Upselling and Cross selling are great ways to maximize your revenue while building stronger relationships with your clients and customers. You may hear the term upsell used interchangeably with cross sell, and though they are technically slightly different, I think this is fine as long as what is being conveyed is understood. Technically speaking, upselling is encouraging customers to purchase a service or product that is comparable, but more expensive, to the one they are intending to buy. Essentially a higher-end or more comprehensive version of the same product or service. Cross selling is encouraging add-ons or complementary products or services along with the intended purchase. Both of these practices can increase the value of each client or customer and, if done correctly, build trust. You also have the benefit of making more sales without having invested in lead generation for those sales since they are established customers and clients.
Let’s say you sell phones. An upsell would be to encourage a customer who is trying to buy a flip phone to upgrade to a smart phone. A cross sell might be trying to encourage a customer who is buying a phone to also purchase a case. There are some strategies that can help you get the most out of your upselling and cross selling efforts. Your strategies should be subtle and focus on providing value to the customer while increasing profits. Being too overt in selling can cause you to look pushy and decrease trust with your clients.
Upselling
There are a few upsells that increase the value of a product for both you and your customer. Here are a few examples of popular upsell styles
- Upgrade – offering an upgraded version of a product or service that the customer already intends to purchase. These often include comparison charts to highlight the added benefits of upgrading. For example, if you sell a software as a service (SaaS), you can show what extra features a customer would get if they upgraded to the next level. You will see this with SaaS providers like QuickBooks, SalesForce, etc. This can be applied to products or services and can help you boost your Average Order Value (AOV).
- Customization – offering a customized version of your product or service is a great way to add value. An example might be selling mugs that can be personalized with pictures.
- Product protection – this one works great for ecommerce, offer a protection plan at check out that will cover replacement, repairs, etc. for a limited amount of time. As long as you sell quality products, this one can definitely boost income.
- Completed Version – if you offer a product or service that needs work to be done in order to function, such as domain names, web applications and hosting, offer a “done for you” option, where the introductory work is completed for the customer. For example, selling a domain name and hosting service to a customer and creating a basic and functioning WordPress site to get them started. This fills a gap between clients having to build the site themselves or having to spend lots of money for web development services.
- Coaching/ Consulting – you can provide one on one coaching to help clients maximize what they get out of your product or service. This can help clients optimize your product or service to their specific situation and needs.
Whether at a physical location or online, you will want to pay special attention to the placement and timing of your upsells. Put different versions of the same product or service together in a way that they can be compared and find a way to highlight the extra benefits of the upgraded version(s). This is a good way to try to upsell from the beginning of a potential customer’s search. Also offer an upsell right before purchase, and again highlight benefits of the upsell. You can even upsell after a sale has been made!
Another highly efficient way to increase AOV, specifically for ecommerce, is to offer free shipping if a minimum order value is met.
Cross Selling
Cross selling is a great way to get repeat customers and encourage brand loyalty. Here are some of the more common ways to cross sell.
- Additional services – for example, if you offer website hosting services, then you could cross sell cyber security services or advertising services to complement the service that you are already providing.
- Bundles/ complementary items – Amazon is a great example of this method. They have a “frequently bought together” feature that will show related and complementary items and will offer to sell them all together in a bundle. This increases value for both the seller and buyer, as these items often are necessary additions to the original item.
- Promotions – let previous customers know of any sales or promotions that you have coming up. Previous customers have already expressed interest in what you do and may have an interest in what you are promoting.
- Data driven – pay attention to how your customers and clients interact with your website to see what other products or services they may be interested in and offer it to them
Cross selling has more options for placement and timing of offers. You can offer bundles before a purchase has been made. You can offer services at the point of purchase. You can offer complementary products or services on the thank you page after a sale has been made. You can utilize drip email campaigns to give info on other services and products which will lead into an offer. You can do some work for the client (generally for services provided instead of products) and make an offer after you can show measurable results from the initial purchase. Utilize multiple methods for cross selling to maximize return on your efforts. The real key here is relevancy, if you can make well timed and relevant offers, this will help your bottom line as well as build trust with your customers and clients. Making relevant offers shows that you understand your customers.
Things to Consider Before Upselling/ Cross selling
Harvard Business Review (HBR) found through their research that there are certain customer types that will be a detriment to your profits, and can actually cost you money. They found that 20% of customers who cross buy are actually unprofitable. This is a significant number of customers and you will want to implement ways to identify these customers in order to save time and money by not cross selling to them.
HBR identifies 4 types of customers to be wary of:
- Service Demanders – customers that abuse customer service channels, wasting employees time and company money
- Revenue reversers – customers who make habitually makes returns or default on contracted payments.
- Promotion maximizers – customers who will only buy when there are steep discounts
- Spending limiters – customers who reallocate spend when cross buying instead of paying more. This is generally for services rather than products, where a customer will draw money from a previous service provided in order to pay for a new service. This creates cross selling costs with no increase in revenue
Having a large number of these problem customers is a sign of flaws in your cross selling and upselling tactics and your marketing strategy. The first step is to identify these problem customers and do not cross sell or upsell to them. HBR advocates to “demarket when necessary.” Sometimes customers will cross buy without being sold to, this is when you may want to think about demarketing, meaning to limit or end the relationship with the customer.
Conclusion
Cross selling and upselling are highly effective ways to boost income and build stronger relationships with your customers. There are many opportunities in the purchase process to make offers. It’s important to get the timing and relevancy of the offer right, as long as you are patient and paying attention, these opportunities should be fairly easy to spot. Be aware that not all customers are worth the time and effort to cross sell and upsell to, find a way to identify problem customers.
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