Tales as old as time, true as it can be.
Suggesting products is one of the best marketing and sales techniques. It’s why stores have assistants that follow customers every step of their way. It is why brands present many types of products on the same shelf side by side. And it is why retailers love to show you how a great pair of jeans goes well with that polka dot shirt by displaying them on the same mannequin.
Suggestive selling is when you upscale products or services to the customers. The purpose of this method is to increase the value of sales, which drives revenue for the brand by boosting average order value (AOV) or customer lifetime value (CLV). The probability of selling to existing customers is 60-70%, while the probability of selling to a new prospect is 5-20%. First-time buyers are 27% likely to return, but after their second or third purchase, this grows to 54%
The familiar modern version of suggestion selling is upselling and cross-selling - the topic that we explore today.
In this article, we’ll first dive into the fundamentals of upsells and cross-sells - what they are, and why they are important. Then, we’ll discuss how to execute these selling techniques effectively with some examples from real brands. Finally, we’ll go over important reminders for upsells and cross-sells before closing the discussion.
Now let’s get into it!
A. What is Upselling?
Upselling is a sales technique to persuade customers to buy a more expensive, upgraded, or premium version of the chosen collection item, or related add-ons, to make a larger sale.
For example, the customer has added a pair of heels from last year’s collection to their cart. The upsell is to show them similar (in terms of style, color, material, etc.) but more expensive heels from the most recent collection.
B. Why Upselling is important
Upselling techniques help retailers build deeper relationships with customers. If it focuses on helping your customers ‘win’ by suggesting premiums, upgrades, or add-ons that will eventually deliver more value and make them feel like they got the better deal, it will turn out to be a customer relations tactic that also generates additional revenue.
It’s essential to note that it’s easier to upsell to existing customers than to acquire new ones. Lead generation is an expensive practice. It is much easier and cheaper to optimize the sale of a customer who already trusts you and has bought something from you in the past or is about to make a purchase now than to sell to a new prospect who has never heard of your brand.
As mentioned above, you have a 60-70% chance of selling to an existing customer and only a 5-20% chance of selling to a stranger. It’s an easy win for a lot of eCommerce businesses on a mission to accelerate their growth and improve the bottom line.
Fundamentally, upselling leads to increased Customer Lifetime Value (CLV). Customer Lifetime Value is the net profit contribution a customer makes to your company over time. You can split your customers into three main categories: not profitable, profitable, and very profitable. Higher CLV means each customer generates more revenue for your business without you having to invest anything extra, which also means your company has more money to spend on acquiring new customers.
Upselling is one of the most effective ways to turn shoppers into very profitable customers and keep them coming back. By creating an easy way to make life straightforward for customers, you are ensuring that they will return in the future if they need more of what you are selling. Be sure to offer great customer service along with your upselling efforts to guarantee happy customers no matter what happens. In short, they raise overall customer satisfaction.
C. When to upsell
First, make sure they’re happy with the service and experience you’ve delivered to them. Never sell to an angry, upset, or disappointed customer. Look out for such signs and try to resolve them quickly.
To make the upsell relevant, focus your pitch on how the customer wins instead of simply showing them something more expensive. When you offer an upsell, make sure it satisfies the customer's needs. For example, if a customer is looking for a mask that helps problematic skin, upselling with a mask for very dry skin just won’t work. You can compare the benefits of two items to highlight the premium version.
The moment an interested buyer logs in to your website, you have complete control over their shopping experience. Powerful as it sounds, it also bears a heavy responsibility: to create an enjoyable journey. Don’t rush to upsell the buyers, but wait and see. There are three moments that brands can make an upsell: before purchase, during purchase, and post-purchase.
Pre-purchase upsells can happen by displaying recommendations at the bottom of the product, Shopify category page or in the sidebar (sometimes both). They work great for free gifts or small purchases where the risk is low and it’s fine to not have as much information about the product.
However, for some customers, this is a pure salesy turnoff because they don’t have the option to do “window shopping”, or search for the product that they want. A solution to this issue is to ask some questions about the shopper’s intent and then personalize the recommendations based on their answers.
To upsell during a purchase, stores can display recommendations using pop-ups or a suggestive section in the shopping cart, on the checkout page, or in the abandoned cart emails.
“Mini carts” are also a great location to feature products for upselling. A mini cart provides an easy-to-access view of cart contents. Like popup forms and other notifications, a mini cart doesn’t require the visitor to navigate to another page, such as your dedicated cart or checkout page. This makes it a great place to feature additional products for upselling.
Yet, it’s worth keeping in mind that upsells before checkout is risky at best. The number one reason that customers abandon shopping carts is because of added or increased prices, so offering a price surge at such a sensitive time may not be wise.
Post-purchase upsells happen after a customer has several reasons:
- No impact on the original purchase. Post-purchase upsells let shoppers add another item to their order without risking the conversion from their initial order. There is no disruption to the original sales funnel. By this point, customers trust you enough to make the purchase.
- Higher AOV. Post-transaction upsells maximize the AOV. This is higher than other upsell techniques because it’s a form of impulse purchase (similar to buying a candy bar at a grocery store’s point of purchase area), which is highly convenient to the customer.
- Increased conversion rate. One-click post-purchase upsells convert higher because customers don’t have to enter their payment information again (which is the best possible scenario).
Besides the thank-you page or confirmation email, you can opt for personalized follow-up emails or text (this is the era of SMS) to entice customers to come back for more. They are much more on-the-go because customers can open them up to revisit the content anytime.
D. How to upsell
Upselling your most popular products and deals is a simple and effective way to boost your average transaction value and increase the stability of the revenue from your online store. Beyond the number of times a product is sold, also look at page visits and clicks to determine which products are most popular in your store.
Nuts.com upsell their bestsellers during the purchase process. This may be a risky move, but who can say no to those 3 beautiful and tasty nuts?
You know those “customize your product” features you get on some sites? Well, that’s a series of upsells, because every customization you add increases the price.
Daily offers are a great way to upsell and grab the attention of returning visitors. They are also an effective way of upselling featured products because they increase the sense of urgency and add a sense of exclusivity when the product is “limited” or available “for one day only”.
When creating daily offers, it’s worth reviewing your sales data to ensure you select the most profitable items and choose the best time to feature them as the “product of the day”. This method is widely loved amongst fast fashion and retail brands.
Extended Service Period
Sometimes, instead of a physical product, you can upsell by offering better value for a longer contract. And you can also offer better deals for early renewals. This works well for SaaS products.
Since you define the criteria or rules for which products are displayed, upselling this way can be effective for online stores that sell many similar products. It’s also useful for eCommerce sites that are just launching and customer browsing history isn’t available yet.
It can be profitable when new arrivals are newsworthy. A lot of this depends on your target audience and the nature of your products. For instance, while promoting new arrivals is vital for fashion sites, promoting best-sellers or seasonal products may be more beneficial for DIY stores.
Tobi always has tons of collection items in new arrivals for recommendations to dazzle their shoppers.
When you don’t have a browsing history for a particular visitor, you can also use the browsing history of other visitors to feature products for upselling techniques. Promoting similar products that were viewed by other customers is one of the most effective types of product recommendations.
Another favorite upsell, both online and offline, is the “protect your product” upsell, which asks you to extend your warranty so you effectively guard your product against something going wrong. For example, if you buy a phone, you can often get a screen replacement warranty. Many retailers even automatically activate the shipping warranty for an extra $10 (which we find unethical).
Products with ratings and reviews
Customer reviews play an important role in a product’s popularity. If you find, based on your product range, that customer reviews are significant, this can be a great way to determine which products to upsell.
Similar to products that other customers have viewed, featuring products with reviews can increase buyer confidence. Ultimately, customer reviews can convince visitors to purchase a more expensive product that is recommended by other customers or receives higher ratings.
One thing you should keep in mind: categorize your products by season to take advantage of this approach. You can make this approach even more effective by offering a promotion on seasonal products.
Another great way of upselling based on subjective criteria is to promote similar products. This solution, typically used on product pages, doesn’t require any special personalization, you only need to recommend similar items. They can be similar in terms of style, texture, material, product details, and many more - based on your attention to interpreting the product options.
You can get creative with the labeling for “similar products” modules to make them more eye-catching and unique, such as “If you like [product name], we recommend you try”
Anne Klein politely suggests their customers by showing them something they “may also like”.
A. What is Cross-selling?
Cross-selling techniques aim to convince the customer to buy more collection items with the original one, so it’s more like a whole other purchase (“Would you like fries with that?”).
For example, the customer has added a pair of shoes to their shopping basket. You could display related product recommendations on the checkout page (e.g., socks, insoles, or shoelaces) to prompt them to buy additional items that increase the value of the original purchase.
Showing this nice pattern shirt right next to a matching pair of leather oxfords will likely attract buyers who will purchase both.
Cross-selling identifies products that satisfy additional or complementary needs that are unfulfilled by the original item. For example, a comb could be cross-sold to a customer purchasing a hairdryer. Oftentimes, cross-selling points users to products they would have purchased anyway. By showing them at the right time, a store ensures they make the sale.
A golden rule of suggestive selling is: The more questions you ask at the front of the sale about the customer's wants, interests, needs, concerns, and desires, the better chance you will sell more to them.
B. Why Cross-selling is important
The main benefits of cross-selling techniques include increased sales revenue, improved customer satisfaction and in B2B businesses, increased Customer Lifetime Value (CLV) through deeper integration in a customer's business.
Most cross-sales involve some kind of discount, which means your firm will make less on the product than if sold alone. However, you may not have gotten the sale at all without cross-selling. So instead of missing a sale, you simply make less on it but still increase overall profitability.
At the same time, the customer wins because they are likely paying less for a product. The company profit/customer discount is probably one of the most significant and noticeable advantages of cross-selling.
Cross-selling looks different across business sectors, but one thing all cross sales should have in common is that they enhance value for the customer. The biggest risk with cross-selling is that an existing customer won’t find added value to the additional purchase, which can fracture a business relationship. Cross-selling opportunities should help a customer solve a problem. That builds loyalty.
One of the elusive advantages of cross-selling is that it can increase leads. If you have loyal customers who are cared for, they will be the first to recommend your services to someone else. So not only are you getting leads, but you’re getting the best kind of leads - referrals.
Always look for opportunities to cross-sell, but don’t force them. Most of them will come up naturally. If you listen to your customers and have true expertise in your offerings, you should have no trouble honing in on the cross-sell.
C. How to cross-sell
In eCommerce, cross-selling is often utilized on product pages, during the checkout process, and in lifecycle campaigns. It is a highly-effective tactic for generating repeat purchases, demonstrating the breadth of a catalog to customers. Cross-selling techniques can alert users to products they didn't previously know you offered, further earning their confidence as the best retailer to satisfy a particular need.
Choose your cross-buyers carefully
Predictive modeling techniques now allow firms to identify which of their customers may be interested in cross-buying which of their specific type of products. While inputs for these models will vary based on the nature of the customers and of the products sold, they may focus on goods or services that are complementary to those already purchased by the client. Customers who purchase cloud customer relationship management (CRM) services, for instance, may also be interested in other types of enterprise cloud services such as security or productivity software.
The smartest sales teams, however, may also look at historical transaction data to determine whether an existing customer is a good candidate for a profitable cross-sale. If a customer’s characteristics match the profile of an unprofitable cross-buyer, firms may consider the customer as an upselling opportunity instead, focusing on selling upgraded substitutes to previous goods or services purchased rather than on expanding to entirely new types of products or services to minimize the additional service and other costs associated with such expansions. Or, if no profitable upselling option is available, they may designate these customers as no-sells.
Sometimes customers cross-buy on their own, rather than in response to any active promotional effort. When the most costly customers attempt to make cross-purchases, however, businesses may need to consider taking active steps to limit their relationships with them.
How do you know whether your client would represent a likely loss for your firm as a cross-buyer? Usually, customers with histories of product returns, early terminations of contracts, or overuse of customer service channels, for instance, could raise red flags. To be more specific, you can identify them with the following signs:
- They overuse customer service in all channels, whether it’s online, over the phone, or face to face.
- They spend money, and then take it back, often through returns, or early terminations of agreements or contracts.
- They only buy during sales promotions, and usually at steep discounts.
- They never increase total spending—just spread the same amount of money among a greater number of smaller cross-purchases.
Use welcoming phases
Instead of throwing random collection items at customers, try phrases like:
- Have you seen the new _____ we just got in?
- When was the last time you tried on sandals?
- Feel this fabric, isn't it so soft?
- Can I get your opinion on this, we just got it in?
In all of these cases, you are suggesting other merchandise to the customer by using suggestive phrases.
Supplementary products / Products frequently bought together
Recommending supplementary products is a great way to cross-sell when you don’t have a customer browsing history by using the purchase history of other customers as the criteria for which type of products you cross-sell.
You can implement this across several Shopify categories or Shopify sub-collections by offering functionally-related items. When you look at your product range, you’ll see that it’s often easy to implement this solution.
This approach to cross-selling can be more effective if you group supplementary products in a package deal with a special offer.
Banana Republic executes this cross-selling tactic by applying beautiful visual aids to the “Wear it with” option. This method is particularly relevant to fashion and lifestyle products, where customers are primarily driven by visual cues.
Use videos and high-quality product images to demonstrate how the product looks and functions in real life and prompt the customer to buy the whole package instead of just purchasing a single item.
Cross-selling related types of products is just like cross-selling supplementary products. Related products may often be used at the same time as the product being viewed, but they don’t have to be used with the actual product.
FLOWER suggests you check out some related products as a cross-selling technique, including their lip color, lip mask and cheek color if you’re already eyeing up their petal eyeshadow.
Promote what customer also bought/viewed
More broadly than using products that were purchased together, you can cross-sell any types of products that other customers purchased, even if they weren’t in the same order.
Oftentimes, customers have similar buying habits or tastes, and this is a great way to take advantage of shared interests. This cross-selling technique is especially effective on checkout pages.
If you’re interested in a bright red cosy throw, IKEA suggests some similar-colored and matching cushion covers for you right underneath based on what others shoppers also viewed.
Promote additional items for (almost) free
Promoting further products for free or at a hugely discounted price is a great way to increase your sales and customer satisfaction.
3 reminders for Upselling & Cross-selling
Are upselling techniques ethical?
Yes, they are. It should never be your intent to deceive your customer or to sell a product that doesn’t do what it claims to do. If you are satisfied that you are being honest and transparent with your customers and that your products and services are as good as they claim to be, there is no issue with offering these items as upsells.
An upsell should always be better than or outperform the original item or service that was offered. Otherwise, there will be no incentive for your customer to choose the upgraded option and they will remain with their first choice.
If your customer can afford the cost and wants the best solution, then they will choose the upsold items. If they can’t afford them or truly just want the cheapest option, they won’t go for it. It simply isn’t a matter of ethics.
When affordability isn’t a problem, the main objection to being faced with upselling is that it isn’t the cheapest option. However, given the choice, people will normally pick the more reliable, better quality, or higher specification option when it is available.
In short, upselling works because people want the best.
When do upsell and cross-sell work?
When cross-selling works
When cross-selling fails
When upselling works
When upselling fails
When can Upsell & Cross-sell hurt your sales?
With various advantages in its field, upsells don’t come without challenges:
- Irrelevance. If you don’t personalize your promotion, you add a point of friction that can discourage them from making a return purchase.
- Upsell fatigue. Hitting your customers over the head, again and again, page after page, is only going to damage customer perception of your brand and may even hurt overall conversions.
- Choice paralysis. Too many choices can be paralyzing when suggestion selling can create a distraction from buying the original product.
Professor Iyengar and her research assistants conducted a study on the effect of choices in the California Gourmet market. They set up booths of Wilkin and Sons Jams - one offered an assortment of 24 jams while the other had on display 6 jam varieties. 60% of the visitors stopped by the larger booth while only 40% went to the one with a lower number of choices.
But 30% of visitors that sampled at the small booth made a purchase while only 3% of the 60% visitors to the larger booth went on to make a purchase.
What works with both Upsell and Cross-sell
Suggestion selling can come in various shapes and sizes, and here are some of the most flexible and efficient methods to apply for both upselling and cross-selling:
By providing a package discount, you can motivate your customers to add more valuable items to their cart.
Provide free shipping
High shipping costs are the number one reason for cart abandonment. For this reason, free shipping is a powerful incentive for buyers to complete checkout. You can also use free shipping above a predefined amount to encourage customers to purchase a more expensive product.
While upselling your gift wrapping services may not provide a huge increase in revenue, it can increase customer satisfaction and help boost your average transaction value.
Personalization via customer history
When you have a customer browsing history to determine which products to feature, you can create even more personalized and effective offers to upsell your customers. For instance, you can highlight recently viewed products on your homepage, Shopify category pages, Shopify sub-collections and product pages. By using your visitors’ unique browsing history, you can offer them the most relevant items.
Bundling is a widely-known descendant of upselling and cross-selling. The logic is simple: You bundle together the main product and other auxiliary products for a lower price than what the single product is sold for. Bundling is also often used along with discounts to increase the perceived value of the offering.
There are 2 types of bundles: Pure bundles and mixed bundles. Pure bundling is when products are made available only in bundles and cannot be bought individually. Mixed bundling is when both options (individual buy and bundle buy) are made available.
Here’s a way you can use bundling: Specify a minimum order amount to qualify for free shipping. Customers who are looking to buy only one item are likely to switch to the bundle to raise order value and qualify for free shipping.
Frequently, bundling brings together related products that are of relevance to a customer. Buying them individually involves more decision making and more steps. Whereas through bundling, in one a customer can buy multiple products together.
Check mobile performance
Always review how your upsells and cross-sells look on mobile and tablets. While more and more purchases are made via smaller screens now, we should keep in mind that there is less space on the screen, so you must be picky when choosing items for display.
For stores looking to increase revenues, upselling and cross-selling are straightforward to implement and efficient to record.
Although your goal should be to get more sales, make sure that your customers are having what they need to solve problems and reach their goals. Pay close attention to your target audience and how they are engaging with your product or service by regularly checking analytics tools like Boost Analytics. Use your data-driven insights to serve up personalized suggestion selling options designed to boost the profit margin.
For the latest tips of upselling and cross-selling, you wouldn't want to miss our Best Upsell & Cross-sell tips to drive sales for holiday 2020.