Cross-selling and up-selling are two completely different sales strategies aimed at achieving maximum profits in an e-shop. What do these terms mean? Which solution should you choose to increase conversion? Or maybe implement both strategies at the same time? We will give you a hint!
Cross-Selling – What Is It?
Cross-selling is a sales strategy which consists in analyzing the customers’ order and on this basis offering them complementary products to the already selected assortment.
The cross-selling strategy is implemented in both direct and online sales.
Examples of Cross-Selling
Cross-selling is used by well-known online stores or e-commerce platforms such as Amazon or Zalando. Once you add any item to your shopping cart, the platform often suggests continuing shopping. First, similar products to the one already selected by the customer are displayed. Most often, the encouraging phrases aimed at encouraging customers to make the purchase are displayed, such as: “Customers who viewed this item also viewed” (Amazon) or “You might also like” (Zalando).
Let’s assume that a customer wants to buy, for example, a tent, in this situation the e-commerce platform will also recommend other supplementary items: a sleeping bag, a camping mat, a camping stove or a flashlight. The recipient usually doesn’t consider such advertising to be intrusive as these items constitute a kind of set with the chosen article. If the customer finds the whole set attractive and useful, there is a chance that he/she will add the suggested articles to the shopping cart.
Another example of cross-selling is the analysis of what products appear on the so-called wish list and offering them in the future, e.g. for the next purchase. If the customer hesitated and failed to finalize the order, the same articles can be offered when buying other, similar products. There is a good chance that this time the customer will decide to buy the product he/she has been considering for so long.
Cross-selling can be a strategy applied in email marketing in order to inform the customer who has already made the purchase which other products will be right for him/her. After a few days from making a purchase, the user may receive a personalized email with suggested items which are frequently bought by people who have chosen the same product. Such advertising is very subtle and, since it is practical in nature, may actually interest consumers.
Cross-selling can also be observed on well-known booking platforms, such as Booking or Airbnb. Once you choose the desired accommodation, the platform may suggest other, completely separate products and services, such as car rental or tour guide. It is possible to make a booking in the same panel, which is really convenient for the customer and, what’s more, the payment for separate services is combined in order to simplify the purchase process as much as possible.
When is Cross-Selling Worth Choosing?
Cross-selling contributes significantly to sales, however, in order to introduce this strategy, it is necessary to first analyze the customer’s needs and monitor the purchasing process. For this purpose, marketing automation tools are used.
Professional software is designed to monitor consumer behavior and conduct segmentation according to certain parameters. Its purpose is also to create personalized offers and display them to the client (e.g. in the form of a pop-up window with a recommendation) and to monitor the recipient’s reaction to the received messages or displayed advertisements.
How to Run an Effective Cross-Selling Campaign?
Once the appropriate analysis has been made and it has been possible to identify what other products could be useful to the customer, then the benefit language plays an important role. The additional product should be a practical supplement to the article that was added to the shopping cart in the first place. At the same time, its purchase should not cost much money. Information about the benefits of the additional purchase should be clear and interesting.
Up-Selling – What Is It?
Up-selling to inaczej sprzedaż dodatkowa lub sprzedaż uzupełniająca. Strategia ta polega na dotarciu do klienta, który już posiada podstawową wersję danego produktu i zaproponowaniu mu jego rozszerzenia lub nowszej, droższej wersji.
It’s some kind of cross-selling, but this time the customer is offered the same product, only in a better, updated or extended version. As in the case of cross-selling, the up-selling strategy is used in direct and online sales.
Examples of Up-Selling
The up-selling strategy is often used by IT service providers and companies offering various types of Internet services. For a small fee, the user can upgrade an already owned version of a given product or buy value-adding extensions to it.
An example of up-selling is:
- sale of computer software – e.g. antivirus in a new, updated or extended version,
- to offer the customer an extension of the previously purchased subscription, e.g. in an online music streaming service or TV- and movie-streaming service,
- to offer the customer switching to a more expensive plan, but with better technical parameters – e.g. by an Internet service provider,
- to offer the clients a more expensive option than the one they were originally interested in, but with additional facilities – this is what airlines do.
When is Up-Selling Worth Choosing?
The up-selling strategy leads to increased sales. If a customer is satisfied with the current services and the price difference between the basic and extended versions of a given product is not significant, they may be interested in switching to a more expensive subscription option.
Up-selling is a good solution also when the customers weren’t aware that there is a better and newer version of the product. If their relationship with the brand is favorable, it can be assumed that they will be more willing to update the purchased service.
How to Run an Effective Up-Selling Campaign?
To make the up-selling campaign effective, it is worth giving the customer a choice of several different variants of a given product or service improvement. The first one may be low-budget, the second one should be high-budget and maximally extended, while the third one should be an intermediate solution between low-budget and premium. The benefits of purchasing individual variants should be clearly listed, e.g. in the table.
Cross-Selling or Up-Selling – Why Is It Worth It?
Why is it worth introducing cross-selling and up-selling in an online store? The answer to this question is simple.
- can be used to present the customers with a wide range of products and services offered by a given brand and interest them with the full offer,
- can help to reduce the number of “abandoned shopping carts” – sending personalized messages at the right time especially when the customer is hesitating over a purchase is a gentle invitation to complete the purchase,
- increase consumer awareness of the brand and its products,
- contribute to an increase of the average order value, which improves sales efficiency and generates additional profits for the company,
- contribute to the satisfaction with the transaction,
- support building a positive brand image,
- build strong relationships with customers.
What Else Can Be Done to Increase Sales Efficiency?
Implementation of cross-selling and up-selling is easier and more cost-effective than winning new customers, which is why more and more companies choose this solution. And rightly so! Research shows that cross-selling and up-selling are more effective strategies when it comes to regular customers who trust the brand and are related to it.
In order to convince the customer to make an additional purchase, it is a good idea to offer reduced shipping costs. In the case of cross-selling, it is recommended to show how additional products work together with the original purchase. When it comes to up-selling, it is best to place a comparison of several different sets of services in a visible place on a website or in a message sent to a client, pointing out the benefits of extending the service.
Cross-Selling or Up-Selling – What to Choose?
Cross-selling is not risky in any way – customers can choose whether they want to buy additional services/products offered to them or prefer to buy only products they had originally in their shopping cart in the first place. In both situations, they make the purchase anyway. The same goes for up-selling – if the advertisement of a newer, extended version of a given product, which the customers already have, is not encouraging enough, in the worst case they will stick to what they already have and continue to pay the subscription in the basic version.
According to a study conducted some years ago, up-selling brings more profits than cross-selling, however, the Web Talent Marketing portal reveals that currently cross-selling is more effective. The famous e-commerce giant, Amazon, admits that over 30% of sales profits come from cross-selling. The perfect solution seems to be to an integration of both strategies and their implementation, together with a subtle e-commerce advertising message.