Do you find yourself with products in your inventory that you just can't sell?
Have you ever heard of cross selling or upselling? If not, then you might be interested to learn what it’s all about.
Whether you use the B2B business model or sell direct to consumer, cross selling can have a dramatic effect on your conversion rate. It can help you sell less popular products and increase your average order value.
Key Takeaway: Cross selling and upselling are both sales strategies used by businesses to increase customer retention and boost their bottom line. Both strategies are used to increase the value of a sale and sell underperforming products. And it’s one of the most effective forms of B2B marketing (see what is B2B marketing) and DTC marketing.
In this blog post, we will explain the definition and meaning of cross selling and upselling. We’ll also look at examples of each strategy in action, and discuss how you can use them to increase customer lifetime value.
We've put together a guide to help you understand what cross selling is, how it differs from upselling, and some tips to make it easier. So if you’re ready to discover what these two powerful marketing techniques have in store for your business, let’s get started!
What Is Cross Selling? Cross Selling Definition
Cross selling is a sales method used to convince a customer to purchase an additional product related to what they're already buying. In other words, cross selling is the practice of selling additional products or services to an existing customer.
It is important to know that cross selling differs from upselling in that it typically involves selling complementary products, rather than upgrading products. For example, a restaurant business might suggest a wine pairing to go with a particular dish.
Cross selling can be an effective way to boost sales and maximize revenue. However, it's important to ensure that the products or services being offered are relevant to the customer's needs. Otherwise, you risk coming across as pushy or desperate, which could damage your relationship with the customer.
What is Upselling?
Upselling is the practice of convincing a customer to purchase a more expensive product or upgrade to a more premium version of what they were originally interested in. This is usually done by emphasizing the value of the higher-priced option or by highlighting additional features that are not available on the lower-priced option.
For instance, the same restaurant will suggest a side dish or appetizer to go with the customer's meal for an additional charge. Another upselling strategy is when a popcorn business offers a bundle package that includes a variety of popcorn flavors and seasonings for a premium price.
Difference Between Upselling and Cross Selling
There are two primary types of selling techniques that businesses use to increase revenue - upselling and cross selling. Both strategies can be effective in boosting sales, but it's important to understand the key differences between the two in order to determine which one is right for your business.
Upselling is the practice of persuading a customer to purchase a more expensive version of a product or service than they were originally intending to buy. For example, if a customer is looking at purchasing a basic smartphone, an upsell would be to convince them to buy a more expensive model with more features.
Cross selling, on the other hand, is the practice of selling additional products or services to an existing customer. This could be anything from convincing a customer who has just bought a new car to also purchase an insurance policy from you, or convincing a customer who has just booked a hotel room to also add on a rental car.
Both upselling and cross selling are valid ways to increase sales and revenue for your business. Which one you choose will depend on your particular products or services, as well as your customer base. If you're not sure which technique is right for you, consider testing out both and seeing which one generates more sales.
Let’s look a little more into these differences:
- Product relationship. Upselling is aimed at increasing a sale's value by selling a more expensive option. The product is essentially the same but costs more. Cross selling is intended to sell additional products, not change what the customer already intends to purchase. Think of products that would appear together on a line sheet.
- Purpose. Upselling is intended only to increase the value of a sale. This is done by offering a "better" version of the same product. Cross selling also increases the sale value, but it also helps sell additional products and reduce the amount of sitting inventory the business has.
- Difficulty. Upselling is harder to do than cross selling, as it is often more costly for the buyer. This is because the customer has already shown an interest in buying a particular item. The business just wants them to buy a more expensive version, so they need to know the best selling points to make it work. Cross selling requires presenting an entirely new product and relating it to what the customer wants. However, since the items are related, customers are more likely to agree with the pitch.
Cross Selling Example
There are many different ways that companies can cross sell to their customers. Some common examples include:
Here are a few examples.
Run a business that sells electronics like televisions, computers, gaming systems, etc.
When selling a new computer, you would offer to the customer items like additional power supplies, a mouse, keyboard, etc. These products help "complete" what the customer is buying and these additional products can make their lives easier.
You're a food supplier with a large amount of gravy packets in your inventory that aren't selling. You can offer a bundle where each purchase of a 5lb bag of potatoes comes with a free packet of gravy.
Luckily for the food supplier, the BlueCart Digital Storefront offers a number of cross selling opportunities. It is an all-in-one DTC and online marketplace that takes all the hard work out of the equation.
Run a restaurant or bar and want to increase your average order value, you'll want to look at selling more drinks. Drinks have a much higher profit margin than food and you generally can control the cost of ingredients.
Here are some more cross selling examples you can implement in your business:
- Restaurant Business:
- Offering a complimentary side or dessert to customers who order a specific entrée
- Suggesting a wine or cocktail pairing to go with a particular dish
- Upselling appetizers or desserts to customers who order only entrees
- Offering a discounted meal deal for customers who purchase a combination of items (e.g. an entrée, side, and drink)
- Wholesale Popcorn Supply Business:
- Suggesting a variety of popcorn flavors to customers who purchase a particular flavor
- Offering a sampler pack that includes a variety of flavors
- Cross selling popcorn seasoning or toppings to customers who purchase only plain popcorn
- Offering a discounted price for customers who purchase multiple flavors at once
- Suggesting a beverage (such as coffee or tea) to go with a pastry or dessert
- Offering a discounted price for customers who purchase a combination of items (e.g. a pastry and a coffee)
- Upselling premium or specialty baked goods to customers who purchase only standard items
- Offering a customer loyalty program that rewards customers for repeat purchases
- Food subscription company:
- Suggesting additional meal options or snacks to customers who are purchasing a specific subscription plan
- Offering a discount for customers who upgrade to a larger subscription plan
- Cross selling premium or gourmet meal options to customers who typically order only standard meals
- Offering a referral program that rewards customers for referring new subscribers
Benefits of Cross Selling
When it comes to selling, companies often focus on upselling and neglect the opportunities for cross-selling. The benefits of cross-selling are numerous, but here are four of the most important ones:
- Increased Revenue: When you cross-sell, you're essentially increasing the value of the transaction without having to find a new customer. This can have a significant impact on your bottom line.
- Customer Retention: Offering complementary products and services to your customers helps create loyalty and encourages them to stick with your company in the long run.
- Improved Customer Relationship Management: By offering additional products and services that meet their needs, you're able to build stronger relationships with your customers. They'll appreciate your willingness to go above and beyond to serve them.
- Competitive Advantage: If your competitors aren't cross-selling, then you have a chance to stand out from the crowd by offering more value to your customers. This can give you a leg up in today's competitive marketplace
How to Cross Sell
Cross selling isn't the easiest, but it can be easier than it seems if you approach it thoughtfully.
Here are a few tips to help:
- Try kitting. This involves combining multiple SKU numbers to be sold in a bundle for a single price. By creating a kit that combines low-performing items with popular ones, you can sell off inventory at risk of becoming dead stock (see what is dead stock). One great option for this is to create a themed subscription box to pair products and use the value of best-sellers to move under-performers.
- Offer discounts. It's much easier to convince a customer to add new products to their order when they're offered a discount. The best way to use this method is offer a percentage off the less-expensive product. It will keep your profit margin higher but still feel like valuable savings to the customer.
- Make sure the products are related. This may seem obvious, but don't try to cross sell products that have no logical connection. It will make customers feel like you aren't trying to serve their needs, and can damage the relationship. Stick to related products and highlight how the additional sale will benefit the customer.
- Use widgets. In the best eCommerce business ideas, cross selling is usually done on product pages and in the cart. You may have seen things like “frequently bought together” or "you may also like" when shopping. These can be done by using cross selling widgets in your DTC to B2B eCommerce platform. These make it much easier to increase your average order value with little work showing both less-known and high demand products.
- Use retargeting. Retargeting is a form of advertising used to convince previous customers to return and buy more. Since you already know what they've purchased, you can target them with products that complement that product. These ads can run on social media sites or by email and have a great return on investment.
- Try to upsell as well. Upselling is when you offer a higher-priced version of the same product (or a similar product) that the customer is already considering. For example, if someone is looking at buying a standard digital camera, you might try to sell them on a more expensive model with better features.
- Don't be too pushy. If you're constantly bombarding your customers with sales pitches, they're going to get annoyed and may not come back next time they need something. Find the right balance between being helpful and being pushy.
- Use eCommerce personalization. Take advantage of data and analytics tools to help you identify opportunities for cross selling. Many ecommerce platforms have built-in eCommerce personalization features that can help you track what customers like and which products they are buying.
Frequently Asked Questions About Cross Selling
What is Cross Selling?
Cross selling is a sales technique in which a seller attempts to sell an additional product or service to an existing customer. For example, if you own a wholesale seafood distribution company, you might try to cross sell shipping and handling, or other supplies to customers who are buying seafood.
What is the Difference Between Cross-selling and Upselling?
Cross-selling is offering additional or complementary products or services to an existing customer or repeat customer, while upselling is offering a more expensive version of the same product or service.
Why is Cross Selling Important?
Cross-selling is important because it can increase the average value of a customer's purchase, leading to increased revenue for the company. It can also enhance the customer experience by offering them products or services that meet their needs.
Sell Out with Me
Mastering cross selling can have a dramatic effect on your bottom line. It also lets you sell products that would otherwise sit in inventory or have to be written off.
If you're a wholesale food distributor or supplier looking to increase your revenue and sell more of your less popular items, BlueCart Digital Storefront may be the solution. It’s a simple, all-in-one ecommerce platform that takes care of store design and structure, payment processing, cross selling, and more. It takes the hard part out of your hands and lets you get back to selling.