How to build Effective Upselling & Cross-selling Strategies. eCommerce Business Cheat Sheet.
These sales tactics provide increased revenues, greater customer satisfaction and develop better customer relationships, making them crucial elements of any eCommerce business plan. In this blog, we'll be discussing exactly what these strategies are, why they are important to you, and how to effectively utilise them
Upselling and cross-selling…what are they?
As introduced above, these are distinct and deliberate strategies used by eCommerce businesses to increase sales (amongst other things). But what exactly do these terms mean? We've outlined each one clearly below so that we can fully understand them. This also allows us to decipher the confusing sales language of the professionals that often (mistakenly) confuse and use interchangeably.
To upsell is to deploy a deliberate sales strategy that gently persuades your customers to purchase a more premium version of a product. Upselling to your customers involves encouragement and guidance away from a less expensive product and towards a more high-end edition.
The capital and time cost of acquiring new customers is higher than selling to the customer base you already have. For this reason, upselling to existing customers makes sense because it’s a cost-effective way to increase revenues. There are many ways to upsell, and this will be covered later in the blog, but in its simplest form it could be as simple as a salesperson saying, “this is the Model X you requested to see, would you also like to hear about the benefits of Model Y?”.
This straightforward example might lead to a sale 1 in 10 times, but this opportunity might increase revenue by a significant amount, depending on the goods/services sold and the difference in price between Model X and Y. Combine this with other opportunities to upsell and you can see why it’s important to get a grasp of this technique. Your eCommerce business might be leaving money on the table!
Upselling comes in three variations, before the purchase, during the purchase and after the purchase. Each can be utilised in various guises, and if done right, customers won't even notice, reducing the fatigue customers can face if you overwhelm them with marketing. Good upselling is complementary to the shopping experience and values customers based on their needs. It can make the customer experience more enjoyable and suggest alternative products that are genuine alternatives based on factors they find important. For example, if a customer is buying a pair of luxury shoes, they may not realise that the pair they have selected are last years design.
Upselling can often be confused with cross-selling, but there are important differences between the two.
Cross-selling involves the selling of related and supplemental products, based on an initial product choice.
For example, if our customer above chooses some shoes, we can suggest laces, polish, belts and other products related to them.
The relations between products can come from lots of different places. We might suggest products based on the relationship we already have with this customer and use data based on previous purchasing behaviour. Alternatively, we can use the data set created by all our eCommerce customers, helping us to understand what additional purchases our average customer makes when they also buy those shoes.
Cross-selling is most effective when it is relevant and personalised. For example, there isn't much point in cross-selling batteries with the purchase of a three-piece suit.
Cross-selling improves the customer experience and leads to increased satisfaction with the shopping experience your eCommerce channel provides. Like upselling, this strategy is best employed in a way that is subtle and doesn’t interfere with a customer’s purchase journey. Cross-selling should be done at a point in the purchase that isn’t intrusive and via a method that the customer prefers.
The outcome, when done correctly, is a customer that's happy and feels like they had agency over all purchase choices in their basket. After completing, they should leave your eCommerce platform knowing that they have everything they need and don’t need to look elsewhere.
Now we know what these practices are, let's discuss why they are important.
Why is upselling important?
Customers generally don’t appreciate overt and hard sales practices, they act to turn people off your brand and into the waiting arms of a rival. When done correctly, the art of upselling improves the customers shopping experience. Online retailers especially rely on upselling, making it important for several reasons:
The act of upselling products through your channel should be focused on helping your customers make the best choices for their needs. Suggesting premium products, variations and upgrades that will deliver more value to them. Potentially giving them a better experience, providing them with better value for money and generating more revenue for your business.
Costs less than acquiring new customers
Marketing in order to generate interest from new customers can be expensive in both time and capital. Optimising your sales to the existing customer network can be a more efficient move. It is clearly much easier to sell to a past customer who has experienced your brand and trusts you than it is to find a new customer and convince them to buy from you. If your eCommerce business is looking to drive up revenues and grow profits, upselling is an attractive practice, specifically post-purchase upselling.
Upselling leads to increased net profits
The value that each customer provides to your business can be measured by the Customer Lifetime Value or CLV. This metric includes the contribution of each customer to your net profits. The higher the value of your CLV the higher the contribution they make to your net profits. By upselling to existing customers, you can improve your CLV without having to make significant investments in marketing or advertising strategies to capture more of the market.
Build brand loyalty
By upselling in the correct way, customers appreciate the value-added service and this, in turn, creates brand loyalty. Assuming other aspects of the experience are high quality, such as customer service and channel accessibility, upselling complements your offer and helps to create a unique relationship, ensuring customers continue to choose you in the future.
Why is cross-selling important?
There are many reasons why cross-selling has benefits for eCommerce companies. Typically, increasing revenue is often the most cited benefit, but there are other reasons why it’s an important sales tactic.
Increased basket size leads to an increased bottom line.
Many retailers, not just eCommerce, have a higher profit margin on peripheral and accessory products and services. By cross-selling these products, perhaps at the point of checkout, you can increase your profits. This can be especially effective if customers feel like they’re getting something for nothing, for example, if you offer delivery for a flat fee. Once customers see that they will pay the same for delivery with the purchase of 1 or 2 items, the barrier to making the 2nd purchase is removed. Cross-selling at certain points of the customer experience can make the difference for marginal decisions, and each time an additional item is chosen, your bottom line looks better!
A happy customer spends more
Cross-selling at its most effective meets the needs of your customer and allows them to make informed choices. By responsibly offering your customers additional and related items, you can complement and improve the initial purchase they planned to make. By doing this, you’re providing a valuable service and enhancing your brand, growing brand loyalty and creating trust with your customers.
Convenience is king
Modern consumers are used to convenience. If people if your audience is forced to look around for related or similar items, they may become frustrated and ultimately part with their cash elsewhere. Cross-selling is convenient. It enables your customer to get everything they need in one place, in one delivery and with one payment. This feeling of expediency can make your brand the ‘go-to’ for certain products and create a customer experience that’s highly valued. Once this connection is made with your customer network, your brand may become the starting point for their future purchases, giving you an advantage over rivals.
What products are suitable to upsell and cross-sell?
In general, the product choices you decide to upsell and cross-sell should be based on the performance and position of your eCommerce brand.
Why performance matters:
As an eCommerce enterprise, your customers generate a vast amount of data. If you’re unsure as to the power of big data, think back to the Cambridge Analytica scandal, where personal data was used to help sway the US presidential election. If data can be used to help elect President Donald Trump, it can be used to help focus your upselling and cross-selling strategies!
Businesses of all types are always looking for ways to retain existing customers and to improve relationships and their customer’s experience. The solution to that for eCommerce is literally right in front of you.
This is another area where eCommerce has an advantage over traditional bricks and mortar retailers. The eCommerce retailer is adaptable and dynamic and can respond to changes in behaviour, trends and habits that their customers alert them to. These alerts can be found in the data generated by your business, so-called big data. Big data is a name given to large amounts of data that can be analysed to help reveal trends and patterns. When applied in retail, these trends can help predict customer behaviour and inform stock management amongst other things.
Whatever platform your eCommerce business uses, data will be being captured and recorded. Everything from how many customers you have subscribed, to how long they spend looking at each webpage. The benefits of managing your company performance like this include:
- Better strategic decision making
- Improved operational control
- Better customer relationships
- Cost reductions through inventory management
For the purposes of upselling and cross-selling, the shopper analysis you can perform based on your data will be your secret weapon. You will be able to use it in order to define customer preferences, such as product ranges and even the times at which they do their shopping.
Customer data allows you to create average and individual profiles for your customers. If for example, your data shows you that certain products are very popular at certain times/days, you can use this information to inform your upselling and cross-selling strategies and make sure you have enough stock when you need it, and not too much when you don’t. This analytical detail may also highlight that customers are searching for a product that you don’t yet stock, in this case, you could choose to offer this product and then upsell/cross-sell from related products they also search for.
Cross-selling opportunities may come from unexpected places. Data may reveal trends that just aren’t obvious, for example, a large proportion of people may buy beer and baby food at the same time. This isn’t intuitive but presents a valuable and previously unknown cross-selling opportunity. Other examples may be more straightforward, for example, people searching for stationary may also search for notebooks, these cross-selling opportunities are more straightforward, but by using data mining to validate them you can build cross-selling into your platform automatically.
Data mining the performance of your eCommerce platform allows you to make the shopping experience more intuitive and will help you boost customer engagement (and sales!). It also highlights the specific products and times to apply upselling and cross-selling.
Why positioning matters:
All companies position themselves in their chosen marketplace so that they establish their brand, communicate their products and services and build connections with customers.
When it comes to brand position, we can refer to the four Ps.
These four things combine to help position a company and its brand.
For example, a manufacturer of wallpaper might see itself as a premium company with a luxury product. As such, it may:
• Price each unit in a way that puts it at the very top end of the price bracket for wall coverings
• Sell its wall coverings through premium retailers and designers
• Market the wallpaper in a way that purposely targets wealthy customers
By acting in this way, the company has deliberately positioned itself at the luxury end of the market and has chosen not to compete with lower quality and lower-priced competitors.
When developing upselling and cross-selling strategies your brand has to be taken into account. When upselling you will want to target products that are relatable to your customer network. Likewise, when cross-selling, you want to offer products that your customers will want, and that also reflects your brand.
What products can you upsell?
Upselling can be applied to almost any product or service and at different times. Some basic examples would be:
Version upgrade – This is simply offering your customers different versions of a product they may be searching for (or have put in their basket). It may be newer, have more memory, be bigger or just a more premium iteration, this type of upselling allows your customers to make informed choices based on features that are important to them.
Customisation – Being able to customise products is a good way to increase a customer’s basket total. This may be adding an engraving, changing colour or gift wrapping, but whatever it is, the additional cost involved is an upsell which is revenue you may otherwise have missed out on.
Service periods – Depending on the goods and services your eCommerce channel offers, offering a service period or product protection guarantee may allow you to add a significant fee to the cost of the item.
Bundling – By offering products in a bundle, you’re effectively performing an upsell while cross-selling. Customers may find it attractive to buy a product as part of a bundle if there is a perception that it’s better value for money or offers delivery benefits. This type of upselling can be lucrative but the way you bundle products and offer them must be done carefully. Customers won’t want unrelated products, even if they are discounted.
What products can you cross-sell?
Effective cross-selling campaigns target the right audience. Being able to Identify cross-selling opportunities starts with the data you gather from your customers on their journey through your sales platform.
Using this information helps you identify the best candidates for cross-selling. This targeting can be done through customers, for example:
Customer X with shopping behaviours ABC, is similar to
Customer Y with shopping behaviours BCD.
In this situation, you may cross-sell products that each have purchased based on a similar behaviour profile.
Alternatively, you can identify products that regularly are purchased at the same time, then suggest these when one of these items are searched for, for example:
Customer X places baby food in their basket,
Customer X is offered the chance to purchase beer.
In this situation, a cross-selling opportunity is taken based on a previously identified correlation between products.
Cross-selling can be applied across your entire product range and can involve related products, (shoes and shoelaces) or unrelated products as found in your customer data (baby food and beer).
Upselling can be performed at different points during the customer journey.
Before purchase: for example, you could display recommended purchases on the product description page.
During purchase: you can display recommendations using screen pop-ups or on-screen in the shopping cart feature of your platform. If shopping carts are abandoned, you could follow up with an email suggesting other items as alternatives.
After purchase: using personalised follow-up emails can give customers the chance to return to your brand to make further purchases in the future, for example to upgrade a product when an updated version becomes available.
Successful upselling is based on understanding your customers’ needs and making the shopping experience more valuable to them.
Provide customers with a reward for increasing their spend with you. This could be free shipping above a certain basket amount or discounts on further purchases.
You can demonstrate the extra value of more premium products by performing an on-screen comparison against a product a customer has selected. This is an excellent tool as it also allows your customers to make informed choices.
Make sure that the products that you upsell are relevant to the customer. If a customer is looking to buy a £500 smartphone, it would be unrealistic to attempt to upsell your customer a £1,200 smartphone. Items should be relatable in function and price to allow your customers to make choices based on their needs. They don’t just want to see the most expensive version of a product range before they checkout.
Resist the hard sell:
Showcase genuine alternatives to inform and guide your customers, do not take every opportunity to bombard them with other options!
Create a sense of urgency:
Communicating the real-time inventory situation (“only 4 items left”, or “six people are looking at this item”) is a good way to nudge customers towards buying if they are making a marginal purchase decision.
When customers leave your eCommerce channel without buying anything, there's still a live opportunity to upsell. They may not have spent any money but they left a footprint in terms of data. You can use this data to follow up with them on the missed opportunity to purchase the item they searched for, perhaps inform them of any upcoming special offers or related discounts.
Using the right language to communicate with your customers is vital, convey the benefits of buying and the risks of not buying, but do so without being ‘pushy’.
Having recognised the customers and products that will apply to the cross-selling strategy, below are some techniques and tips that can be used to ensure your approach is as effective as possible.
Offer your customers the additional products and services that you feel will provide them with a better customer experience:
Cross-selling should be thought of from the perspective of a customer and not just in terms of revenue growth. Striking a balance between adding value to a customer’s journey and overwhelming them with irrelevant offers is difficult to do. But make sure that you’re not turning customers off by making too many cross-selling attempts.
Cross-sell at the right time:
For customers who have previously used your platform to place orders, there are cross-selling opportunities over email or through targeted ads. For some brands, this might be the best method rather than making cross-selling suggestions at the point of sale. Timing is really important, and you want to ensure your sales methods align with your brand identity.
Existing campaigns can be tailored and planned in order to embrace cross-selling. Any materials that your brand uses for marketing, such as in-house blogs or podcasts can be used to steer customers towards cross-selling opportunities. For example, if you send high-end audio equipment, a blog on accessories such as headphones that might complement your products can generate orders. Maximise your cross-selling reach by ensuring you use all the methods available to you, some of which you may already be offering anyway.
Encourage cross-selling through customer interactions:
Maintaining an online community may be suitable for your brand, and this approach may complement your existing digital marketing. Giving customers a space to interact and review your products can be a powerful (and under-appreciated) tool to help you recognise potential cross-selling trends. Depending on the way this space is constructed, you may even be able to build in targeted ads.
This tactic is most relevant to customers who may be mostly driven by visual cues. By employing videos and images to demonstrate your products you can prompt customers to purchase additional related items. Including video and images that include more than one product can lead to the customer buying the ‘whole package’ instead of a single item. For example, if a customer was searching for a winter coat, you may include an image of someone wearing the coat, and some trousers, and some shoes, and carrying a bag, and wearing jewellery…by linking to these additional items you can generate extra purchases while still not providing your customers with a ‘hard sell’. In fact, you’re suggesting additional items whilst providing a value-added service, showing them what the winter coat looks like in the real world.
The vast majority of eCommerce retailers are employing cross-selling tactics already. Look no further than Amazon’s “Frequently bought together” and “Customers who bought this item also bought” features. Both are highly effective at increasing revenue for Amazon while remaining highly valued by their customers.
Customers will often consider buying products that are “frequently bought together”, in fact sometimes customers will use this feature to navigate platforms in order to find a product that better meets their individual needs, as opposed to using the search bar. These types of features don’t just prompt people to buy additional products, but they also work as a reminder to buy products that they’d need anyway to supplement the primary purchase, (for example buying a torch, you will also need batteries).
Cross-selling, along with upselling, can be a powerful sales tactic, allowing you to level-up your revenues.
To sum up...
Now that we have discussed upselling and cross-selling you should understand how they can increase both your average order size and your revenue. These boosts to your business can be achieved using the information and marketing techniques already present in your eCommerce platform. By making the best use of all the data your company will already be capturing (or able to capture) you can really focus on the fine detail of your customers' needs and your company’s strengths. Ensuring upselling and cross-selling are carried out in the most effective way possible.
Your eCommerce business can make a start by using this guide to identify which products to concentrate on before deciding when and how you’ll communicate these to your customers.
In other words, what related, complementary and additional products can you recommend that will add value to your customers’ purchases and/or improve their shopping experience?
As you deploy these strategies you will refine and develop them, making them more effective for you and more useful to your customers. The key to successful upselling and cross-selling is to do it in a way that informs customers so that they leave feeling empowered and confident that they made their own decisions to purchase products or not.
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