Upsells and Cross-Sells

Upselling doesn’t have to be reserved for huge companies with hundreds of thousands of products to push at their customers. In fact, you get upsold (or cross-sold) every time you say yes to the smiling waiter who offers you dessert at the end of your meal or to the phone company who convinces you to add additional data to your monthly plan.

Selling more products to existing customers is often overlooked in favor of seeking sales from new leads, but that’s a mistake. On average, the probability of successfully selling to a new lead is 5-20%; that number triples when selling to existing customers. In fact, 70-95% of a company’s revenue comes from upsells rather than acquisition of new leads. These revenue-generating sales boost your ROI, increase the value of each customer, and usher your customers into becoming advocates of your company who refer new customers.

All it takes to outfit your ecommerce site with effective upsell and cross-sell offers is a thorough understanding of your customers’ needs combined with the ability to offer the upsell at the right time using automation software.

Establish an Ongoing Relationship With Your Customer

Your relationship with your customers shouldn’t end the moment they click “BUY.” You should look at this as the start of your relationship with them — as ongoing relationships have been shown to be much more valuable. So how can you identity effective products to sell to existing customers? It’s simpler than it sounds: First, find the product orbit.

The what? Keith Perhac, the co-founder of Summit Evergreen, defines the product orbit as “a sales strategy in which your product offerings naturally lead into one another,” essentially leveraging the natural synergy between two products to move an existing customer from one product to another. Ask yourself what would be in the orbit of each product so you can map out the customer path to provide more value to your customer while making more money.

For example, if you were offering online beginner French classes, items in the product orbit might include a French grammar workbook or an advanced version of French classes for those who have graduated from your first class. What products would your customers naturally gravitate toward once they’ve already expressed interest in one product?

Consider this example from Virgin America. With the basic flight itself as the base offer, they leveraged seats with more legroom and better amenities. Customers can choose to make their flight more comfortable or luxurious, depending on how much they’re willing to spend.

Determine How to Provide More Value to Your Customers

There are many ways you can use a product’s orbit to your advantage. The most popular, as outlined in the example above, is the upsell. By definition, an upsell is a strategy or technique in which a company promotes a more expensive product, upgrade or add-on in an attempt to prompt the customer to make a more profitable purchase.

Netflix does an excellent job of upselling its subscription-based video streaming services, as they offer a $7.99, $10.99, and $13.99 option. The prices of the service also contribute to the allure of the upsell, as they are all within a decent range of each other. A price increase of $3 is by no means a big leap for the added services provided in the upgrade.

In addition to upselling, there’s cross-selling, which involves recommending relevant products or services in addition to the one that’s already in their shopping cart. While upselling is offering a pricier version, cross-selling is offering an item that would complement the product or service being purchased. For example, a wine retailer could upsell by suggesting an older, pricier wine or make a cross-sell by suggesting purchasing a wine opener as well.

Amazon utilizes these techniques as evidenced by their “Frequently bought together” section where the products recommended are intuitively related to the original product. Using their customer data to discover what a customer generally buys after purchasing the original product, Amazon offers relevant suggestions to create a bundle. This benefits the customer in two ways: by exposing customers to products they might not be aware that they need and by saving them time from research.
If those items are frequently bought together, then the customer can safely assume that the memory card and rechargeable battery will work with their GoPro. It’s not just one product recommendation, but rather two or three options that work well with the product. This creates an easy and time-saving buying decision for the customer.

Alternatively, there’s the downsell. If a customer does not want the product you want to sell, you can suggest a cheaper alternative. In an upsell, you would market a product that costs more than the original purchase; for the downsell, you would promote something less expensive than the original. Think of the last time you were at a car dealership. The car salesman might have presented the luxury car first. If you hesitated, he showed you the economy car.

This also works for subscription-based services. It’s a great way to capture a sale for customers who aren’t quite ready to buy the full price option or commit to an extended period of time. Check out how BarkBox gives consumers the option of choosing a cheaper subscription depending on their commitment level. They also display the “Most Popular” option so visitors can quickly see the most common choice.