The power of suggestion—upselling and cross-selling for ecommerce success
Whether your business is a booming bricks-and-mortar store or a fresh ecommerce website, the primary reason it exists is to sell your products. So if you want to be more profitable, you need to sell more of those products, either by finding new customers or by convincing your existing customers to buy more.
It sounds simple, right? But businesses often fall into the trap of thinking they need to increase the number of transactions customers make, if they want higher sales figures. That’s just not true! You can also increase your sales by increasing the value of each order through upselling and cross-selling. And, if you’ve got the right tools and information, this approach can have dramatic results, with companies like Amazon attributing up to 35% of their revenue to cross-selling.
So let’s look at exactly what we mean by upselling and cross-selling, and how you can tailor your sales plan to give your customers a better experience…but only if you really understand your customer base.
What are upselling and cross-selling?
Upselling is encouraging the customer to purchase a more expensive version of the product they originally intended to buy. For example, if a customer has selected a mid-range pair of cushioned running shoes so they can train for a fun run, you might encourage them to upgrade to a premium pair, which will last longer, be more comfortable, and reduce the likelihood of injuries.
Cross-selling is where you encourage the customer to buy additional items that complement their selection. In the running shoe example, you might ask if they’d also like to buy a moisture-wicking singlet, a pair of socks, or a lightweight cap.
To put it in a context we’re all familiar with, you could say that upselling is “Would you like to upsize your combo for just a dollar extra?” and cross-selling is “Would you like fries with that?”
The two tactics share a common purpose: they aim to convince your already-committed customer to spend a little more. And both are timed after the customer has selected what they want to purchase. But their approaches are subtly different, with upselling focused on a better version of the same basic item, and cross-selling focused on adding related products of comparable or lower value.
Of course, there’s a grey area between the two: if a customer wants to buy a new desk lamp, is your suggestion of an eco-friendly light bulb an upsell or a cross-sell? The answer will depend on who you ask, and I say it doesn’t really matter, so long as you’re suggesting the right optional extras to go with the main purchase.
What are the benefits of upselling and cross-selling?
The benefits for you as the seller are evident: with minimal effort, you can convince you keen customer to spend a little bit extra, boosting your profits. But it’s not all about you—upselling and cross-selling is also beneficial for your customers.
By upselling and cross-selling, you’re ensuring that customers have everything they need to really get the most out of their purchase, so they can start enjoying their new products immediately. The key is in really understanding what your customers are looking for, so you can tailor your suggestion to their needs, their budgets, and their buying patterns.
How can I tailor my upselling and cross-selling for a better customer experience?
It all comes down to understanding your customers. If you know what’s driving your customer’s purchasing decisions, you can make more appropriate suggestions in your attempts to upsell and cross-sell, and limit the number of options you provide to avoid the dreaded “analysis paralysis”.
In a bricks-and-mortar store, you can ask your customer directly what they’re looking for, and tailor your suggestions to suit. But that doesn’t work for online stores! You’re unlikely to have all the information you need, and your suggestions need to be presented automatically as your customer proceeds to the checkout. This is where the data from your ecommerce software solution can help.
As a starting point, you should have a good idea of
- who your customers are, and why they shop with you, from your feedback surveys
- which products or categories are related, and which usually sell together
- which products are best-sellers for each category
- which product suggestions have had the highest cross-sell conversion rates.
If your current sales system doesn’t offer automation, you can still use this information to manually set up collections of complementary items at different price points, and use these groupings as your standard suggestions. For example, if someone adds a power drill to their shopping cart, your suggestions might be a more premium cordless drill and three different packs of extra drill bits.
If you’re using a good ecommerce platform, like Neto, you should also have automation features, and access to information about
- names, demographic information and order histories for existing customers, which show what they usually buy, and may give a hint about their motivations for buying or their usual budget
- browsing histories for all shoppers, which will give you clues to which complementary categories they’re interested in, and if they’ve added products to their cart but haven’t checked out.
- the geolocation your customer is ordering from, which may help narrow down their purchasing goals, e.g. a Brisbane-based shopper buying a heavy winter coat in the middle of summer might be planning an overseas trip.
With this level of detail in your data, you can completely personalise your product suggestions, even addressing your customer by name. With 73% of consumers preferring to buy from businesses that personalise their experiences, this simple step could lead to 5.5 times higher conversion rates.
You own an electronics store, and an online shopper has looked at phones, cameras, travel SIM cards, and carry cases. She ends up selecting a basic model smartphone with a small screen and minimal storage space, priced at $499, and proceeds to the checkout.
Based on her navigation, your ecommerce software attempts to upsell by pointing out that an extra $100 investment would buy a higher resolution camera and twice as much storage space for photos, eliminating the need to carry a separate camera. You also cross-sell by suggesting she buys a $9 screen protector or $19 phone case, an extra memory card for $50. And because she’d looked at a travel SIM, it seems she might be heading overseas, so you also suggest a $14 global adaptor for her phone charger.
She upgrades to the better phone, and buys all the extras—and you’ve just increased your sales $192. That’s 38% higher than the original shopping cart value!
Neto is a leading ecommerce platform designed to help your business grow across multiple channels. With inbuilt analytics, mobile-responsive themes, fully flexible navigation, customisable shopping carts, and a wide range of add-on integrations, Neto lets you create a perfectly tailored customer experience. If you want to know more about understanding your customers so you can tailor your marketing strategy, check out our blog post on defining your ideal customer.