Do you want to boost your revenue?
Of course you do.
That is why Up-Selling and Cross-Selling are crucial no matter whether you run a product or service based business. (Yes, that’s right, up-selling and cross-selling is not just for product based businesses!)
Studies have repeatedly found that companies that have a functional up-sell and cross-sell strategy experience:
- Greater customer life time value
- Increase in the average order value per customer
- Increased marketing leads
- Increased revenue and profits
According to a research analyst, up-selling and cross-selling is responsible for around 10-30% of revenue generated on most e-commerce sites. In fact, Amazon once announced that it makes close to 40% of it’s revenue from cross-selling and up-selling.
Up-Selling Vs. Cross-Selling
So, what are the differences between up-selling and cross-selling?
Up-selling is when the seller (that’s you) encourages the customer to spend more by recommending an alternative product that has added benefits and is more expensive than the current product that they are looking at.
Cross-selling is when you encourage the customer to buy a product that complements their existing purchase. The cross-sell product is usually cheaper than the product your customer is looking to purchase, but doesn’t have to be.
How to Implement it
No matter whether you are running a product or service based industry, there are always ways to up-sell or cross-sell your services. Here are a few ideas to get you started:
1.) Protection Plans: This strategy works best when your customer has purchased a service or product that could come with a potential risk. These include product insurance, warranties, virus checkers, security options, guarantees and more. A good example of a protection plan would be on an expensive camera or plane ticket- offering an insurance or some type of warranty can help ease your customers mind and boost revenue.
2.) Support Subscriptions: This strategy works best when you are selling some type of software or computer program. Offering unlimited or valued tech support in conjunction with your software can help you to increase revenue and customer satisfaction. A good example of this would be allowing your customers access to a call centre or online chat support to help them configure or set up some new software for their home or office.
3.) Product Training: This is another strategy that would work well with a software program but also with an educational or resource based service. You can also use it for complex games, toys and training kits. Product training add ons can also help give your customers a better experience and is a great way to boost revenue.
4.) Discount Bundles: This is one of the most effective strategies as it offers a matching product or service that will enhance the item your customer wishes to purchase. Product bundles are also often sold at a discount in order to raise the perceived value of buying more than one item. Bundles are usually comprised of two or three products.
5.) Social Proof: Another great way to increase the chances of your customers purchasing an add-on product is to offer social proof, for example “people who bought this product also bought…”. Social proof is definitely a popular way to increase sales and revenue as it instantly builds trust.
6.) Freebies: Another great way to increase the average order value per customer is to offer a freebie of some kind that is unlocked when your customer spends a certain amount. The most popular freebie to offer is free shipping so for example- “spend $50 and get free shipping”. You could also experiment with doing this with accessory items such as “spend $100 get a free gift”. If you are running a service based company, perhaps you could experiment with offering a discount for complimentary services.
7.) Re-Bills: Re-bills definitely have a negative connotation in the online world, however offering a discount for long-term subscriptions can definitely increase profits and revenue. This strategy will really depend on your business model but Amazon for example, offers a product as a straight sale but then also offers it as a monthly re-bill for a discounted rate. Giving your consumers options, especially on products they are likely to purchase again, could definitely help to increase sales.
Maximising the Strategy
While up-selling and cross-selling may take some trial and error, here are some fool-proof techniques that will help you to maximise your efforts-
Bundles Vs Individual Products
Studies have found that customers were more likely to purchase a bundle of products when an individual product sale was also offered. One research company that was testing gaming system bundles stated that when individual options were not offered and only the bundle was available, sales decreased by over 20%. This just goes to show that giving your customer options can definitely help boost confidence and increase perceived value of the bundle.
Higher Pricing for Recommended Products
Higher priced options in your recommended products section or in the prime real estate of your website has been shown to help increase the overall customer spend price.
One eCommerce study found that when higher priced items were in plain view or easy to see, sales increased by 4%. While this may not be much, if your customers are spending more and buying bigger ticket items, this means huge revenue and profit gains.
Offer a Bad Option
This may sound strange, but offering your customers an option that is clearly worse than the option they are looking at can help to boost sales and perceived value. This especially applies when you are up-selling a product. Just be careful not to offer too many options as this may prevent your customer from making a decision altogether.
Complimentary Products at Checkout
Placing complimentary products on the checkout page has proven to be the best strategy when it comes to getting customers to purchase more. One study found that cross-sells on the checkout page have the potential to increase sales by 3%.
Up-selling and cross-selling is an easy and seamless way to help increase your company’s revenue and ROI, why not implement a strategy today and see how it can help boost your sales.