As an e-commerce store owner, you know how challenging it can be to generate revenue consistently. But by mastering a few upselling and cross-selling techniques, you can significantly increase your average order value and boost your overall revenue. In this article, we'll explore how upselling and cross-selling works, and how you can use both to increase sales.
Understanding Upselling and Cross-Selling
Upselling and cross-selling are two powerful strategies that retailers can use to encourage customers to spend more money. Upselling involves offering customers a more expensive or premium version of a product that they're already interested in buying. For example, if a customer is looking to buy a laptop with a particular configuration, you could suggest a higher-end model with better specifications.
Cross-selling involves offering complementary products or add-ons that go well with what the customer is buying. For example, if a customer is buying a camera, you could suggest a camera case, an extra lens, or a tripod.
Both techniques can be highly effective in driving sales and increasing revenue. Forrester research analyst Sucharita Mulpuru estimates that an average of 10-30% of ecommerce revenues are driven by product recommendations such as cross-sells and upsells. According to Hubspot’s 2022 Sales Strategy Report, almost half (42%) of companies see 11-30% of their revenue coming from upselling or cross-selling.
Getting To Know Your Customers
Before you can start using upselling and cross-selling techniques in your business, you need to understand your customers' needs, preferences and behaviors. This information can help you tailor your offers to your customers' specific interests, delivering value for them and increasing the chances of them making a purchase. Showing that you understand their “why” and can offer solutions that meet their needs will help you build trust and loyalty among your customers.
One way to collect customer data is by using a customer relationship management (CRM) system. A CRM system can help you track customer interactions with your store, including their purchase history, browsing behavior, and so on. You can also use analytics tools like Incendium to understand customer behavior and preferences, such as the products they're interested in and the pages they spend the most time on.
8 Upselling Techniques To Boost Revenue
There are lots of upselling techniques that you can use to increase your average order value. Let’s look at some of the most effective:
1. Product Bundling
Bundle related products together and offer them at a slightly discounted price than if the products were purchased separately. For instance, you could offer a laptop, a laptop case and a wireless mouse at a discounted price. The customer feels like they are getting great value, and you close the sale.
2. Limited Time Offers
Create a sense of urgency by offering limited-time deals that expire after a specific period. This technique can encourage customers to take action quickly, increasing the chances of them making a purchase - they’re also less likely to spend time shopping around, so you won’t lose out to a competitor.
3. Volume Discounts
Offer discounts to customers who buy products in bulk. This technique can encourage customers to spend more money on your store.
4. Upsell Based On Customer Preferences
Analyze your customer's purchase history and recommend products that align with their preferences. For example, if a customer frequently buys organic skincare products, you could recommend an alternative, more premium product from another organic brand.
5. Provide Upsell Options During The Checkout Process
When customers are already in the buying mindset, upselling during the checkout process can be highly effective. For example, offer an upgrade to a premium version of a product or a complementary product at a discounted price.
6. Incentivize Customer Purchases
Offering incentives can make customers more likely to purchase an upsell product. For example, you could offer a discount on an additional product if the customer spends over a certain amount, or provide a loyalty discount to customers who frequently purchase from your store.
7. Suggest Upgrades For Short Lifecycle Products
Products with shorter lifecycles provide great upsell opportunities. For example, if a customer is buying a pack of regular batteries, you could recommend that they purchase more powerful, long life batteries instead.
8. Offer Finance Options
If you sell high-ticket items, offering financing options can make it easier for customers to make larger purchases. For example, offering a monthly payment plan for a more expensive product could encourage customers to make a purchase that they might not have been able to afford otherwise.
Now that you’ve mastered the principles of upselling, what can cross-selling do for your business?
8 Cross-Selling Techniques To Increase Sales
Remember, cross-selling is all about products that complement the original product your customer is there to buy. These eight cross-selling tactics will have you making the most of every sale.
1. Product Recommendations
Use customer data to suggest products that are similar to what the customer is already buying. For instance, if a customer is buying a laptop, you could suggest a printer or an external hard drive.
2. Complementary Products
Offer complementary products that go well with the products the customer is already buying. For instance, if a customer is buying a camera, you could suggest a camera bag or a tripod.
Offer add-ons or upgrades to the products the customer is already buying. For instance, if a customer is buying a laptop, you could suggest upgrading the RAM or the hard drive.
4. Personalized product recommendations
Use customer data and behavior to offer personalized product recommendations on your website. For example, if a customer is browsing a specific category, offer complementary products or products that other customers with similar browsing history have purchased.
5. Optimized product descriptions
When creating product descriptions, include suggestions of complementary products that customers might be interested in. For example, if you sell kitchen appliances, point the customer towards related products like cookware, utensils, or recipe books.
6. Free samples or trials of complementary products
Offering free samples or trials of complementary products can help customers discover new products they might be interested in purchasing. For example, if you sell skincare products, offer a free sample of a complementary product with a purchase.
7. Email marketing to suggest complementary products
Send personalized emails to customers with product recommendations based on their purchase history or browsing behavior. For example, if a customer has purchased a dress, send them an email with suggested accessories that complement the dress.
8. Retargeting to highlight complementary products
Use retargeting ads to suggest complementary products to customers who have already visited your website or added items to their cart. For example, if a customer has added a camera to their cart, retarget them with an ad for camera accessories or lenses.
Implementing Upselling and Cross-Selling
Now that we have explored various upselling and cross-selling techniques, it's time to implement them into your store's checkout process. The goal is to make these techniques seamless and non-intrusive, so they don't interrupt the customer's shopping experience. Don't be too aggressive - customers don't like feeling pressured to buy something they don't want. Be subtle in your approach, and only offer relevant products so that you don’t sabotage the trust you’ve built with your customer.
Here are four ways you can start implementing the strategies that you’ve learned:
1. Use Product Recommendation Plugins
When presenting upsell or cross-sell products, make sure they are relevant to the customer's current purchase. If you are using something like shopify for your store, you can search for automated product recommendations plugins. There are plenty of them and they are normally pretty cheap, especially given the potential revenue they can bring.
2. Place Upsell And Cross-Sell Promotions at the Right Time
With upsell and cross-sell promotions, timing is everything. If you present the offer too early, the customer may feel overwhelmed and exit the checkout process. On the other hand, if you present the offer too late, the customer may have already completed the purchase and the offer will be irrelevant. A good time to present the offer is once the customer has added an item to their cart, or during the checkout process.
3. Keep It Simple
Your upsell and cross-sell promotions should be simple and easy to understand. Use clear language and visuals to explain the benefits of the offer. Customers should be able to make an informed decision quickly. Don’t overwhelm them with too many upsells: the conversion will end up being low or you may put them off the sale entirely.
4. A/B Test Different Promotions
Not all upsell and cross-sell promotions work the same for all customers, so it’s important to A/B test different promotions to see which ones work best. You can test different offer types, placement, and timing to determine what resonates with your customers. Learn more about A/B testing in our conversion rate optimization guide for ecommerce websites.
Measuring the success of your upselling and cross-selling strategies is essential to optimize and improve them. Here are three metrics and tools that can help you track and analyze the success of these strategies:
Average Order Value (AOV)
AOV is the average amount spent by a customer per transaction. By tracking AOV, you can see how effective your upselling and cross-selling strategies are in increasing the customer's spending.
Conversion rate measures the percentage of visitors who complete a purchase. By tracking conversion rate, you can see if your upselling and cross-selling strategies are negatively impacting the conversion rate. If that's the case, it may be time to re-evaluate your strategy. Learn how to calculate your website’s conversion rate in our ultimate conversion rate optimization (CRO) guide for ecommerce websites.
Solutions like Incendium can provide detailed insights into customer behavior and can help you track the success of your upselling and cross-selling strategies. Specifically regarding funnels, you can see where customers drop off during the checkout process and make changes accordingly. Tracking funnel completions before and after implementing changes is essential to measure success and also make sure you haven’t caused any problems!
Upselling and cross-selling are powerful techniques that can help you increase your revenue and improve the customer's shopping experience. By understanding your customer's needs, you can offer relevant products at the right time, increasing the chances of making the sale. Implementing these techniques requires some careful planning and execution, but the results will be worth it. By measuring the success of your upselling and cross-selling strategies, you can optimize and improve them, driving long-term success for your e-commerce store.