Every business wants to make the most of their products and margins — from what we can tell, it’s pretty universal to want your company to do better. The hard part can be knowing how to sell more and achieve gains with your existing offering.
That’s where two product concepts designed to deliver added value to your customers come into play: upselling and cross-selling.
These tried-and-true methods help companies highlight benefits of their products, improve sales (even of under-performers), and make an operation more efficient. They rely almost exclusively on your marketing team’s ability to craft specific messages that engage your audience.
If boosting your sales numbers sounds like a good plan, let’s discuss your two best suggestive options for achieving it.
The Secret Upsell Sauce
Upselling is a tactic to increase the value of the orders customers place by moving them to a higher tier or a high-end product version. Your online store can often suggest newer versions or more advanced models to fit specific needs.
The secret to upselling effectively is having multiple tiers and helping customers realize the value they’ll get from the more expensive purchase. Show them how they benefit as well as what a good deal it is.
The barrier at the point of the upsell is when your customer set aside a certain amount or had a certain cost they were expecting to pay. Stick close to that price point while highlighting how the new option better meets the demands they have.
The Gap Cross-Selling Fills Best
Cross-selling is the promotion of products that are similar or complementary to what your customer is already buying. This effort can happen during a sale, and you’ll often see it on product pages and shopping cart pages. It can also occur after a deal, usually in an email campaign that highlights everything your customer needs to make the most of their initial purchase.
Cross-selling is all about finding a way to fill a gap of the original item after the customer is ready to buy. Showing those gaps to customers early in the sales process runs the risk of sending them to your competitors, so many companies wait until a product is purchased.
Think of ordering an expensive knife, and then on the checkout page you get a discount on a high-quality sharpening stone. The marketing angle is protecting the investment of the original knife and allowing it to last longer, instead of discussing how the blade will dull with use.
At the same time, you wouldn’t want to pair the high-end sharpening option with an inexpensive knife because it draws attention to the disparity in quality.
The Data Isn’t In
Cross-sell and upsell opportunities involve two different tactics, so many companies try to figure out which is best and then focus solely on that. In truth, there’s no clear winner.
Different studies taken at different times, focusing on various markets, highlight a range of results. Some say upselling is 20 times more effective than cross-selling, while others note that cross-selling to a small fraction of customers can generate as much as a 180% lift in sales.
The one thing that the data does seem to agree on is that focusing on at least one of these elements can boost your sales. In industry comparisons, category leaders and the fastest-growing brands are those more likely to prioritize upsells or cross-sells.
Your best results are going to come from A/B testing to determine when each method works for you and your audience.
Why and When to Upsell
The core benefit of upselling is that it can create a deeper relationship with your customer. You’re taking time to provide the best products for all of their needs, hopefully increasing their customer lifetime value (CLV).
Choosing when to upsell depends on your products and your time to educate your audience on replacements.
When you purchased your most recent car, you might have chosen heated seats or alloy wheels, which replaced the standard options and increased the overall pric. That upsell happened at the time of the original sale.
If you buy an upgrade during your next vacation, whether it’s the hotel or the airline ticket, you’re likely paying for the improvement after the original sale was completed – when you check-in for the flight or room.
Get the most out of upsells by limiting the choices customers see and demonstrating the value and benefits of the option that has your best margins.
Why and When to Cross-Sell
Cross-selling focuses on complementary goods that don’t replace your initial sale product. They make it easier to use your core product or make the core product more efficient. Cross-selling increases CLV by driving up the value of a sale while you’re generally paying less in processing, handling and other payment-related fees.
One of our favorite reasons to cross-sell is that it shows you how customers think about your products and how much they’re willing to spend on a package deal.
To make the most of your cross-sell efforts, focus on products that are required for improved operation. Today’s TVs tend not to come with high-quality built-in speakers, so major retailers often push sound bars or systems when you go in to buy a new set.
Build a Total Offer Together
If you’re struggling to think of upsells and cross-sells for your business, consider one so successful that it’s become a cultural hallmark: Would you like fries with that?
For fast food, it was a cross-sell that proved so successful we now see “value” meals at nearly every fast-food restaurant. It became a go-to upsell option over time so that it could always be available at the time of purchase.
That connection is important, and we see it as an eventuality of nearly every sales funnel. These two techniques can support each other and help your business grow.
Remember the Rule of 25
After you’ve put your offer options together, review your campaigns and how they’ll be sent to customers. Make sure you don’t overinflate costs your customers face or put too many messages in their way to make the sales process unpleasant.
A reasonable rule-of-thumb is to keep your offers from increasing the overall order cost by more than 25%. It encourages people to take the offer without feeling overwhelmed or backing out of the whole purchase.
The rule helps us remember the point of the entire process: you want to provide something better for your customer while also generating higher revenue. If you start focusing too much on these add-ons, you soon won’t be able to see the forest for the trees.
Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.