Upselling and cross-selling are sales strategy where the customers are provided an opportunity to buy related products or service when making a purchase. The purpose of upselling and cross-selling is to increase sales.
As the term indicates, when upselling the suggested products and services are slightly higher priced than the one considered. Ubiquitous example of upselling is the offer to super-size in fast food restaurants.
Cross-selling is simply suggesting additional items or add-ons to a customer making a purchase. The philosophy behind these sales strategies is that salespersons should not just passively take orders, but instead be active sellers.
The term suggestive selling is also sometimes used. The term refers to a more subtle approach where the complementary product is not even mentioned by the salesperson but just pointed to the customers.
As cross-selling consists of products and services the customer wasn't planning on spending in the first place, the salesperson needs to effectively communicate to the customers why he or she needs to buy the extra items immediately.
If the need for additional purchases is not communicated clearly enough and with intelligent knowledge on the customer’s behaviour, the strategy might seem like pressuring and aggressive to the customer.
Sales strategies and e-commerce
Both upselling and cross-selling have been used since the early days of e-commerce to drive more personalized shopping experiences and increase average order value.
Now with the introduction of sophisticated web analytics and big data tools these strategies can be executed in highly nuanced and effective ways.
On e-commerce sites cross-selling is offered for instance by providing customers ”better together” combos and up-selling by offering more expensive models near the shopping basket.
Upselling and cross-selling strategies are based on two factors.
- Logics. If a customer buys a laptop, he or she will also need a laptop carrying case.
- Customer’s behaviour. Customers who bought X, also bought Y.
Products offered with upselling and cross-selling techniques can be divided into four categories:
Usually presented when the user is browsing the store and making selections.
Cross-selling offering purchases to complement their current purchase: e.g. buying a carrying case when buying a laptop. Additional items can be suggested based on what is in the customer’s shopping cart or before checkout.
Other members of the chosen product family can be presented before checkout.
When the customer has entered the purchase mindset just before buying he or she easy also susceptible to buy more.
Incentives are often used in upselling and cross-selling. For instance: buy two to get one for free, get a discount on the second item or free shipping.
In addition, products and services might be offered which add value to the customer’s purchase. Customer might also be told that by buying a special add-on he or she will save money in the long run.
Know your products, how they are used and how they fit together. Do not try to combine wrong products.
Identify the customer and present relevant offers based on his or her shopping history and market segment.
Constantly analyse buying behaviour and customize shopping experience.
Identify the best moment for offering other products and the best position on the screen.
Respect the user. Do not appear pressuring or aggressive.
Respect security and privacy policies.