgraded model of a product or service that can better fulfill their needs. Think of it as comparing the main product or service with one of higher value to highlight the additional specifications, features, and benefits to a customer.
In upselling, you offer products with additional features than the one they intended to purchase.
This allows clients to walk away more satisfied with their purchase and in turn, increases your profits.
It’s a classic win-win situation.
The strategy helps increase AOV (Average Order Value) and boost revenue by helping customers visualize the value they will get by making a higher-end purchase.
Upselling is most efficient when the probability to purchase the chosen item is higher.
The process involves educating customers, communicating the product’s unique benefits, highlighting differences, and offering discounts.
As a seller, you present to your customer more expensive items, an improved version, upgrade, or an add-on that the customer wouldn’t have considered.
For example, if you’re offering cleaning services, you can upsell your customer to purchase a weekly or monthly package covering more rooms.
What Is Cross-Selling?
Cross-selling is one of the most effective methods for generating repeat purchases.
It doubles as one of the primary tactics for generating new revenue for many business entities.
To cross-sell is to sell complementary or related items to an existing customer.
It involves identifying products that satisfy additional needs not fulfilled by the original product.
It is a highly effective selling method since it allows you to demonstrate the breadth of the catalog to customers.
In cross-selling, you intend to convince a customer to incur an additional cost by suggesting they buy extra items than they had initially planned.
The key is to take advantage of the ‘just in case’ outlook of customers to improve their shopping experience and generate maximum revenue.
The additional products you suggest to customers during cross-selling should complete the set and help the customer gain maximum value from the original purchase. Therefore, you have to identify products that complement each other logically.
For instance, you can cross-sell a comb to a customer purchasing a blow dryer.
In eCommerce, you can utilize cross-selling on product pages, during the checkout process, and in lifecycle campaigns.
You can also use cross-selling to introduce customers to products they did not know are offered. This way, you establish yourself as a retailer who can satisfy a particular need.
Cross-Selling And Upselling Examples
To better understand the differences between cross-selling and upselling, let’s look at a few examples.
|Case||Upselling Example||Cross-Selling Example|
|A user wants to buy a mobile phone from you.||Offer a phone with a better camera, upgraded features, and, thus, a higher price.||Suggest a phone case, screen protector, or headphones.|
|A user wants to buy a backpack from you.||Suggest a bigger backpack option.||Offer a hand luggage bag that fits in that suitcase.|
|A user wants to buy a web-hosting from you.||Suggest a better plan for an attractive price.||Offer website building and design services.|
Upselling vs Cross-selling Comparison: Key Differences
The table below gives a detailed comparison of upselling and cross-selling:
|Meaning||Upselling aims at convincing a customer to purchase a better version of a product with additional features and specifications than the one they intended to buy.||Cross-selling refers to recommending a complimentary item or additional product to be purchased with the main item a customer is buying.|
|What does it do?||Selling something of higher value, quality, and specifications than what’s required by the customer.||Presenting related items to a customer to convince them to spend more money.|
|Objective||To increase average order value (AOV)||To increase the general value of the sale|
|Involves||An upgrade, higher-end product, or an add-on item||Complementary or related item that pairs well with the main product|
|Increases||Average Order Value and Average Bill Value||Average Ticket Size and Average Bill Value|
The key difference between upselling and cross-selling is that in upselling you’re convincing a customer to buy a better version of a product they initially wanted to buy to increase the sales revenue.
While in cross-selling, you’re convincing a customer to buy a related product to push more sales and increase the number of items sold to boost the total sales value.
What Are the Benefits of Upselling and Cross-Selling?
Upselling and cross-selling are often viewed as unethical ways of coercing a customer to spend more money.
Nevertheless, the end goal of a business is to increase profit margins and push more sales.
When used properly, these strategies create a win for both the customer and business because it makes a customer eventually make the ‘right’ purchase.
The following are the benefits of cross-selling and upselling to a seller:
1. It Increases Customer Retention
Customers often make purchases to solve a problem or satisfy a certain need.
This means that they are looking for the best solution for their problem.
If you use cross-selling and upselling correctly, you’ll help customers find the best product or service suitable for their needs. Or, you’ll help them find more value than what they expected.
In turn, their needs will be satisfied, and it will increase their preference for what you’re offering.
This helps in customer retention and increases income generated.
And 43% of customers spend more on brands they are loyal to.
2. It Increases Average Order Value and Lifetime Value
In simple terms, Average Order Value is a metric that tracks the average dollar a customer spends on your site, app, or business in general.
Upselling and cross-selling increase your average order value by promoting a customer to trade up or buy an additional product.
It also boosts Lifetime Value. LTV is the total profit margin a business expects to earn from a customer over the whole period of its business-to-consumer relationship.
According to our data, businesses have a 60%-70% probability of selling to an existing customer compared to 5%-20% selling to a new prospect.
Therefore once you build your customer’s loyalty to your business, you’ll be able to increase their LTV and your generated revenue.
Where Are the Best Places to Use Upselling And Cross-Selling Offers?
Here’s a list of the hottest spots to hit with your cross-selling and upselling deals:
- Product page
- Checkout page
- Thank-you page
- Transactional email
The best places to place upsell and cross-sell offers are product pages, checkout pages, thank you pages, and transactional emails, as the consumer is already involved in the purchase process, so there is a good chance that he will be tempted by making a good offer and will perform an additional purchase action.
What And How Should You Upsell And Cross-Sell?
One of the most common ways to upsell is through the next higher model by giving something of better specifications and features. Here are some suggestions for effective upselling:
- Ensure that the upsell isn’t 25% more costly than the original item. The less costly a product/service is, the higher the chances of making a successful upsell.
- Promote the most reviewed or sold products. Customers’ will most likely want to know how preferred the upsell product is to fellow consumers, especially in eCommerce. A product with more successful sales will probably perform better.
- Include testimonials and ratings for the upsell product.
- Use phrases that make suggestions relevant and give context. For example; Why should you buy that product instead of this?
- Make add-ons on features and specifications more appealing. Create an irresistible offer hard to pass. For example, you can, in addition to the improved specifications, you can offer a lifetime warranty on the upsell.
- Suggest products that are in the same category. For instance, if you’re selling an iPhone, your upsell should be a better iPhone model, not an android phone.
Cross-selling techniques are somewhat similar to upselling but are effective when used in the checkout process to tap into impulse buying. In cross-selling:
- The product should be 60% cheaper than the product initially added to the cart. This will prompt customers to overlook it as an additional expense.
- Opt for products that are easily forgotten but complement the main product. For example a lighter for a gas stove, a small comb for a blow dryer, etc.
- Make data-driven suggestions. You can study and track your customer’s movements on your page or previous searches to determine what else they need that is related to their recent purchase.
It is important to note that automating cross-selling and upselling is easier. You can categorize products and tag related items for quicker automation.
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