Cross-selling and upselling are becoming a more common KPI for customer marketing teams as customer marketers get more involved in how companies nurture an increase in growth and revenue.
But where do you start? In this article, we’ll go through the basics of each, and set you up with some best practices for implementing these processes into your strategies.
Our agenda will go through:
- What cross-selling and upselling mean,
- The difference between cross-selling and upselling,
- Why cross-selling and upselling are essential to customer marketing, and
- Some cross-selling and upselling techniques.
What is cross-selling?
Cross-selling means to market a product or service that is complementary to something the customer has already purchased (or is planning to purchase). The thing you’re marketing will usually be a similar price to the original product.
Consider the cross-selling product as an add-on or complimentary product aimed to support and improve the original product's experience.
Examples of cross-selling
- Original product: A formal dress - Cross-selling product: A complimentary clutch bag.
- Original product: A burger - Cross-selling product: A box of fries.
- Original product: A couch - Cross-selling product: The matching armchair.
- Original product: A video game - Cross-selling product: A similar video game in the same genre.
What is upselling?
When you upsell, you’re selling your existing customers different products. This can be related to the products they’re already purchasing or not. Upselling aims to encourage customers to purchase a premium or more expensive version of these products.
The idea is to have customers invest more into your company and, in turn, improve things like your bottom line, revenue, and customer lifetime value.
Examples of upselling
- Original product: A burger - Upselling product: The bigger double-decker version of the burger.
- Original product: A couch - Upselling product: The newest version of the couch with better construction and more features.
- Original product: A video game- Upselling product: A expansion pack or collector’s edition of the same game.
What is the difference between cross-selling and upselling?
As you may already be able to tell, the difference between cross-selling and upselling is the type of purchase you’re trying to get your customers to make, and the money they’ll be spending.
The most vital part of these processes is to approach it as a way to support your customer's experience with your brand, not just to get them to spend more money.
When you cross-sell and upsell, you must have a good understanding of your existing customer's purchase history, their pain points and needs, and how the products you’re promoting may solve them.
Cross-selling will prioritize related products to the ones your customers are already purchasing.
Upselling aims to get customers to purchase the premium or upgraded version of the product they are buying.
To conclude, the aim is to increase sales, yes, but with the priority of making your customer's experience with your product or service better for their needs.
What are the benefits of cross-selling and upselling to customers?
So, we’ve established that cross-selling and upselling have a positive impact on revenue, but what are the benefits for customer marketers specifically?
Increase the customer lifetime value
Customer lifetime value is the overall value a customer has for your business over the course of the time they are with you. Upselling and cross-selling prioritize existing customers in their marketing.
If an existing customer buys extra products or buys a premium version of the product (and then continues to purchase them), their lifetime value to your company will go up.
Increase customer retention
In a similar vein, successfully upselling or cross-selling to an existing customer can improve customer retention. As we said before, the act of cross-selling or upselling needs to be purposeful, as the new product must fulfill a need of the customer.
Suppose a customer is missing one feature that’ll improve their user experience, and that feature is in the premium version of the product. In that case, they may be more inclined to remain with a familiar brand than go elsewhere.
Remember that lots of customers won’t know your brand outside of what they purchase, so they may not know what other benefits you offer, so it’s your task to implement the cross-selling and upselling processes into your existing marketing strategy.
Foster customer loyalty
When you solve a customer's problem for them, this has a knock-on effect. By being aware of customer pain points, and offering alternative products that will solve them, then you’re showing that your organization values them, not just their money.
Personalization of offers goes a long way with this.
Increase conversion rates
This is true of both existing customers and potential customers. Let us explain how.
For existing customers, a successful conversion means turning a customer from a repeat customer into a loyal one. And from a loyal customer to an advocate.
When this happens, the more advocates you have, the more word-of-mouth marketing will be working for you. When an advocate successfully converts a potential customer into a first-time buyer, then that’s a win for you too!
Offer new prospects
New processes always invite a trial and error period. When you begin your process of cross-selling and upselling to customers, you’ll have a few hiccups on which products to sell to which customers (though this should be less common if you research well beforehand).
With these errors actually come opportunities for learning. Make a note of which products work well for which customers. You may find a combination of products you may not have thought about before, opening a whole segmentation of customers for you to cross-sell and upsell to.
How to cross-sell and upsell to your target audience
1. Understand your customers
The vital part, which we’ve already mentioned, is to approach this with the customers and their experience with your brand as a priority. And the central part of being successful at this is to make sure you know your customers like the back of your hand.
This is where your personas, both buyer and user, come in handy. Refamiliarize yourself with who your ideal target audience is, what their needs and desires are, and how that interacts with your products.
Good cross-selling and upselling strategies will not leave customers feeling like they’re being sold to, but that you’re trying to find a solution to their problem (which just happens to be your products).
Consider the customer experience you want to give when recommending products and make sure they’re complimentary products to the ones these customers already use. Show them that you're listening and that you care about the relationship you have with them.
2. Get familiar with the customer journey
Going through the different stages your customer goes through can help you better understand the customer experience with your product, and how they use it. Customers at each stage in the customer journey will have a different way of using your product
As a consequence, the products that complement their user experience will be different. It does no good to advertise to your advocates a product they’ve been aware of and have used since day one.
The same is true for the opposite. No new customer wants to hear about your ultra deluxe exclusive version of your product before they’ve familiarized themselves with the standard one first.
3. Connect products with pain points
Now you understand your customers and where they are within the customer journey, you can begin connecting products with their pain points. Take advantage of the customer segmentation types within your overall customer base to group your customer together.
Think about cross-selling and upselling as a part of the conversion process. Make sure each product is not miles above what each segment is willing to pay, nor above what their actual need is.
4. Ask your customers
A concept quite often overlooked, is to simply ask your customers about it. Talk to them and use strategies to offer them options and get their unfiltered opinions on the types of products you suggest to them.
This can save a lot of time and let you know how close or far off the mark you are. Make sure you’re taking advantage of every avenue to your customers, and these don’t have to be complex interactions either. Check out our guide on in-app messaging to get a better understanding of how to approach your customers.
Cross-selling and upselling techniques
Here are some of the more common practices for upselling and cross-selling techniques.
Bundling in e-commerce is used as a cross-selling technique. It takes the main item and then puts it with one or more additional items to create a bundle. This usually comes with a discount on the overall price, where the sum total of the bundle is less than if the customer bought them all separately.
This is a great technique that benefits both you and the customer. They get all the relevant add-ons for the additional product at a discounted price. For you, they end up spending more money than they would have before and don’t get the additional items in the bundle from your competitors instead.
There are two types of bundling:
- Pure bundling - When the items in the bundle can only be brought together and not separately.
- Mixed bundling - when the items in the bundle can also be bought individually.
These types of bundling each count as cross-selling and upselling:
- Pure bundling plays on the idea of exclusive or premium options and is therefore an upselling technique.
- Mixed bundling offers complimentary items without them being exclusive and so is a cross-selling technique.
When your customer clicks on a product page on your website or goes to checkout, this is the perfect time to remind them of other offers and products that may apply to them.
You can use them as a pop-up, or as a less invasive suggestion box at the bottom of the screen. The aim is to recommend related products without overwhelming your viewer.
This type of technique works well in getting impulse purchases, and so should not offer them too much. If they have 10 options to choose from rather than four, they’re more likely to not choose any. Decision fatigue is real!
This works as both an upselling and cross-selling technique.
Don’t fault the power of the awareness stage of the business funnel. As we said before, it's highly likely that most of your customers don’t have any idea what you sell outside of the products they purchase on the regular, so it’s always a good idea to keep them informed.
Blogs are a great way to have continuous information going out to your customer base. You can tailor each one to the types of products you offer, how each one compliments the other, and more.
Listicle articles are a huge resource for people when they’re researching products, so don’t be afraid to make your own, listing the benefits and features of all of your products.
You can also create a monthly newsletter or magazine for people to subscribe to. That way your customer base is informed every time you launch a new product, without you having to go out and contact each one individually.
This is also a great way to keep your loyal customer and advocates informed on the goings on in your company - what you're working toward in the future, any position changes, and more.
How-to videos are a fantastic way to market to both existing and potential customers and hit several stages of the customer journey at once. If your product or service has a particular learning curve when using it, this can be a great way to reassure them that it isn’t impossible to overcome.
In the same vein, you can have more and more in-depth how-to videos with each upgrade of a product, making sure people know about the products you want to upsell to them already.
We go in-depth into some of the best practices for cross-selling and upselling in the article below, so have a read to make sure you don’t get caught out.