According to recent studies, getting and retaining customers remains one of the top marketing goals for small and medium-sized businesses. Unfortunately, this focus on driving the development of new customers is causing the majority of companies to miss the opportunities for increased sales that lie within their existing customer base. This is indeed a tragic business trend, as missing such opportunities is roughly equivalent to finding a pile of free money on a table. Yet deciding to forgo taking it because a better chance (with a bigger pile of cash) may present itself at another point in time.
Silly metaphors aside, this is precisely where cross-selling and upselling come into play. Both approaches are key to the development of successful e-commerce enterprise, especially considering the increasing competition that is continually developing within this space.
So, just what are upselling and cross-selling, and how could they help to benefit your small or medium-sized e-commerce business in the future?
What Is Upselling?
By definition, upselling is the practice of encouraging customers to purchase a comparable yet higher-priced product than the one they are currently interested in. As such, the most common form of upselling can be found in the comparison charts utilized by well-known retailers like Amazon to compare higher-end products with their lower-end counterparts.
Showing customers what other models have to offer has the potential to increase their interest in the more expensive offerings, which in turn can help your e-commerce customers to walk away from their transaction with a greater sense of satisfaction. Better yet, when executed properly, upselling allows for customer satisfaction to be paired with higher sales numbers, yielding a mutually beneficial transaction that leaves both parties satisfied.
What Is Cross-Selling?
Cross-selling, which can be considered to be a close relative of upselling, focuses on the identification of products that would complement the original product that a customer is interested in purchasing. The identification of complementary needs can provide a powerful opportunity for savvy e-commerce relators, as it can lead to a similar sense of increased customer satisfaction, much as is the case with upselling.
While cross-selling techniques are utilized in almost every type of retail, e-commerce platforms typically leverage product pages that can be displayed during the early stages of the checkout process to generate additional purchases. Needless to say, such approaches can be highly effective when executed properly, as they provide customers with the option to invest in other high-quality products while gaining a better understanding of the breadth of a retailor’s catalog, which in turn helps to inform future purchasing decisions.
How Are These Two Approaches Similar?
Upselling and cross-selling are closely related by design, as utilizing them in tandem can lead to great sales numbers for e-commerce storefronts. Additionally, both approaches to pushing add-on purchases focus on providing additional value to customers, as opposed to limiting their purchasing opportunities to products that they have already encountered.
In both cases, the guiding business objective is to increase the value that customers are able to derive from additional products that might not have previously known about. At the end of the day, the key to success with both approaches is the ability to truly understand what your customers value and respond in kind with add-on product offerings that meet such needs.
How Are They Different?
Due to the fact that upselling and cross-selling are so closely related, it can be difficult to determine just how they might differ from each other. In reality, the difference between upselling and cross-selling lies in the underlying intention of each. While both approaches are forms of suggestive selling, upselling is more focused on encouraging customers to buy a higher-quality version of the product they are currently interested in, while cross-selling is focused on encouraging the purchase of products that help to augment the overall user experience.
Generally, it is important to approach the implementation of upselling or cross-selling in a tasteful manner that is respectful of a customer’s needs, wants, and expectations. Emphasizing features of products over their prices can help customers to feel as if their needs are well understood by their favorite brands, which will drive greater levels of loyalty over time. Alternatively, pushing customers to buy stuff that they don’t really need is one of the easiest ways to lose the trust associated with your brand overnight.
What Are Some Examples of Effective Upselling and Cross-Selling?
Believe it or not, upselling and cross-selling can be found all around us. Common examples of upselling in everyday retail interactions include:
- Your server at a restaurant asking whether or not you’d like to add steak tips for a small additional fee to the salad that was just ordered.
- A car salesman recommending that someone purchasing a vehicle upgrades to the premium interior package due to the higher-quality experience.
- An airline offering customers the opportunity to upgrade their coach ticked for a business-class experience for an additional fee.
On the other hand, cross-selling can sometimes appear so natural that it is hard for everyday consumers to pick up on. Common examples of successful cross-selling include:
- The barista at your local coffee shop asking if you would like to add a donut to your typical coffee order.
- An electronics retailer recommending the purchase of a memory card and carrying case to someone who is purchasing a new digital camera.
- An online apparel retailer suggesting the purchase of new shows to go along with the selection of a nice dress.
Is Upselling or Cross-Selling Better For My E-Commerce Business?
This can be a difficult situation to answer, as every e-commerce business will have different priorities when it comes to driving the creation of additional sales from their existing customers. Generally, we suggest that e-commerce stores take every opportunity to upsell and cross-sell, as these techniques can be game-changers for small and medium-sized e-commerce businesses. These approaches work very well in the e-commerce space, as highlighted by giants like Amazon and Alibaba, which have clearly mastered the implementation and execution of such sales techniques.