Every customer that visits an eCommerce website offers the alluring possibility of increasing the company's bottom line just a little more. However, that is not possible unless the company does everything in its power to entice the customer to spend more money in the store than they might have otherwise. One technique used by companies looking to squeeze every bit of profit that they can from a customer is known as upselling, and it is the technique worth paying a considerable amount of attention to. We will be zeroing in on this technique and the cross-selling process to help you better understand the whole range of tools available to improve your sales.
Defining Upselling and Cross-Selling
Upselling is the practice of encouraging customers to purchase a comparable higher-end product than the one in question. Meanwhile, cross-selling invites customers to buy related or complementary items.
Many people make the mistake of using these terms to mean the same thing because they do offer similar approaches. However, the approach that each method takes is somewhat unique, and they should be distinguished from one another.
Customers are often far more persuadable than they realize, even those who think that they know exactly what they want when they go shopping at an online retailer. The truth is, they can be swayed by some clever upselling on the part of the eCommerce store that they happen to be shopping with. One way that this manifests is when the store uses upselling techniques to convince the customer of the value of a higher-priced item.
Let's take a look at an example of how this may play out:
- A customer searches online hoping to find an office chair that will meet their needs.
- They located an office chair that they believe will be suitable, and it is priced at $65.
- The online retailer deploys the use of upselling by showing a comparison chart of the different attributes of the $65 chair versus a model that costs $100.
- After viewing this information, the customer reconsiders their decision and realizes that they might be better served by the enhanced features of the $100 chair.
- The customer purchases the $100 chair instead of the $65 one.
By using a comparison chart and showing a customer the various attributes of a higher-end chair, the store just increased its total sell to that just by $35, or about 54% more than what the customer was originally going to spend.
Even better than the increased revenue is the fact that the customer will come away from this purchase, having felt that they made a better choice for their needs as well. Thus, they will likely be happier with their purchase than if they had simply based their choice on pure economics. They are a more satisfied customer, and the store was able to increase its sales all through the magic of upselling.
Upselling Captures Low-Hanging Fruit
Here is a surprising statistic that you might not know about: The probability of selling to an existing customer is around 65%, but the probability of selling to a new customer is only about 10-15%.
This means that eCommerce stores have to work much harder to convince and convert new customers to their products than they do to upsell an existing customer. When someone has already demonstrated trust in your products by having made a previous purchase, then it just makes sense to continue trying to sell more and more to that same individual. They clearly like what you are doing already. You can capture them as loyal customers if you are just willing to work on your approach and practice powerful upselling techniques.
Build More Lasting Relationships
Relationships of all kinds require attention and nurture in order to thrive. If you don't tend to your customer relationships, those customers won't come back to you. They will likely drift away into the arms of the competition. Upselling is one way that you can tend to the relationship that you have built with a customer.
Upon initial reflection, some people think of upselling as a sneaky tactic or something that only serves the interest of the company. However, that is not accurate. Successful upselling serves the customer as well because:
- It provides them with a premium product
- It educates them about the array of product offerings that are available to them
- The customer tends to be happier with their ultimate purchase
- It builds a bond between the customer and the company that they have purchased this wonderful product from
Just because upselling also improves a company's bottom line does not mean that they are doing something wrong. It means that they are providing additional value to their customer's life. They are rewarded for having done so by receiving an increase in revenue as a result.
You may or may not realize it, but you have almost certainly seen the tactic of cross-selling in action when you are the customer of an e-Commerce store. If you have shopped online virtually anywhere over the last two decades, then you have experienced what it looks like when a store cross-sells to you. In fact, Shopify reports that Amazon generates a considerable amount of its revenue by using this tactic:
Amazon reportedly attributes as much as 35 percent of its sales to cross-selling through its "customers who bought this item also bought" and "frequently bought together" options on every product page.
Cross-selling is the process of recommending similar or complementary items to a customer based on the items that they are already searching for. If a customer were to search for dog leashes, they might receive recommendations for dog food bowls as well. The two products are complementary to one another. An online retailer can safely assume that someone searching for dog leashes has probably recently adopted a dog or is interested in doing so. If that is the case, then doesn't it make sense that they would also want to purchase a food bowl at the same time? This is what the store will assume. The store may try to cross-sell the customer on the dog bowl.
An Easy Way to Generate More Revenue
Cross-selling is one of the easier ways that a company can increase revenues without expending too many resources to do so. All they are doing is including a little bit of extra code into their website to recommend products that are similar to one another. Instead of the customer floating around from store to store to purchase all of the related items that they need, they can look at your store as a one-stop shop.
Cross-selling encourages customers to purchase related products that they may not have even realized they needed or wanted. The customer tends to have their mind focused on the original product that they came to your store for. It is only when they are presented with additional related offerings that they realize that they may need more items than what they had initially stopped in the store for.
One thing to remember about all of this is the fact that cross-selling needs to be done well to be effective. If the algorithm that generates the recommended products is not working well, it may miss the mark entirely. A failing algorithm may produce suggests that:
- Are at too high of a price point for the customer
- Are not clearly related to the products already in a customer's shopping cart
- Potentially offend the customer!
On that last point, there are some customers who may be sensitive about certain products offered in your store. It is not always possible to keep everyone appeased, but you should pay careful attention to the types of things that your algorithm is recommending before setting it out into the wild. Some customers may become offended if they are recommended products that they don't agree with or they don't believe apply to them.
Upselling vs. Cross-Selling: When to Use Each
Companies have some choices to make as far as when they use upselling techniques versus when they will use cross-selling ones. They have to think carefully about all of this because they don't want to jeopardize their relationship with a customer by attempting to use too many sales tactics all at the same time. An e-Commerce store that tries to use all of the tactics at the same time will ultimately burn out their customers and deter them from carrying on to make an actual purchase. You definitely don't want to put yourself in that position, so you must ask, which techniques should be used when?
Consider Upselling When Dealing With Infrequent Customers
New customers or customers who don't visit your store are your best targets for upselling techniques. This is because you don't know for sure when you will see them again, and you want to leave a good impression. If you successfully upsell a customer to a premium product, they may be so pleased with the item that they have received that they will gladly do business with you again.
Getting premium products into the hands of customers who are seemingly on the fence about your store is a great way to start to work on winning them over to become more loyal and steadfast customers in the future.
Cross-Sell to Customers Who Purchase Frequently
The customers who come back to your store time and time again for purchases are your favorite kind of customer. You can rely on them to come through for you, and you can generally get them to purchase additional items that are complementary to the items that they have already purchased. They already trust the store, and they have shown a clear preference for your products over the other options that are available to them. As such, it makes sense that they may want to purchase additional products on top of what they already have added to their cart.
Cross-selling will increase the item count in the carts of people who drop in frequently. It can increase their average ticket cost when they do finally go to checkout. Those higher tickets will contribute to the profits of the store that they are shopping in, and that is ultimately what it is all about. The eCommerce stores want to generate as much income as they can per customer, and they want to provide utility to those customers so that they will return.
Make Abandoned Carts a Thing of the Past
Online shopping cart abandonment is a very serious problem for all online retailers. They hate to see customers leave their store without making a purchase, and they often wonder if there is something that they could have done differently to prevent this from happening.
There is no way to completely scrub any online store from the problem of shopping cart abandonment entirely. After all, it turns out that nearly seventy percent of all online shopping carts are abandoned by shoppers without making a purchase. However, retailers can use the upselling and cross-selling strategies described above to try to keep their abandonment numbers down.
Those strategies, along with many calls to action and other gentle nudges on customers, can help keep abandonment rates down and allow the online retailer to have the best shot possible at retaining as much of their customer base as they possibly can. If you are uncertain about what your shopping cart abandonment rate is, you need to get that figured out now.
Storyly can help you figure out your best approach towards making the progress that you need to make to improve your sales and eCommerce conversion rate. By using the strategies listed above as well as some others that are uniquely tailored to your particular store, you can make major progress towards improving your sales and revenues starting today.