Cross Selling and Up Selling

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UP SELLING AND CROSS SELLING

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Cross-selling and up-selling are two sales techniques that consist of offering the customer additional products or services to complement or enhance their initial purchase. Cross-selling refers to the strategy of offering the customer products or services related to their initial purchase. For example, if a customer buys a mobile phone, the seller could offer a case, screen protector or headset to complement the purchase. Up-selling, on the other hand, cis to offer the customer an improved or more expensive version of the product or service they are considering. For example, if a customer is interested in a mid-range mobile phone, the seller could offer a premium version with additional features at a higher price. Both strategies aim to increase the value of the sale and improve the customer experience.

The following are some of the advantages and disadvantages of these sales techniques

Advantages of cross-selling and up-selling

  • Increase in the value of the sale.
  • Improved customer satisfaction by offering complementary or enhanced options.
  • Encouraging customer loyalty.

Disadvantages of cross-selling and up-selling

  • The customer may feel pressured or forced to make an additional purchase.
  • If these techniques are abused, they can negatively affect the relationship with the customer.
  • If additional products are not relevant or do not meet customer expectations, it can negatively affect customer satisfaction and loyalty.

In general, cross-selling and up-selling can be effective when used in a way that is appropriate and relevant to the customer. It is important to take into account the customer's needs and preferences and offer options that complement or enhance their initial purchase.

Practical examples of cross-selling and up-selling:

Example of cross-selling

A customer comes to an electronics shop looking for a high-definition television. The salesperson takes the opportunity to offer him a Blu-ray player compatible with the TV, a soundbar and an HDMI cable. The customer, who initially only intended to buy a TV, ends up taking the other products as well.

Example of up-selling

A customer comes to a mobile phone shop looking for a mid-range model. The salesperson takes the opportunity to offer him the latest high-end model, explaining the advantages in terms of features and performance. The customer opts for the high-end model, even though he had not initially considered it.

How to apply cross-selling and up-selling in a new company

In order to apply cross-selling and up-selling in a new company, the following steps can be taken:

  1. Know the client well: it is important to know the needs and preferences of customers in order to be able to offer them additional products or services that meet their needs.
  2. Analyse purchase history: Reviewing customers' purchase history can help identify patterns of buying behaviour and determine which products or services might be complementary or of interest.
  3. Offer additional products or services: use every opportunity of customer contact to offer additional products or services that may be of interest to the customer.
  4. Customise the offer: tailor the offer to the specific needs and preferences of each client to increase the chances of success.
  5. Training the sales team: train the sales team in cross-selling and up-selling techniques so that they can effectively offer additional products and services.
  6. Measuring results: it is important to measure the success of cross-selling and up-selling strategies in order to be able to adjust them if necessary and optimise results.

Some specific ways to apply cross-selling and up-selling in a new venture include:

  • Offer complements or accessories to the main products that customers are buying.
  • Offer discounts or promotions on additional products or services if purchased together with the main products.
  • Use personalised recommendations based on customers' past purchases to suggest additional products that may be of interest to them.
  • Offer subscription plans or memberships that offer exclusive benefits or special discounts on additional products.

Cross-selling and up-selling success stories

One of the best-known success stories of cross-selling and up-selling is Amazon. The e-commerce platform uses the technique of recommendations based on users' previous purchases to promote cross-selling. For example, if a customer buys a cookbook, Amazon can suggest related cookbooks, cookware and other relevant products. In addition, Amazon also uses the up-selling technique by offering customers higher-value or higher-quality product options. Another example of success is McDonald's. The fast food chain has used up-selling for years by offering customers the option to make their menu bigger and add extras to their order. In addition, the chain has used cross-selling by promoting bundled meal deals to promote the sale of several products together.

A third example is Apple. The company uses up-selling by offering different models and versions of its products, allowing customers to choose between more advanced and more expensive options. Apple also uses cross-selling by offering accessories and add-ons for its products such as cases, chargers and adapters.

What is a common cross-selling technique in ecommerce?

A common cross-selling technique in ecommerce is to display complementary or related products during the checkout process, such as offering a case for the mobile phone being purchased. You can also offer the option to add additional products on the shopping cart page before the checkout process is completed. The sale is a vital activity in any company. But it is very important to do it intelligently.

This means that there are two approaches to selling:

  • The first is the focus on rotationThis is the total volume of product we place on the market.
  • The second is profitability. The profitability of the company depends on the sales mix: not all products in a company's portfolio contribute the same margins.

The idea is to sell a lot but as far as possible to take care of the profitability of these sales by selling more products with a higher contribution margin. Cross-selling and up-selling have to do with this second approach. Cross selling is an English term that means: cross-selling. It is a marketing technique used in both traditional and digital commerce, and consists of the introduction to other products related to the one they are buying. Example: a customer buys a smartphone and the salesperson also includes the anti-shock case and the screen saver, as well as a holder to place it in the car. This increases the customer's purchase ticket.

Cross-selling is therefore all about complementarity.

In the case of up-selling, it consists of selling a product of a higher perceived quality and a higher price. The classic example is the waiter who sells a diner a wine of higher quality, price and, obviously, margin than the wine initially chosen by the customer. Arguments such as the safety or reliability justifies the argument. Success in both cases obviously depends on the salesperson's ability to generate credibility and trust in the customer. The customer must perceive a sincere attitude of help and concern for customer satisfaction. It is a virtuous circle that is established between the interests of the customer and those of the selling company. Generally, when a product is chosen for purchase, the eCommerce displays another related product in an attempt to sell another related product as a suggestion.

Benefits of Cross Selling and Up Selling:

CROSS SELLING

UP SELLING

Increase sales and certainly profitability.

Increase the average profitability of your business.

Customers will be more satisfied if the products that meet their needs are offered in one place.

Exceed customer expectations by improving their perception of the seller and the company.

It helps to attract customers and build customer loyalty, in addition to having frequent customers who return to your business in search of promotions.

Customer loyalty

 

Increasing product visibility

EXAMPLES OF CROSS SELLING

Buy a jacket and show a matching tie so that it is also added to the shopping cart. Or in a fast food restaurant, buy a hamburger and have them suggest a complement for an extra euro.

Let's take another, more common example, in the field of consumer electronics:

The customer is buying a €700 15-inch laptop. You offer him a €900 17-inch laptop with a 1-year extended warranty, then: you upsell. If you suggest that your customer should buy a cooling rack for €50, that's cross-selling. Cross-selling brings many benefits, as it develops the opportunity to gain 60-70% from cross-selling an existing customer, while the opportunity to gain a new customer is only 5-20%. This is because a customer who says yes to one of the products is willing to open his wallet to spend some more money.

IKEA is one of the brands that best practices cross-selling. They offer us recommendations of furniture that combines well with the one we are thinking of buying. If we put ourselves in the shoes of their target audience, we realise that consumers are usually looking for more than one piece of furniture. Offering them ideas of items that combine well with the main product they have visualised is a great way of cross-selling and selling complementary products.

EXAMPLES OF UPSELLING:

When we book an airline ticket, we have the option of paying different fares. The cheapest fare is good value but does not include any benefits. The 'premium' or 'business' fares offer many extras, such as more luggage, priority boarding, better seats, the possibility to change tickets... All this at a higher price. Hotels when booking accommodation, either on the hotel's own website or on comparison sites such as Booking, have the possibility of selecting different rooms with more or less expensive prices. The advantages included in each room (single or double beds, views, terrace, etc.) are perfectly designed and tailored for upselling.

Another example is the music streaming service Spotify. This streaming service is free but carries advertising and some restrictions on listening to music. The premium plan eliminates all these drawbacks. In addition, when you upgrade from the free to the premium version, you get a number of additional benefits such as discounts for three months.

APPLY THIS TIP TO YOUR PROJECT

TASK

Now that you have read the TIP, answer this question:

  1. If you have a CMS-based eCommerce (Prestashop or WooCommerce, for example) look for where to configure the cross-selling of a product.

ECOMMERCE CROSS-SELLING CASE STUDY

Juan is an entrepreneur who has launched his own online electronics shop. To increase his sales and improve the customer experience, he decides to apply a cross-selling strategy. The strategy consists of offering complementary or related products to the main product that the customer is buying.

TO IMPLEMENT THIS STRATEGY, JUAN FOLLOWS THE FOLLOWING STEPS:
  1. Identify the main products that customers are buying in your shop, such as mobile phones, laptops and digital cameras.
  2. Look for complementary or related products, such as phone cases, portable chargers, laptop mice and camera cases.
  3. Place complementary or related products on the main product detail page and on the checkout page, so that the customer can easily see and add them.
  4. Use recommendation tools to show similar products to the ones the customer is buying, which can generate more cross-selling opportunities.
  5. Analyse sales statistics and customer behaviour to identify patterns and adjust the cross-selling strategy accordingly.

By applying this cross-selling strategy, Juan has been able to increase his sales and improve customer satisfaction by offering complementary products that can enhance the user experience with his main products.

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Alex Fonseca

Alex Fonseca

Co-Founder of the platform for entrepreneurs El Mallorquín. Advisor and Consultant in eCommerce and Online Business.
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