Upselling and cross-selling can be best explained in terms of day-to-day examples. For instance, get a brush for 50% off when you buy a certain brand of toothpaste. Sign up for a bank account and get an instant credit card approval. Why buy an ordinary TV while you could get a Smart TV for Rs.5000 more?
The list is endless.
Cross-selling and up-selling are practices used by brands to provide customers with an opportunity to choose from a higher-end variant of their product/service or encourage them to buy complementary products in addition to their purchase.
In both the cases, the motivation is to increase the sales and eventually, revenue. The salient characteristic in both kinds of selling is to understand the consumer’s actual value and then presenting them with products and corresponding features that make the justify the purchase.
What is Cross-selling?
Cross-selling is the action of providing a supplementary product or service to a customer who is already in the process of a purchase. Several businesses practice cross-selling in many different ways.
The scope of cross-selling processes can be extensive. The ultimate goal is to protect and maintain relations with the clientele, while simultaneously increasing monetary profit.
Cross-selling recognizes products that fulfill additional and corresponding needs that were unfulfilled by an existing item in the brand’s portfolio. For example, a set of speakers could be cross-sold to a customer purchasing a LED television. Oftentimes, cross-selling lures buyers to purchase a product which they may not have purchased right away by showing it at the right time.
Cross-selling is pervasive in every type of trade, including banks and insurance agencies. Banks cross-sell simpler banking solutions, while plugging in attractive credit card schemes to newer customers; life insurance companies showcase new car owners with a slew of plans right at the dealership venue.
In ecommerce, cross-selling is often practiced during the checkout process. It is a highly-potent gambit for generating recurring purchases. Cross-selling can greatly help educate and enlighten users about products they were previously unaware of.
Up-selling is the practice of encouraging customers to choose a product that has a higher price (and often better benefits) than the product they are about to purchase. The practice uses comparison points to sell such higher-end products to customers. (Normal keyboards vs backlit keyboards for example).
Presenting potential buyers with bigger and better versions of the same product or service can go the extra mile in addressing pain points that they did not even know existed. Firms that excel at up-selling do so, by helping customers visualize the value they will get by making the higher-priced purchase.
Examples of Cross-selling
Smartphone + Smartphone Insurance
Of late, the prices of the smart phones have towered and this has set the stage for smart phone insurance players. E-com giants like Amazon have started to cross-sell insurance along with smartphones. This has not only resulted in the increase in profits but also rise in customer satisfaction levels since saves them the hassle of running around in the event of a malfunction/theft.
Credit Card + Instant Loans
Banking industry cross-sells instant loans to the existing credit card holders based on their credit scores, thus showcasing the perfect example of cross- selling.
Offering snacks and beverages in the form of a complete meal is the strategy used to instill a “more for less” mindset in the consumer’s mind. Extra fries at McDonald’s, extra cookies at Starbucks and extra dips at Domino’s are just some examples of this practice.
Examples of Up-selling
Spotify is a great example of up-selling. By offering a free listening experience, Spotify encourages more users to use its platform. At regular intervals, it subtly lets the user know about the wonderful features like offline-listening, and high-quality streaming available in their paid variant. More often than not, users eventually convert to a paid subscription as a result. Classic up-selling done right.
Booking a hotel along with preferred amenities is a very personal experience. Booking.com clearly understands the importance of a memorable stay. Once a search is initiated, the initial results are a stream of cheap rates. As they scroll down, users are presented with better options, albeit at an additional cost. Bundled with these packages are value-added services like zero cancellation charges, free vouchers, free modifications to the booking dates, etc. Considering the overall trip expenses, for a traveler this is a rather small price to pay for a complete peace of mind.
At the higher end of the market spectrum, BMW encourages the buyers to design and modify their cars to suit their persona before purchasing. They make the whole experience exclusive for the owner and profitable for the seller.
Cross-selling and Up-selling Best Practices
Smart cross-selling and up-selling calls for smart offers. A customer, who is already spending on a product, should want to exceed the desirable amount and go for a complementary product or a pricier version of the product or service. Here are some best practices followed by brands across the world.
1. Build Relevance
Proximity in the attributes of the regular and higher end product is necessary. Changes to content, design and configuration should ideally not be drastically different so as to stay relevant to the customer and not scare them away with a completely different product. Only genuine changes that would significantly add value product or service need be incorporated in the upgraded version. (Think Echo and Echo Dot). Another major upshot of up-selling is that these superior variants can fix the defects that existed in the original product thus better benefitting the customer.
2. Customer Service is Important
By spending an extra amount, buyers would want to feel a little more valuable in the eyes of a brand. (Amazon Prime is a great example). They would expect to feel privileged as compared to other customers. Better services and value-added benefits from the seller’s end will make them feel more welcome and celebrated. Simply put customers want their extra expenditure to be justified.
3. Be Credible
Credibility of the company will in the first place allow the customer to take the decision of spending extra on the brand. This decision of spending more, is entirely based on the choice of the customer. Solid facts, feature highlights and added benefits should be showcased and articulated effectively to help the brand appear credible and initiate the jump.
Refrain from making the cross and up-selling seem like a necessity to the customers and introducing FOMO. Always remember, it was the primary and the original product that had brought in those customers for the first time. Never say something that makes the original look sub-par in order to push the upgraded variant.
Give Details and simplify
Unnecessary rules, ramblings and guidelines are never appreciated by customers. Educating them about a new or extended product or service should be a simple and informative process. It should not be complex and confusing.
Tips on Practicing Up-sells and Cross-sells
Show variety, but don’t overload
Too many choices generally lead to confusion. If you can’t convince the customer, don’t confuse them. With experience, one learns to foresee if a certain customer is open buying other products from the brand.
Keep up-sells relevant
Showing a MacBook for a user who’s browsing for Windows laptop is a wrong plan of action. Completely different or radically different items can’t be an up-sell tactic. The same applies to products with a different set of features, with radically different prices. In a nutshell, when setting up your up-selling, remember that the products should satiate a customer’s need.
Provide bundled options
Bundled options appeal better to customers than having to buy each item individually. They allow for multiple product sales, discounts and better convenience.
Focus on the benefits rather than price
‘Customers won’t buy a more expensive product’ is a myth. Studies show that product cost, although an important decision-making factor, is still not the only important one. If the product you are up-selling or cross-selling satiates a customer’s needs nicely, it’s very likely that the customer won’t be hesitant to buy it.
Have a Value Proposition
The golden rule is: if you would like your client to choose another variant, ensure you have a value proposition for it. Find the answer to, “Why would the customer spend more money?”
Personalized headlines work better than general ones in marketing materials and websites. For instance, ‘you might be interested’ is better and personal than just saying ‘people also view’.
With over 12 years in the business of customer support and service, ExpertCallers is home to an expert team of executives who have mastered the art of up-selling and cross-selling through phone answering services. We provide quality outsourcing services to brands and businesses, helping them increase sales and profits. Talk to us today to discuss how our services can benefit your brand and expose your customers to a wider product portfolio.