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Time to read: 6 minutes
Looking for more ways to boost your sales numbers? Of course you are. Well, look no further than upselling and cross-selling. These timeless tactics have been proven to bring in the bucks as long as people have been selling — in other words, forever.
No matter what your business model is, there’s probably an upsell or cross-sell opportunity you can tap into. We’ll walk you through everything you need to know, right down to real-world examples of how these tactics work for businesses you know and love.
Upselling is a sales tactic that motivates buyers to purchase a more expensive version of the product or service you’re offering. By simply prompting buyers to upgrade beyond the basic offering, you can increase the overall value of a sales transaction — which means you can maximize your sales income without increasing the number of transitions.
Why it matters: Consistent upselling helps you learn to effectively position and communicate the value you’re offering so you can successfully sell customers on upgraded models or premium services.
Why it works: Customers are willing to pay more for a better version of a product or service — as long as you can demonstrate that the increased value meets or exceeds the increased cost.
When it works: An upsell happens prior to completing a sales transaction or as part of a reengagement or renewal that gives the customer an opportunity to upgrade to a more robust product or service.
Cross-selling is the practice of selling a complementary or associated product or service alongside the original offering.
Why it matters: Cross-selling can increase sales by 20% and overall profits by 30%. Enough said, right?
Why it works: After making an initial selection, customers are primed to buy and often more willing to make additional purchases, especially if the products or services in question further address their needs or solve a related problem.
When it works: A cross-sell may happen at various points during the customer journey: as they research solutions, before they finish checking out, or post-transaction as they consider another purchase. (Pro tip: It’s important to note that you don’t always have to cross-sell your own product or service — it’s common to cross-sell partner offerings that are relevant to your customer’s needs and capture additional revenue through a pre-arranged commission structure.)
While both upselling and cross-selling can prompt customers to spend more, there are subtle differences in the way you can execute each tactic.
The primary difference between upselling and cross-selling is:
Upselling reveals a better version of the product or service currently being considered
…while…
Cross-selling provides a product or service that’s complementary to the original item
Here’s a two-minute short story that will walk you through how upselling and cross-selling can be used seamlessly in the same transaction.
Let’s say you’re a sales rep at Pear Smartphones.
Now let’s say a customer named Steve walks in and says he’d like to purchase one of your smartphones.
You show Steve over to your crisp display wall, featuring two versions of the brand new Pear Smartphone 55. At first glance, the phones look identical.
Steve picks up the Basic model, which has 100 GB of storage. As he explores the phone, you ask him what he typically uses his smartphone for. Steve admits that he mainly uses his smartphone to take videos of his dog, Tim, that he posts on Instagram.
Here’s a perfect opportunity for an upsell…
You tell Steve that the Pro model of the Pear Smartphone has 500 GB of storage, substantially more than the Basic model, and a motion-tracking lens better suited for shooting video.
After a short chat, Steve agrees to the upsell and purchases the higher-priced smartphone. More storage means he can get even more footage of Tim before he needs to back up his files, and the motion-tracking lens means he can shoot even better action footage at the park.
But wait, there’s more: It’s time for the cross-sell.
As you ring up Steve, you motion to cases for Pear Smartphones. You point out that the new Snakk case is waterproof, impact-resistant, and has a built-in stand. Steve leaves with his Pear Pro and Snakk case, delighted that he purchased everything he needs in one trip. He’s eager to get home and take some test videos of Tim.
Meanwhile, you increased the order value of the initial product with an upsell and the amount of merchandise sold with cross-selling. Everyone’s happy. (Well, maybe except for Tim — next time, maybe you should cross-sell some dog treats so Tim gets rewarded for his screen time.)
Now that you understand how upselling and cross-selling work in the real world, let’s look at more examples of these tactics in action across a few more business sectors.
While we’ve all encountered upselling and cross-selling during ecommerce or retail experiences, businesses across the analog and digital spectrum employ these tactics daily to boost their sales.
To give you additional insight into how these tactics can be used effectively, here are some examples of them at work in your daily life.
Premium membership levels: If you’ve used any sort of SaaS (software as a service) software, you’ve undoubtedly been upsold. Have you paid more to enjoy an ad-free experience on Spotify or Hulu? That’s an upsell. Have you increased your Dropbox or OneDrive storage to save all those cherished family photos? That’s also an upsell.
Car detailing: If you’ve ever put your car in neutral and traversed through a car wash, you’ve probably been offered an upsell from the basic wash to a package that includes a little more polishing, vacuuming, and one of those aggressively scented air fresheners. While these upsells are dramatized with flashy graphics and hyperbolic descriptions of soap, it’s a common way to get you to spend a little more money to gain access to a little more value (although the value of that air freshener is debatable).
Recommended items: Amazon was one of the first to introduce “frequently bought together” features, which are lists or carousels of — you guessed it — items that are similar or related to the one you’re browsing. This kind of predictive modeling can help ecommerce retailers sell more by anticipating your needs. If you’re looking for a broom, there’s a good chance you’ll also buy a dustpan. If you take a walk down the lamp aisle, you’ll likely see lightbulbs on an endcap. And so on…
Menu pairings: Wine sales have significantly higher profit margins than food sales, so most restaurants with a decent sommelier on staff use cross-selling to bolster their revenue. Suggesting wines that pair well with the dishes you’re ordering makes you more inclined to add a glass or bottle to your order. This is usually a win for everyone: You feel like you’ve amplified your enjoyment, and the restaurant and its staff make a few extra bucks.
Now that you’ve seen the many ways upselling and cross-selling can be used, think about how you can apply them to your business.
Is there a seamless way to introduce your premium consulting package to customers who are exploring an entry-level service? If there are products customers sometimes purchase together, can you bundle them as a more convenient offering? Do you have a way to identify longtime customers who may be ready to upgrade their subscription or replace a product that may be wearing out?
Like any new tactic, you may need to test your approach to discover what sticks. Don’t be afraid to iterate as you learn more about what your customers respond to. The better you can anticipate their needs, the sooner you’ll watch more profits roll in.
Email is one of the best channels for upselling and cross-selling because of its unique capacity to provide a vehicle for targeted, personalized communication — both components of a strong upsell or cross-sell opportunity.
Here are a few ways SendGrid can make it a cinch:
Segment lists of buyers who may be ready to upgrade their subscriptions
Use professionally designed templates to showcase related products
Send automated email reminders to repeat customers who may need to restock
And much more
Try SendGrid for free to upsell and cross-sell with ease.
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