Would you like to add onion rings? Do you want to supersize that? Those phrases, familiar to everyone, are excellent examples of cross-selling and upselling. Accepting those offers will only add a few dollars to your order. Nevertheless, you can be sure that upselling and cross-selling add a significant sum to the bottom line of outlets that employ the techniques.
Cross-selling and upselling can be used by almost any type of business. But your timing must be perfect, and you need to offer the right products. Here are some tips on cross-selling and upselling to increase sales and profits.
What Is Cross-selling
Cross-selling is the practice of selling products complementary to the original order. Generally, the items will be related to the item ordered but fulfill a different need. For example, a financial advisor selling you a mortgage is also likely to offer you life insurance.
What is Upselling?
Upselling is offering customers a product that might better suit their needs. And, of course, the product suggested will be a premium product. Supersizing your meal, for example, is an upsell. Products available free with a premium upgrade that provides enhanced functionality are another example of upselling.
How to Upsell and Cross-sell like a Pro
The idea behind cross-selling and upselling is straightforward. You are tempting customers with more products. However, presenting buyers with random products is unlikely to succeed. Here are some pointers to help you fine-tune a cross-selling or upselling strategy.
1. Wait Until the Original Order is a Done Deal
The objective is to make cross-sells and upsells additions to the purchase, not an alternative. If you offer too many options before the sale is complete, you may sow the seeds of doubt and lose the entire order. It is, therefore, best not to offer additional products until you have all the necessary information to finalize the original order. For example, on an e-commerce site, you would present the buyer with the products at checkout.
2. Follow the 25% Rule
You are attempting to tempt buyers into increasing the value of the order. However, your customer will have already decided that their purchase will meet their needs and is within their budget. Consequently, you want to offer something that will only add slightly to the total value of the order. The magic number that will generate the most add-on sales is 25% of the original order value or less.
3. Offer Only Relevant Products
It is crucial that you only offer products relevant to the original purchase. Suppose your customer is buying a dress shirt, for example. In that case, they might be interested in purchasing some studs or cufflinks. Offering unrelated products is unlikely to be successful. It could also distract the customer from completing the original order.
4. Limit the Choices
It is best to limit cross-sells and upsells to a handful of options because offering too many choices will confuse customers and deter them from completing the original order. Checkout or order completion still needs to be as painless as possible. So, upgrading or adding new products to the order should require minimal effort on the part of the customer.
5. Offer Added Value
Cross-selling and upselling should not be seen as a way of offloading substandard or slow-moving items in your product range. Your add-on products should be adding value to a customer’s purchase. And it is that added value that you should be pushing when you present the customer with the option to add something to their order. The message you are conveying is that the buyer can significantly increase the value of their order while only slightly increasing the total purchase cost.
6. Time-Limit Offers
Time-limited special offers create a sense of urgency and encourage customers to select the add-on products and complete their purchase. For example, messages such as “Upgrade today and save 20% on your total order” would be an enticing proposition. However, you need to ensure that such an upsell increases profits overall.
7. Offer Tiered Upgrades
People have varying budget flexibility. Some people might be tempted by the super-premium offer you have for them. Others, though, might have limited flexibility in how much they are willing to spend. Consequently, offering a small range of upsells or cross-sells at various pricing levels increases the chances of a customer purchasing one of those add-on options.
8. The Customer Comes First
Cross-selling and upselling are not tactics to con a customer into parting with more money. Instead, these strategies are best used to help customers find products that meet their needs and get the best value for money. Aggressive sales tactics and misleading advertising will get a brand a bad reputation and eliminate the possibility of repeat business. It is best to put the customers’ needs first when planning cross-sells and upsells while, of course, keeping the objective of increasing profits in mind.
9. Don’t Overdo It
As already mentioned, offering too many choices can be counterproductive. Pushing an upsell or cross-sell at every opportunity can be equally unproductive. The offer of an additional product or service should be helpful to the customer, not a blatant effort to extract more money from a customer.
10. Consider the Various Timing Points
Finally, checkout or the signing of an order is not the only time you can cross-sell or upsell. There may be opportunities to sell upgrades and additional products pre-sale and post-sale. For example, providing a menu of varying service levels pre-sale might entice customers to go for the premium option. Post-sale follow-up emails can also be used to prompt customers to buy upgrades or complementary products.
Cross-selling and upselling are tried and tested methods of increasing sales and profits. Both techniques are best used to ensure the customer wins when they upgrade or add to their purchase. The application of these methods will vary depending on the type of products or service you are selling. But the fundamental principles apply to almost any sector. Hopefully, the above tips will help you see how you can use cross-selling and upselling to increase your profits.