Upselling vs. Cross-Selling: What’s the Difference?
Acquiring new eCommerce customers is the fastest way to pad your business’s bottom line. But your existing client portfolio can also be optimized to increase value for your business and forge better long-term relationships with customers.
That’s where upselling and cross-selling come into play. This article will discuss the differences between these two sales techniques and why you need to understand how to execute them if you want to increase profits.
What’s An “Upsell”?
An upsell is a sales technique whereby a salesperson or vendor encourages an existing customer to purchase more than they otherwise would. An upsell can also occur when the customer is induced to buy a more expensive item. This can take the form of a product upgrade, a warranty, or any other condition of an add-on to the original sale.
Not all forms of upselling involve a “hard sell.” This is because vendors can sometimes upsell effortlessly by merely introducing customers to other options they may not have already considered.
For instance, some of the best subscription services offer add-on options that allow customers to receive more items or higher-quality products.
Examples of an Upsell
Many good cases are floating around on the internet that demonstrates how to upsell effectively. Often, the best upsell executions are when the customer doesn’t even believe they’re being upsold.
Take, for example, GoDaddy’s domain registration sales page. When you checkout through GoDaddy’s online store, you have a host of options to bundle additional services. These include a business email account, a website builder tool, and web hosting at an affordable price. This gives the buyer a chance to upgrade to a better deal before they finalize their purchase.
For another example, look no further than Amazon’s “frequently bought together” offerings. If you ever shop on Amazon, chances are you’re familiar with how they suggest additional products to shoppers.
Using data collected from previous shopping carts, Amazon suggests customers bundle their shopping cart with other items that other shoppers also purchase with whatever’s currently in their cart.
In GoDaddy and Amazon, both offerings don’t feel like a sleazy “hard sell” to the customer. Instead, they subtly offer a beneficial upgrade or bundle deal to the customer to make their experience better or improve the overall value of their purchase. In short, a good upsell should be a win-win between the vendor and the customer.
What’s A “Cross-Sell”?
Large businesses and small vendors alike employ a sales strategy called “cross-selling” to increase profits and sales volume. In practice, cross-selling often accompanies upselling to get the most out of every existing customer. The object of cross-selling is to boost income from a customer and to protect their relationship.
Cross-selling involves the selling of additional services or products to an already acquired client or customer. There is some degree of risk inherent in cross-selling because it can cause distrust between buyers and sellers. Vendors must ensure that all cross-selling efforts truly enhance the value of a customer’s purchase.
Examples of a Cross-Sell
There are many ways to cross-sell that are ethical and effective. Below, we’ve listed a handful of the most common cross-selling examples that we encounter regularly:
- A life insurance company offering a bundle with car insurance
- A computer salesman offering an upgraded monitor, mouse, and keyboard
- An electronics eCommerce vendor offering a speaker system with an HDTV purchase
- A telecom retailer offering to bundle a home plan with broadband internet services
- A sporting goods store offering a half-price hockey stick with a purchase of skates
The Benefits and Risks of Cross-Selling and Upselling
From the vendor’s perspective, cross-selling and upselling are the main benefit of increasing revenue through additional sales. The problem, however, is that your customers are smart and can see through basic sales techniques.
For instance, the line “You may also want to purchase…” can come across as demeaning and manipulative. Many customers will consider these tactics to be sleazy, and they will go unappreciated and, in the worst of cases, damage a company’s reputation.
For this reason, vendors must make sure that every cross-sell or upsell benefits the customer. The art of an effective upsell or cross-sell achieves a singular objective: guaranteeing a customer’s satisfaction. If the customer isn’t satisfied by the outcome of the cross-sell or upsell, you may lose more revenue in the long run by damaging the customer relationship.
The key to success, then, is to know when to offer a cross-sell or upsell to your customers. Not every sale deserves to be cross-sold or upsold. Instead, it would be best if you only offered these sales suggestions when the situation calls for it and when it truly benefits the customer.
Mastering the Art of the Upsell/Cross-Sell
Sales, of course, are more of an art than a science. Upselling and cross-selling may resemble a science. This is because upselling and cross-selling can be done effectively by calculating whether the customer truly stands to benefit from the additional sale. If they do, offer the upsell. If not, hold off and preserve their trust in you.
A customer’s loyalty is paramount. Don’t offer an unnecessary additional sale unless they will objectively benefit from the transaction. If you lie to a customer, chances are they will see right through your deceit, or they will eventually and won’t come back again.
Always be honest about the value that your customer can gain from a sale.
Never offer a cross-sell or upsell that is entirely out of the left field. In the end, you want to predict what your customer needs to achieve their desired outcome.
Only offer products or additional services when you know that they offer something to your customers that they want and wouldn’t achieve otherwise.
Last, vendors must demonstrate how they stand to benefit from the additional sale.
If you can’t articulate why the upsell benefits the customer in plain language, they might lose trust and back away from the sale.