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Why Upselling And Cross-Selling Can Make Or Break Your Business

By Lauren Lietzow 27 July, 2022, 6 mins read

35% of Amazon’s revenue comes from upsells. Here’s how you can do the same!

The ecommerce industry is constantly evolving, and after a tough few years of supply chain issues and increasing competition (not to mention plague, flood, and fire), trying to maintain consistent, long-term revenue growth in your business is becoming trickier by the minute. 

That’s not to say it can’t be done, there are, of course, many ways to build a stable, growing ecommerce business. 

One (thought-lacking) option many ecommerce businesses take is to simply load more money and effort into driving higher traffic to their businesses by throwing ad spend at the wall and seeing what sticks. 

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Marketing Strategists discussing upselling and cross-selling.

Another, and far more efficient (not to mention cost-effective) option is to use upselling and cross-selling techniques. Using these techniques not only improves your average order value, but you also get to build your relationship with existing customers which can create long-term brand loyalty and, consequently, long-term revenue growth. 

In this value-packed article, we’ll take you through the reasons why cross-selling and upselling are now imperative parts of digital sales, and show you how you can use them to take your business to the next level. 

What is Upselling? 

Ecommerce upselling is a sales technique that is used to encourage customers to buy a product of greater value than what they were originally planning. With upselling, you’re not offering products to complement your customer’s initial purchase – instead, you’re suggesting an upgraded or superior version of the product they were already intending to purchase. 

Upselling Example

Let’s say your business is in the fashion industry, specifically, in footwear. A customer has added a pair of faux leather boots to their shopping cart. In order to increase the average order value of the sale, your website suggests three other shoe options the customer may be interested in. These three options are all made of superior materials, in this case, genuine leather, so the price point for these is higher. So, you have taken the initial central item the customer is choosing to buy and are upselling them on a superior quality option instead. 

What is Cross-selling? 

Ecommerce cross-selling is a sales technique that can be used to encourage customers to spend more by purchasing a product that’s related to what they’re buying already. Rather than encouraging a customer to buy a more expensive product, you instead offer an additional product that will add value to their purchase. 

Cross-selling Example

Building on the previous example of fashion footwear. A customer has now added a pair of your genuine leather boots to their shopping cart. In order to increase the average order value of the sale, your website suggests the customer should add leather shoe polish to their shopping cart so that their boots stay in mint condition for longer. 

In this case, cross-selling is not enhancing the boots themselves, rather, it is building around the original purchase with a product that adds value and longevity to the shoes. 

The value of upselling and cross-selling for your business

Incorporating upselling and cross-selling into your product strategy is a great way to maximise sales from the get-go. One of the biggest costs you have as a business is marketing, but if you’re using upselling and cross-selling techniques then you’re saving a lot of these costs and making the most of every customer. 

In fact, studies show that the probability of selling to a new prospective customer is 5-20%, while the probability of selling to an existing customer is 60-70%. Why is this? Because you’ve already established a relationship with that customer. They’re invested in your products because they’ve already chosen to spend their hard-earned money with you. 

Take, for example, Amazon. A major ecommerce conglomerate that uses upselling and cross-selling techniques incredibly effectively. Amazon has stated that up to 35% of its enormous revenue comes from carefully executed upselling and cross-selling

But why are upselling and cross-selling important to customers? Simple: customers buy products and services to solve a problem. They are aware of the problem, but might not be aware of the best solution to the problem. So, by using upselling and cross-selling techniques effectively, you can help solve the problem for your customer. 

Effectively upselling and cross-selling to customers helps to build brand loyalty and advocacy with customers. If your upselling and cross-selling strategies are carefully tailored to each customer, then you’re not only adding value to your business, you’re also helping a customer choose the best option to solve their problem. When done correctly, these AOV-increasing techniques spark an extra dose of customer satisfaction and trust. 

They’ll feel that you’re taking care of them, and that you’re taking their personal circumstances into consideration when offering those add-on items at (or after) checkout.

Words into action: upselling and cross-selling best practices

So, we know why these practices are important – the proof is in the pudding. But how can we actually implement them to boost our AOV without looking like a used-car salesman trying to throw in the kitchen sink to make an extra buck?

To upsell and cross-sell effectively, you must know your customer. These strategies only work well if you’ve built trust and loyalty with your audience. Attempting to upsell or cross-sell without understanding what your customers want and need will only alienate them from your business and make you come across as – yep, you guessed it – a needy second-hand car salesman. 

Perception is everything. Read that again.

How you tackle upselling and cross-selling is key. If you frame it as wanting to ensure your customers get the most value for their money, then you have a winner.

But on the flip side, if it feels impersonal and money-grabbing, the customer will feel dissatisfied and taken advantage of. You’ll lose that connection you’ve created. 

So, what are some great upselling and cross-selling examples?

To cross-sell effectively: 

1. Always offer something cheaper than the original product. You’re aiming to build value around the initial item, not convert them to a totally different product! 

2. Keep offers relevant to the product a customer is buying (i.e., trying to cross-sell a pair of sunglasses with a book is probably not going to interest your customers). 

3. Start small. If you don’t have the product range to offer customers just yet, don’t fret! Gift wrapping and free shipping thresholds are a great way to add value and personalisation to each order. 

To upsell effectively: 

1. Promote your most reviewed or most sold product – nothing builds trust quite like promoting products other customers already love. 

2. Give context – why is your upsell option superior to what a customer already has in their cart? 

3. Keep it simple. Curate a few well-targeted options to optimise your chance of a successful sale. If a customer gets overwhelmed with choice, they’ll just skip past your options. 

Marketing Strategists discussing upselling and cross-selling.

Want to learn more? 

Increasing your AOV is just one of the holy trinity of metrics that result in killer sales. And whether you’re working toward a push for EOFY, Black Friday, Christmas, or just want to boost your year-round numbers, it’s important to consider upselling and cross-selling as just one cog in a much more complex machine.

Before you launch a strategy, it’s important to understand what your customers actually want and need – and you can get this through both data and market research. 

Experts in increasing the bottom line, Megaphone has helped thousands of businesses reach more customers and make more sales. To help you develop more effective upselling and cross-selling strategies that will increase your revenue, get in touch.

Let our Digital Strategists work their magic with a FREE marketing audit AND 2022 Digital Strategy worth $1200. Book a chat now

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