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Cross-Selling vs. Upselling: Maximizing Revenue and Customer Satisfaction

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Exploring the Differences: Cross-Selling vs. Upselling

Wouldn’t it be great if you sold more products in every cart? Wouldn’t it also be great if you sold a higher number of your more expensive products? Businesses thrive on high-value sales whether that’s a high-value cart total or a single more expensive product.
This doesn’t happen naturally. We need sales techniques to help customers to make a buying decision, whether promoting a new product, converting new customers, or encouraging repeat purchases from existing customers.
Cross-selling and upselling are revenue-boosting techniques that are worth having as part of your <a href="https://www.podium.com/article/sales-tips-for-small-businesses/">sales strategy</a>. So you can start implementing and gaining results from these strategies, read on to find out what they involve and the differences between them.
<h2>What is cross-selling?</h2>
Retailers usually sell products within a certain sphere. They could be an ecommerce business for hiking gear or baby products. Either way, they have complementary products that a customer buying one item could benefit from or even be actively looking for. Instead of relying on customers to search the entire online store themselves, <a href="https://www.podium.com/article/cross-selling/">cross-selling techniques</a> bring additional products to the attention of customers.
For example, a customer buying a camera may also want to buy a camera bag, battery, and even a warranty to cover breakages.
<h3>Why use cross-selling techniques?</h3>
It creates a better customer experience because the business is making it easier for customers to find related products that they want to buy and therefore is meeting customer needs in more than one way. Also, it increases the average order value a business can achieve by encouraging customers to buy more than one product at a time.
<h3>Top Tips for Cross-Selling</h3>
When implementing a cross-selling strategy, make sure the product recommendations are for relevant products, not just anything in the store. For example, it’s better to recommend fries to someone ordering a hamburger than to recommend they buy a vegan burger.
The best recommendations are based on active listening. Get to know your customer base. Look for patterns in what they tend to order together. Understand the root cause problem they are trying to solve through your products to refine your recommendations. This could change depending on the customer persona so take demographics and psychographics into account when tracking patterns.
<h2>What is upselling?</h2>
There’s more than one way to skin a cat, right? In the same way, there’s more than one product or service that can fulfill customer needs. Often businesses have a suite of products to appeal to the different budgets, priorities, and needs of their various customer personas. The version of the product a salesperson will offer a customer depends on what they care about. Do they want their needs met at the cheapest possible price? Or are they willing to upgrade to a more expensive version to enjoy more functionality?
For example, a customer looking for a laptop might be happy with a basic laptop with enough functionality to check emails and work on spreadsheets. A customer who is into gaming, on the other hand, would have a better experience if they upgraded to a laptop with top-end memory, processing, and visuals.
<h3>Why use upselling techniques?</h3>
Adding upselling strategies to your sales tactics could improve the customer experience by helping individual customers to find the right product for them. Additionally, it adds to the business’s bottom line by building higher revenue and higher average customer lifetime value.
<h3>Top Tips for Upselling</h3>
Upselling won’t work for all customers. Some people are happy with an old version of a phone even though it has outdated technology because it still meets their needs. Other people want the newest phone for full functionality despite it being sold at a higher price point.
So your salespeople need to know the needs and priorities of the customer they’re speaking to. With the onset of automation, businesses can track behavior throughout the customer journey so they can identify the customers that will be most responsive to upselling.
<h2>Key Differences Between Cross-Selling and Upselling</h2>
So cross-selling and upselling are just ways for businesses to make more money, right? Well, yes but in distinctly different ways. While both strategies increase the value of the shopping cart when the customer checks out, cross-selling increases the number of products in the cart and upselling increases the value of a single product being purchased.
Amazon uses both cross-selling and upselling. Scrolling down a product page, you’ll see a table comparing the product to other similar products with different prices and features. You’ll also see a ‘customers also bought’ section, sometimes with options to bundle together add-ons for a good deal.
<h3>When to Use Cross-Selling</h3>
Cross-selling is suitable for new customers because bundling products together make customers feel like they’re getting more bang for their buck. They are spending more money but they are also getting more products, complementary items to what they wanted to buy in the first place. So it could be marketed through a pop-up during the checkout process.
<h3>When to Use Upselling</h3>
As upselling involves asking customers to make a more significant investment in a single product, it’s most successful when marketed to existing customers. They already know and trust the business so are more likely to be comfortable paying a higher price point for a single product. They may even be looking for an upgrade after initially buying a more affordable product so upselling can be used as a <a href="https://www.podium.com/article/retention-marketing/">customer retention strategy</a> delivered through post-purchase marketing strategies.
<h2>Implementing Cross-Selling and Upselling</h2>
If you’re going to ask customers to spend more money with you through cross-selling or upselling, you need to do it right. It should add to the customer experience, not impair it. Sales tactics with high conversion rates tend to follow these steps.
<h3>1. Understand customer needs and preferences to identify relevant opportunities.</h3>
You want to recommend the right product upgrade or add-on at the right time. So understanding your customer’s needs and what they’re willing to spend money on is paramount. This can differ between customer persona and throughout the customer journey. Consistently <a href="https://www.podium.com/article/12-benefits-of-crm-why-your-business-needs-one/">collect customer data</a> and feedback to map patterns and identify high-potential opportunities. Remember sales opportunities don’t end after the first purchase, get to know new and existing customers alike.
<h3>2. Personalize offers based on individual customer data and history.</h3>
While multiple buyer personas can help businesses to account for the variations in their customer base, no two customers are the same. Recommending additional or higher-priced products is most successful when looking at individual customer data and the history of their interactions with the business. For example, have they looked at the product pages for two different products at different price points? What have they purchased before and what does that tell you about the kind of products they’re interested in?
<h3>3. Monitor results and analyze data to refine your strategies.</h3>
You don’t have to get it perfect the first time. Over time, you’ll collect more customer data and have more upselling and cross-selling examples to map patterns of buying behaviors. Your sales tactics should be in constant review as you collect more of this data and monitor the results of your current strategies. Consider the various factors involved in a successful upsell or cross-sell such as the timing of the recommendation and how they received the marketing message (e.g. email, text, website pop-up, etc). Ensure you are recommending the right products in the right way.
<h3>4. Train and empower your sales team with product knowledge and persuasive skills.</h3>
While a lot of the sales and marketing processes can be <a href="https://www.podium.com/article/ecommerce-marketing-automation/">automated</a>, there will also be a role for sales teams to support customers in their buying decisions. Therefore, they need the knowledge and skill to offer and close upsells and cross-sells. Give them the training and encouragement to not simply make a sale but help customers to find the right product with the features and add-ons that meet their needs. They’ll struggle to do that if they’re unsure how to uncover customer needs and priorities or what products are complementary.
<h2>Drive Revenue Growth and Delight Customers with Podium</h2>
Offering support throughout the customer journey with product and upgrade recommendations can get complicated unless you have digital tools in place to help you. Successful upselling and cross-selling rely on strong customer communication management, not only to communicate about upselling and cross-selling opportunities but to track valuable data about needs and preferences. Podium enables you to streamline customer communication through an<a href="https://www.podium.com/inbox/"> omnichannel inbox</a>.
What if you’re in communication with a customer and they want to go for the upsell or cross-sell? With Podium, you can process the payment then and there using the<a href="https://www.podium.com/payments/"> text-to-pay feature</a>. The workflow is seamless, especially with the range of integrations available including<a href="https://www.podium.com/marketplace/quickbooks-online"> QuickBooks</a>.
Customer feedback adds depth to a business’s understanding of its customer personas and the different needs and priorities it fulfills for them. Gather more insightful customer feedback by asking for it directly using Podium’s<a href="https://www.podium.com/reviews/"> review management tool</a>.
Just like upselling and cross-selling, Podium’s communications and marketing platform helps businesses to add to their bottom line.
<h2>FAQs</h2>
<h3>How to upsell to customers?</h3>
Upselling is the sales technique of directing a customer to buy a higher-priced product or service that better meets their needs than the option they were originally going to purchase. Learn about the individual customer from what they share about what they’re looking for as well as customer data such as purchase history to give relevant recommendations. Customers will only buy a higher-priced product if it meets their needs through extra functionality. Match what they are looking for with the features and benefits of the product. This will motivate customers to spend more and go for the upgrade.
<h3>How to Cross-Sell?</h3>
The intent to purchase one product suggests that the customer will find other products you offer useful too. This is an opportunity to recommend those products to the customer before they checkout. Instead of guessing additional products customers may want to buy, use customer data to find patterns of what products are bought together by what customers. You can make the cross-sell even more appealing by bundling products together and selling them at a discounted price. Everyone likes getting a good deal, especially when it’s products they already need or want.
<h3>What are upselling and cross-selling examples?</h3>
Say you run a bakery and a customer comes in asking for a birthday cake. If you were going to upsell to them, instead of checking them out for a standard birthday cake, you’d ask if they would like a personalized birthday cake with a name and a photo. Or whether they’d like a two-tiered cake instead of a one-tiered cake. You’re suggesting that instead of buying one thing they buy a different better thing.
If you were going to cross-sell to the birthday cake customer, you’d suggest additional products on top of the cake that they may find helpful in their birthday celebrations. For example, the bakery could also sell bread which the customer can use to make sandwiches for the buffet at the party. Or maybe you offer a delivery add-on to ensure the cake arrives at their house in good shape.

Cross-Selling vs. Upselling: Maximizing Revenue and Customer Satisfaction

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