If you’ve heard about cross-selling and upselling but have never tried these marketing strategies, you might be wondering what they are and their differences. When comparing cross-selling vs. upselling, they both entice customers to increase their AOV (average order value), but the approach to each method is different in terms of the types of recommended items and their impact on your sales and order profitability.
Learn more about the differences and similarities of these strategies, their benefits, choosing the right strategy for your store, some real-world examples of companies successfully cross-selling or upselling, and tips to get started with your strategy implementation including with a tool like Cross Sell.
Cross-selling vs. upselling differences and similarities
Cross-selling is a strategy where you’re getting customers to purchase extra products connected to the items they’ve already picked out. For instance, the customer buying sneakers in the previous example might also decide to buy running socks to go with them.
Upselling, on the other hand, is the process of increasing a customer’s sale value by enticing and convincing them to buy either a higher-priced version of their chosen item or additional but different items altogether. For instance, if someone is buying a pair of sneakers for $50, you suggest a pair made from higher quality materials with more features like extra cushioning and support that costs $75.
Usually, both cross-selling and upselling happen when a customer shows signs they’re about to make a purchase. Both of these strategies involve promoting similar products or services to the item a customer originally intended to buy.
Why cross-sell or upsell to your customers?
There are a number of benefits to using cross-selling vs. upselling strategies in your business.
Increase AOV, profit, and ROI
Cross-selling and upselling let you grow your business beyond simply retaining your current customer base and sales – when you earn trust and grow how much these customers spend in your store, you’ll increase your average order value (AOV), eventually leading to more profit and ROI. When your customers see meaningful and relevant offers, their total purchase value is likely to go up. It’s a win-win: you earn more revenue while they benefit from a better or complementary product, which often increases their satisfaction and prompts them to shop again (another benefit for you!)
This is key since it costs five times more to attract a new customer than it does to keep an existing one, a hefty price for small businesses to pay. Since you’ve already put in the work of marketing, sourcing customers, and selling to them, you may as well try to get as much out of your investment as possible (without being pushy, of course).
Benefit your customers with flexibility and convenience
The truth is, many shoppers don’t want to spend the time and energy in finding a new business that carries what they’re looking for. When you offer more relevant options and add-ons, they have more reason to trust you and buy again. They’re benefitting from cross-selling and upselling, too, since they get the flexibility of other useful product options and the convenience of sticking with your store, which they trust.
Strengthen customer loyalty with relevant offers
Upselling puts all of your customers’ options on the table so that they can make an informed purchase decision. It’s not about pressuring them to buy an expensive item they may or may not need; it’s about actually demonstrating that you anticipate their needs and care about offering them quality choices – if your customers feel that you’re looking out for them and their needs by being selective in the products you offer are more likely to stick with you. In fact, whatever you can do to increase customer loyalty lowers the cost of losing customers, particularly new ones. Every year, the average American company loses 23-30% of its customers because of low customer loyalty. On the flip side, it’s been found that profits rise from 25-95% just by increasing your customer retention by as low as 5%.
Create store advocates
It’s no secret that reputation means everything. With the power of reviews and social media, your targeted prospective customers can easily and quickly see where you rank among the competition. So, actively creating advocates for your store and brand is a wise business strategy. You can do this by placing a strong focus on a positive customer experience and offering great value through tactics like cross-selling and upselling. Do this well, and you’ll find people will naturally advocate for you through things like five-star reviews.
What’s the best strategy or solution for your store?
Choosing the best strategy or solution for your online store is important, so take the time you need to figure it out. If you’re looking to increase your AOV and overall profitability, both cross-sell and upsell strategies are great, especially when used together. But, be sure to keep in mind how they could impact your business:
- Upselling usually promotes upgrading to a higher margin item, and
- Cross-selling doesn’t necessarily increase your margin but does increase an AOV with a higher number of items.
Your business model is a good indicator of whether cross-selling vs. upselling is more valuable to you. If you have high fixed costs, like shipping, maximizing AOV will spread that cost out and minimize its effect on each order. Alternatively, some stores like to prioritize upsells if it fits better with the particular products they carry. For example, a store selling relatively high-priced laptops might view shipping costs as minimal in comparison to laptop prices. So, they might see more impact from a customer choosing a higher-end item to upsell than from an additional small complementary cross-sell purchase.
Think critically about your shoppers and why they buy from you
Whether you should implement cross-selling, upselling, or both in your store really depends on your customers – you need to know them well. Be sure that you understand what products your customers are buying and what these choices indicate about who they are and what they need. As well, you should know their demographics and the shopping patterns of other people who fall into similar demographic categories. You might even pick up on patterns like a certain pair of products frequently bought together, which can help inform your strategy.
Assess your inventory and plan ahead
Take a look at your products and decide what you’ll offer customers going forward. Choose more expensive items to upsell and complementary products to cross-sell.
It’s usually easier to get people to buy an improved version of something they’re already looking to purchase, just like in the earlier sneaker example. Where demographics can play a role here is knowing the age bracket of your target market – for example, if they’re teenagers, they may not have the disposable income to opt for an upsell product. Likewise, you might not even have a more expensive upsell option for some products. In both of these scenarios, a cross-sell option works well, like with the running socks in the example above.
Companies successfully using cross-sells and upsells in their business model
Many companies are using cross-selling and upselling successfully in their business model every day. Some examples include:
Flourist, a Shopify store that sells flour and other baking items uses cross-selling on their product pages to promote related products consumers might be interested in. Because these are specialty products, they do not include an “add to cart” button underneath the images, but instead, require visitors to click on the item to learn more.
Lush, which creates and sells handmade cosmetics like soap, body wash, and shampoo, uses cross-selling to promote their most popular products with stellar reviews that trend on their website. They present these by stating they’re bestsellers and showing customer reviews.
Allbirds, a clothing and shoe store on Shopify promotes related products on their pages with a section called “Frequently Viewed Together.” This encourages customers to view other products on your website, which keeps them browsing for longer and ultimately helps them find their favorite option from your store.
Amazon. If you’ve shopped at Amazon, chances are you’ll have seen recommended, complementary items come up as suggestions for you each time you add something to your cart, saying things like “Discover additional items” along with product links. Amazon also does upselling through Amazon Prime, which gives paid subscribers various perks.
How to get started with cross-selling or upselling to your customers
Cross-selling and upselling are excellent ways to entice your customers to buy more, which boosts your revenue. To get started, you’ll need an app designed for cross-selling and upselling functionality. Cross Sell is a great option for Shopify stores because it gives you all you need to create cross-sell and upsell campaigns that convert to sales, including the ability to customize individual Shopify product recommendations. What’s also great is that the Cross Sell process is straightforward without any complex algorithms, you can try the tool out for free, and the Pro plan is very affordable compared to others on the market.
Starting a successful cross selling campaign
To launch a successful cross selling campaign, you need to know which of your products and services complement one another. Ask yourself who your target market is and what these customers usually pick as add-ons to their main purchase, what items they purchase at the same time, and what products have done well in past cross selling campaigns (if you’ve done them before). You might gather this information from customer communications, purchase and browsing history, and if repeat returns or cancellations have been made.
With the earlier sneaker example, your customers might want running socks, shoelaces, or even exercise clothing and equipment. All of these cross sell items would complement their original purchase of the shoes because they’re essentials for a full workout experience.
When you understand who you’re targeting your campaign to and what products you’re going to cross sell, it’s time to create a strategy for offering the promotions. With Cross Sell, for example, you can display up to 15 products on your shoppers’ product or basket/cart pages.
Creating an effective upsell strategy
When it comes to upselling effectively, consider these tips:
- Always upsell products from the same category as the original product. With the sneaker example, you don’t want to suggest a pair of brown loafers if your customer is shopping for running shoes.
- Provide enough screen space for the promotion and show testimonials for the upsell product.
- Choose your best seller or most reviewed products, as long as they make sense to pair with the original purchase item.
- Offer your customers context and reasons why they should choose the upsell item over something else.
- Remember that too many choices can overwhelm many people, so don’t offer too many.
Why use cross sell and upsell strategies in your marketing plan
Cross sell and upsell strategies in your marketing plan will help you to increase your AOV, profits and ROI, to grow your business beyond your current customer base – offering better or complementary products often increases satisfaction and prompts repeat business. You’ll also strengthen customer loyalty with relevant offers, since upselling puts all of your customers’ options on the table so that they can make an informed purchase decision. If your customers feel that you’re looking out for them and their needs by being selective in the products you offer, they are more likely to stick with you.
Cross selling and upselling also gives your customers flexibility and convenience. When you offer relevant options and add-ons, customers have more reason to trust you and buy again, since they get the flexibility of other useful product options and the convenience of sticking with your store. Plus, these strategies are great ways to create store advocates. Through reviews and social media, your targeted prospective customers can easily and quickly see where you rank among the competition. So, actively creating advocates for your store and brand is a wise business strategy. Do so by focusing on a positive customer experience and offering value through cross selling and upselling.
Cross selling and upselling are beneficial marketing strategies for Shopify stores, as they can be very effective at getting customers to buy more and enticing them to return again, which boosts your store’s bottom line. To start, you’ll need a tool like Cross Sell, which creates cross sell and upsell campaigns for you and lets you customize individual Shopify product recommendations or use the tool’s automations. The Cross Sell process is user-friendly without any complex algorithms, and the tool is free to try.