Recall the last time that you were at McDonald’s (even though it feels like a decade at this point). What did you order? Maybe you only wanted some fries and coke, but the cashier convinced you to convert them into a happy meal. Or perhaps you noticed a new addition to the burger suite (at a point when you were hungry enough to devour a buffalo) and decided to try it out instead. If we start inspecting such encounters closely, an interesting pattern emerges. For instance, walking into a shoe store and subtly pitched to add a pair of socks or shorts to the cart.

What is this? And more importantly, why does it work so well for almost all organizations, regardless of industry?

Guide: Cross-selling and Up-selling Explained

What is Cross-Selling?

At its worst, Cross-selling is an advanced sales tactic. But at its best, it is a customer success story that corporate leaders yearn for. As we have seen in the examples above, Cross-selling is the process of satisfying the customers’ additional needs that the primary product cannot fulfil. In other words, it means encouraging customers to buy complementary products with their purchases, increasing the overall cart value.

This places the strategy miles away from cold reach-outs and sales prospecting simply because it taps existing customers instead of new ones.

What is Upselling?

Up-selling is the first conceptual sibling of Cross-selling, where the end goal is to increase the cart value not by introducing new items but by increasing the size or quantity of the initial purchase decision. For marketers (or salespeople), this may translate into selling a higher-end subscription to the customer with more advanced features or integrations. In most cases, upselling works much better than Cross-selling since it is easier to improve the commitment of a purchase decision that the customer has already made!

What is the difference between Cross-selling and Upselling?

More often than not, Cross-selling and Up-selling are used interchangeably, marking a conceptual error. The best way forward is to consider Cross-selling a complementary product and Up-selling an upgrade. For instance, upgrading an economy aeroplane ticket to business class would be an Upsell. But shopping from the in-flight product catalogue, such as headphones, would be a Cross-sell (since you have already bought the plane ticket).

Upselling is almost always associated with a higher-margin product. Cross-selling deals with similarly priced complementary products with no significant enhancement in the margin. Thus, margin expansion is a function of upselling. Cross-selling helps boost order value and volume. The following examples will make the difference vivid.

Case Study: TaskUs registered a 30% increase in up-selling & 20% increase in cross-selling

Why are Upselling and cross-selling Important?

When Brian Halligan, CEO of HubSpot, went onstage to deliver a keynote at Inbound 18, no one expected what was coming next. He officially shattered the traditional concept of Sales Funnels – a cornerstone of marketing strategies since 1898. His argument? Funnels are inherently outcome-centric. They do not care about the customers once the sales process is over. The solution? Delighting customers with the new Flywheel model instead.

As HubSpot explains, companies can drive more referrals and repeat sales by using the momentum of happy customers. This is a strong indication of the direction in which the digital world is headed. With increasing transparency and customer awareness, businesses today have no choice but to invest their energy into delighting existing customers. Why? This is because, in present hyper-competitive landscapes, acquiring a new customer is 5 to 25 times more expensive than retaining an existing customer, as reported by Harvard Business Review.

In other words, upselling and Cross-selling are much better business strategies than Sales and Customer Acquisition. Here’s why you should be paying close attention:

1. Revenue Growth

Both Upselling and Cross-selling have a direct positive impact on your average order value. This is a rather obvious outcome when customers are motivated to opt for higher-priced alternatives or add-ons. To put the numerous benefits in perspective, here’s what Neil Patel explains happened in 2006 when Amazon added Up-selling capabilities with the phrase – “customers who bought this item also bought”. They clocked a 35% boost in sales! Source

1. Strong Customer Relationships

The fact that customers are willing to buy is itself a testimony to existing solid relationships. Successful cross-selling and up-selling can strengthen this relationship to the point of co-dependence, provided that you can deliver on your promise. But this also comes with a word of caution – never try to pitch additional products/services that buyers do not need. And even when you do get the pitch right, always be willing to take no for an answer.

1. Increased CLV

For certain businesses, such as in the SaaS space, upselling and Cross-selling can amount to as much as 70-95% of the revenue. This means that in a modest scenario, initial sales can rake in only 5% of the revenue! This brings us to another critical revelation – the effect on Customer Lifetime Value (CLV). With most of the revenue being a direct result of the day-to-day experience of customers with the business’s products/services, Up-selling and Cross-selling also have a direct bearing on the overall CLV.

How to Cross-sell and Up-sell in Key Accounts?

Cross-selling v upselling is an art form where customer success teams need to target the sweet spot between under-delivering and under-pitching, and Account Planning plays a significant role in making this possible. Here are some of the best practices that will help you paint the canvas with more conversions:

1. Understand Customer Needs and Goals

Even though it may look tempting, don’t just bombard your customers with product suggestions. The right Upsell/Cross-sell opportunities are hard to come by, leaving no room for squandering. The best way forward is to prospect customers first and answer questions like:

• What were they looking for in the first place?
• What are their short-term and long-term goals?
• Is there any budget or operational constraints?
• And more…

Once you know everything about them, proceed to take the right call – Upsell or Cross-sell?

1. Find White Space Opportunities

One of the best methods to identify Up-selling and Cross-selling opportunities is to use White Space Analysis. It involves identifying new sales opportunities within existing customer accounts. How does it work? By leveraging the best decision-making weapon that the digital age has given us – Data.

‍White Space Mapping provides deep insights into customer behaviours and buying trends, such as the products purchased, additional demands, factors influencing sales, and more. A quantitative approach gives you a tangible framework to identify gaps between products and services that your customers have already bought from you and the ones that you can sell to them.

1. Make Customized Recommendations for a Win-Win Scenario

It is always frustrating to be at the receiving end of a sales pitch with a thousand possibilities. When you swamp your customers with overwhelming information, you are potentially endangering your entire relationship with them. Instead, put an effort into knowing their definition of a win. Then, find a way to help them achieve it, even if it means going out of your way to offer customized product/service packages or matching them to the perfect one (if it already exists). Whatever you do, it will always be a win for you since you will end up boosting the cart value.

1. Find the Right Person to Reach Out

The likelihood of sales drastically drops as the number of decision-makers increases. Harvard Business Review reports an average sign-off of 5.4 people on each purchase. Hence, you need to connect with customers at a deeper level, identify all the decision-makers, and help them reach a consensus. Relationship Mapping or Account Mapping can come to your rescue here. It involves a visual representation of data points and the relationship dynamics that exist within your customer’s organization. It is often used by salespeople to identify key decision-makers and goes a step beyond the typical Org Chart to also include informal hierarchies, mapping the best possible path of Cross-sell or Upsell.

1. Deliver the Right Message at the Right Time

There is a thin line between helping and pushing. With upselling and Cross-selling, you would not want to be even in the same zip code as the latter. During their journey, if customers feel that they are being duped or that they cannot trust you, they will vanish quicker than you can say “Please Stay”. Once prospecting is complete, be up-front about your commitments, pricing, contracts, and more – anything that helps you build a rapport. Then, demonstrate the actual value of the offer by sandwiching the pitch between successful case studies and positive testimonials.

Successful Strategies for Cross-selling and Upselling

Multiple strategies can work in your favour in this space. You need to narrow down your choices with constant A/B testing and feedback analysis via an Account Planning Template within your CRM. Here are some Up-selling and Cross-selling strategies that can work as excellent starting points:

1. Focused Conversions

Create lists of past buyer personas, segregate them into various personas, and personalize your communication strategy with the right offers.

1. Automation

Deploying smart remarketing tactics that automate your Cross-sell and Upsell efforts (or a part of them) by running dedicated ads with the right messages.

1. Incentivize Customers

Using past customer data and getting personal. Make buyers feel valued with loyal customer discounts or freebies when they upgrade or reach a specific cart value range at the time of checkout. This will increase the customer satisfaction.

1. Retarget Abandoned Carts

Repeat customers with abandoned carts are often the result of mere distractions. Having a communication plan will remind them about what they have almost purchased!

1. Offer Trials/Demos

Don’t just tell, show instead. A taste of the solution can often convey much more value to customers and can work much better at scale, especially if you have a tech product or service.

Cross-selling and Upselling Examples

Now that we have covered most of the theory let’s see it in action through some handy examples.

At the Sales Level

Go Daddy is a web domain registrar and hosting provider that has cemented itself as the epitome of Upselling and Cross-selling techniques. Every time you purchase on their website, the provider is quick to identify complementary products and services that can be intuitively bundled together with the purchase. For instance, a domain buyer will receive additional options to add hosting and domain privacy to their carts.

At the Customer-success Level

Dell was one of the first computing brands to introduce various ‘Help Me Choose’ sections on its website. For laptops, this means giving customized recommendations based on the information that customers have provided. Such offerings help customers to make better-informed decisions and purchase premium products that are a perfect fit for their needs or budgets. Hence, they are more satisfied in the long run and much more likely to come back.

Pros and Cons of cross selling

Pros

1. Increased Revenue: Cross-selling can lead to higher sales volumes and increased revenue per customer by encouraging them to purchase additional products or services.
2. Customer Loyalty: Providing valuable recommendations that genuinely meet the needs of your customers can enhance satisfaction and loyalty, leading to repeat business.
3. Higher Customer Lifetime Value: Selling more to an existing customer base can boost the overall value each customer brings over time.
4. Improved Customer Experience: When done correctly, cross-selling can improve the customer experience by offering convenient one-stop-shopping solutions.
5. Cost-Effective: Cross-selling is often more cost-effective than acquiring new customers because it leverages existing relationships and data.
6. Better ROI on Marketing: Cross-selling initiatives can improve the return on investment for marketing activities, as the costs are typically lower when targeting existing customers.
7. Broader Product Exposure: It gives customers the opportunity to learn about and try other products or services they might not have considered otherwise.
8. Optimized Inventory: Encouraging the sale of related or complementary products can help manage inventory more efficiently.

Cons

1. Customer Annoyance: Aggressive or poorly timed cross-selling can annoy customers, leading to a negative experience and potential loss of business.
2. Complexity: Implementing an effective cross-selling strategy can be complex, requiring detailed data analysis and targeted marketing approaches.
3. Training Requirements: Employees need to be well-trained in cross-selling techniques and product knowledge, which can incur time and financial costs.
4. Dilution of Core Message: Focusing too much on cross-selling can dilute the core message or main product benefit, confusing customers.
5. Increased Risk of Returns: Customers might purchase additional items they don’t actually need or want, leading to higher return rates and associated costs.
6. Customer Pushback: Some customers perceive cross-selling as being overly sales-oriented rather than service-oriented, which can harm the company’s reputation.
7. Potential for Overload: Offering too many cross-sell options can overwhelm customers and make the decision-making process difficult, leading to decision fatigue.
8. Risk of Cannibalization: There’s a risk that cross-sold products might cannibalize the sales of higher-margin items instead of complementing them.

Pros and cons of Upselling

Pros

1. Increased Revenue:By encouraging customers to purchase a more expensive item or add additional features, businesses can significantly increase their revenue.
2. Enhanced Customer Experience:Offering premium products or extra features that genuinely add value can enhance the customer’s overall experience and satisfaction.
3. Better Inventory Management:Upselling can help move higher-margin or overstocked items, optimizing inventory levels.
4. Improved Customer Loyalty:When done correctly, upselling can demonstrate attentive service and understanding of the customer’s needs, fostering loyalty.
5. Higher Customer Lifetime Value:Upselling can boost the overall spend of a customer over their lifetime, enhancing their total value to the business.
6. Competitive Advantage:Offering premium solutions can distinguish a business from its competitors, positioning it as a provider of high-end products or services.

Cons

1. Customer Annoyance:Aggressive or inappropriate upselling can irk customers, leading to dissatisfaction and potential loss of business.
2. Perceived Pushiness:If customers feel pressured or manipulated into spending more, it can harm the relationship and damage the business’s reputation.
3. Increased Return Rates:Customers who are upsold products they don’t actually need or want might end up returning these products, impacting the logistics and return processing costs.
4. Potential for Mismatched Products:There’s a risk that in the push to upsell, customers are recommended products or services that don’t fully match their needs, leading to poor experiences.
5. Loss of Sales:If upselling attempts make the purchase too complex or expensive, it could result in the customer abandoning the purchase altogether.
6. Training and Resource Cost:Effective upselling requires investment in staff training and sometimes additional resources, which can be a strain, especially on smaller businesses.
7. Dilution of Brand Trust:If upselling is perceived as misleading or purely profit-driven, it can erode trust in the brand, affecting long-term customer relationships.

E-commerce succeeds with Cross-selling and Upselling

“Customers also bought”, “Frequently bought together”, or “Related items” with a list of items that you should consider purchasing is something you would have noticed countless times whenever you are about to check out any e-commerce site. This is cross-selling, and it is a profit-boosting tool for the e-commerce business for both B2C and B2B service provider scenarios. This increase in profit, however, is only sustainable if the customers are offered a valuable product or service as the cross-sell option and a positive customer experience is ensured. On the other hand, if you are pushy and the customer is annoyed, you might end up missing out on a potential repeat sale. The strategy here should be to tread lightly with “You might also like” options. If you are sure an individual product will add value to your customer, go ahead and place it in their suggestions. This might not only increase your profit margins but also develop customer loyalty.

Another thing to be kept in mind while cross-selling is to not overwhelm your customers with too many options. Keep them limited to ensure they complete the purchase and are not distracted by choice overload.

On the other hand, you must have also seen the option of “Similar Products” or “Compare with similar items” displayed side by side when you are trying to make a purchase. One would be your choice, and the other choices have slight differences and upgrades. This is up-selling and the best strategy to let your customers know that just spending a little more could amplify the return on that purchase. While up-selling, the rule of thumb is to ensure that the product you are suggesting is under 25% more than the cost of the product your customer has chosen. Other additional features can be added by default while giving the customers the option to deselect, much like what GoDaddy does with its offerings.

All in all, in both cases, the focus should be on value addition and a worthwhile customer experience and shouldn’t come across as another unsavoury sales tactic.

Major things to consider when upselling

When it comes to upselling, multiple factors should be taken into account to ensure its effectiveness and customer satisfaction. Here are the major considerations:

1. Customer Needs and Interests:

• Understand the customer’s needs and preferences.
• Offer products or services that genuinely add value to their purchase.
• Consider their buying history and behaviors to tailor the upsell.

2. Product Knowledge:

• Have in-depth knowledge of both the primary product and the upsell options.
• Be able to clearly explain the benefits and features of the upsell.
• Highlight how the upsell complements or enhances the main purchase.

3. Timing:

• Choose the right moment to introduce the upsell (e.g., before completing the purchase, during a follow-up call).
• Avoid interrupting the customer’s buying decision process at inappropriate times.

4. Relevance and Value:

• Ensure the upsell is relevant to the initial purchase.
• Focus on value rather than just the price – clarify how the upgrade or additional product will benefit the customer.

5. Customer Experience:

• Keep the customer experience positive and pressure-free.
• Listen to the customer and understand customer journey be attentive to any objections or concerns.
• Offer a seamless and convenient cart upsell process.

6. Transparency and Honesty:

• Be transparent about pricing, benefits, and terms.
• Build trust by not overselling or exaggerating the benefits.

7. Incentives and Bundles:

• Use promotions, discounts, or bundles to make the upsell more attractive.
• Offer limited-time offers to create a sense of urgency.

8. Training and Communication Skills:

• Ensure that sales representatives are well-trained in upselling techniques.
• Develop strong communication skills to articulate the upsell effectively.

9. Feedback and Analysis:

• Collect customer feedback on the upselling process.
• Analyze the success rate of upsells to identify areas for improvement.

10. Ethical Considerations:

• Ensure that upselling tactics align with ethical standards and don’t exploit the customer.
• Avoid upselling to customers who clearly express their unwillingness or incapacity to make additional purchases.

By focusing on these key areas, you can improve your upselling strategies to increase revenue while maintaining high levels of customer satisfaction and loyalty.

Driving Cross-sell and Upsell Opportunities with Account Management Software

So we understand that current customers are statistically more likely to buy from you. This makes cross-selling and up-selling a natural ingredient that drives growth in your key accounts. The role of a Key Account Manager is no less than being a magician. He/she has to bypass customer rejections, cut through the noise, and inject growth in even the most optimistic projections. But while doing so, it is important to remember that growth in such complex scenarios is a function of patience and consistency. But does it also have to be a function of intense leg work? Not necessarily. Enter – Key Account Management Software, such as the one from DemandFarm. Here’s how it delivers a perfect vantage point to leaders:

• Aggregated critical account data from disparate systems.
• Analysis of key ongoing and upcoming trends.
• Recommendations engines with intuitive reports.
• Automated workflows for key account planning strategies within the account planning tool.
• Visualization and mapping tools with Org Charts.
• And more…

Key account growth cannot occur if your satisfied customers are unable to see and perceive the value in your proposition. It is your responsibility to meet their needs and showcase how you’ll never drop the ball. And as we have often seen in this digital age, the foundation of successful eCommerce business strategies that outperform their peers is built on data.

Now, the only question is – what are you going to do about it?