Every business has two fundamental aims: to solve a problem for its customers and make money while at it. This claim is still valid today even as eCommerce has swallowed a significant portion of the business world. Marketing and sales techniques like cross-selling, upselling, and down-selling are still quite relevant to help boost sales and satisfy your customers.
In this article, we’ve answered popular questions regarding cross-selling and upselling, and explained strategies you can deploy to down-sell, cross-sell, and upsell products on your online stores. We also show why these strategies are important with clear examples.
Let’s get started!
Difference Between Upselling, Cross Selling, and Down-selling
Upselling, cross-selling, and down-selling are all practical ways of improving Shopify conversion rate as an online store owner. There are, however, slight differences in how these tactics work and when they are used. First, let’s define upselling.
What is Upselling?
Upselling is the practice of offering a better product or service to a consumer than their intended product. The primary purpose of upselling is to encourage the consumer to acquire a higher-quality product and hence pay a greater price. Both parties leave happier: the supplier with more revenue and the customer with a product of higher quality and utility.
Upselling is appropriate for selling any product or service when the likelihood of purchase is high. If a buyer is unsure, he or she may avoid purchasing altogether if given too many pricey options. The method is also appropriate when doing business with established consumers, who are more likely to trust your suggestions and purchase the recommended product.
Understanding the customer's wants and aspirations is the key to effective upselling in every situation. It gets easier to upsell once you can offer an enhanced or higher-value item that meets their needs.
What is Cross-selling?
Cross-selling occurs when a seller offers the customer extra products or services at the moment of sale to improve the quality of their purchase. Typically, the seller bundles the extra products with the purchased item. This sales method works well since it increases sales and revenue while also creating loyal clients who are more inclined to buy from you again in the future.
When you have other products that complement the customer's original purchase, cross-selling is most effective. It may be easier to persuade a buyer to buy an additional product if it adds to the value of their existing offering.
Before attempting to cross-sell, consider the price. Cross-selling a product that is less expensive than the initial purchase can be easy. In general, cross-selling products should not add more than 25% to the overall transactional cost.
What is Down-selling?
To close a deal, the down-selling strategy attempts to sell a consumer a lower-priced product or service. The consumer is either dissatisfied with the product or does not have enough money to make the transaction. The seller recognizes this and sells a lower-priced or higher-quality product within the same price range.
Down-selling is typically used when the prospect's likelihood of not purchasing a product is high. Selling a lower-priced product allows you to avoid a total sale loss. Upselling works best when your customers are willing to spend more while down selling works when you are dealing with budget-conscious customers.
Even if you are selling high-priced items, you can use down-selling to increase sales. Discounts, unpaid trial periods, free shipping, one-time deals, special offers, and other price-cutting strategies can entice customers to buy expensive products. In some cases, this strategy can be very effective, but it also carries the risk of backfiring and costing you more than it would save by selling at a lower price point.
Why are they Important for Online Store Owners?
The stiff competition in the eCommerce industry demands that online store owners devise strategies to retain customers if they want to make profits. Thus, marketing techniques to recruit new customers or keep existing customers are critical to an online store's success.
Marketing professionals understand that selling to existing consumers is easier than acquiring new ones. According to research, getting a new customer costs five to twenty-five times more than retaining an existing one. Upselling, cross-selling, and down-selling are all effective strategies that online store owners use to keep their existing consumers.
These tactics are beneficial to their businesses in a variety of ways, including:
1. Improves customer loyalty
Consumers buy products to help them solve problems. While they know what the problem is, they may not have the best solution. Upselling or cross-selling products that work deepen their trust in the seller. The consequence of this is loyalty and continuous patronage.
2. Increases customer lifetime value/customer retention
A customer that derives value from their initial purchase is more likely to come back than one who didn't. Upsells,cross-sells, and down-sells are tactics the seller can use to help derive value on their purchases.
3. Offer convenience and flexibility to the customer
When the seller down-sells a product to the customer, they remove the cost obstacle. They also make the purchase convenient and increase the options for the customer to make a purchase.
4. Increased profits
The more products a merchant can sell, the higher profits he can make. These selling techniques ensure that you can make sales in almost impossible situations. Instead of relying only on Shopify apps to multiply store conversion, you can use these techniques to drive sales in your stores to unprecedented rates.
3 Upselling Strategies
Any form of product upselling requires that you analyze your customer personas and make relevant suggestions as per their interest. When this is done, the following are ways it can be deployed.
You offer the customer a better version of the product they requested originally. The reasoning is to improve the customer’s experience with the product and convince them to come back for a second purchase.
Performance Boost Upsell
In this case, you offer the consumer the premium version of the product they want to buy. The biggest promise of a performance boost upsell is that it will help the customer get their desired results faster.
This strategy involves convincing your customer with real-life examples of how the upsold product achieved the customer’s desired goals perfectly. You can achieve this by promoting your best-selling products or products with the most reviews.
3 Cross-selling Strategies
Here are three strategies you can deploy to cross-sell products to your customers.
This strategy hinges on the fact that we tend to make decisions faster when we have limited choices. As the seller, you will increase the chances of the consumer purchasing by grouping products that will help them achieve their aims. Bundling is often used with a discount to increase the perceived value of the offering as it reduces decision stress.
2. Related Products List
You can keep a list of related products on the check-out screen to prompt your customers. This list should contain products that are usually forgotten, but essential for the consumer. It could be protective cases for mobile devices or lighters for gas stoves. If you run an online store, you can use the Shopify product recommendation engine to achieve this.
3. Checkout Cross Sells
Your check-out product list could contain additional items that can be easily added to the order with a click. This strategy taps into the impulse buying tendency of a customer. Reports say that check-out page cross-sells get up to 7.25% conversions. A quick tip for check-out cross-sells is that the products you suggest should be 60% better than the original product the customer wants to buy.
Down-sells are tactics to make sure the customers buy from your store even if they get what they want. This can be a little difficult to do and also may backfire if executed poorly. The down-sell increases the possibility of the customer making second purchases of higher priced value.
Here are three down-selling strategies you can deploy to ensure sales in online stores.
When a customer quits purchasing a higher-priced product, you can provide smaller components of the larger product that can still assist them with attaining their goals. You may allow the purchase of smaller quantities if you are dealing with measured products.
Rather than offering parts, you can offer a product with a lower price and value. This can both help the customer achieve their goals and help you make a sale. It avoids the lose-lose scenario in which there’s no purchase and no sale.
Exit Intent Sales
This strategy is similar to the cross-sell strategy at the checkout. When a buyer attempts to exit the sales page, you display a list of related products on the last screen. The goal is to persuade the customer to investigate other things in the store and make a purchase.
How to Implement Cross-Selling, Upselling, and Down-Selling Strategies?
Implementing these strategies can be a bit tricky. You'll undoubtedly notice that these strategies are pretty similar to one another. It is advisable to implement them all at once. However, this leaves you with an avalanche of options and the difficulty of determining which one is ideal for each product.
Which of these strategies you use the most depends on your sales approach. Best practices mandate that you creatively mix all of your upselling, cross-selling, and down-selling methods. That is how you can guarantee sales in your store.
Quick Tip: Keep your customer’s intent at the top of your mind. If you can help the customer achieve their aims in the best way possible, you will surely get their money.
Here are some ways you can use these strategies creatively to boost your sales:
- Coupon Codes: Use a code to help your customer save money on a purchase.
- Timed-Bound Offer. Create scarcity to induce urgency and make the customers buy the products.
- Extra Value Additions. Include freebies for people who choose the upsold option, allowing customers to realize how much better the deal is.
- One-Click Upsells. Allow your customers to easily add an option to their order without having to enter their credit card information again.
- Order Bumps. Allow shoppers to add products to their cart before paying.
- Post-purchase Following Up. After the sale, follow up with customers to encourage them to buy other products.
- Trip-wires. Offer a low-cost product or a part of a product that entices your customer and make them trust you in preparation for their next purchase.
4 Best Examples
When these sales techniques are executed creatively, the result is always beautiful for the customer and profitable for the seller. In this section, we will discuss four examples of how these strategies are used by some familiar big-name companies. Please note: these are to illustrate the subtle and creative ways you can implement these tactics. They are not direct templates for you to follow.
Let’s get to it!
Amazon's Cross-Selling Mastery
35% of Amazon’s sales are attributed to cross-selling tactics powered by its powerful recommendation algorithms. It's “Customers who bought this item also bought” and “Frequently bought together” lists are on every check-out and product page. This prompts a customer to buy a compatible—or necessary—product.
It's one thing to promote related things, but quite another to show items that previous buyers purchased. This strategy validates the customer's decision to purchase one of those things because other consumers did as well. It's also an excellent use of customer data, as data generally speaks for itself, making these product suggestions more accurate than those based on gut instinct.
If you run a multi-product store, you can use customer data to identify cross-selling opportunities like Amazon. And, for the most impact, display these products in a way that confirms the customer's needs and similarities to other customers.
Apple's Secret Cross-selling Sauce
Apple is known to derive a larger share of its revenue from services and accessories rather than its device sales. How are they able to pull that off? Their intentional branding efforts and a sprinkle of cross-selling sauce. Their cross-selling feels so intuitive that you don't even think about it.
When you try to purchase on their website and you view your cart, Apple recommends a few accessories that will enhance your experience with the product you are buying. The prices of these accessories are optimized for impulsive purchases and thus increasing your chances of adding them to your original order. They also display these nudges in a way that is consistent with their informal and enjoyable branding style. They let you feel you're already purchasing the necessities.
You imitate Apple by identifying subtle ways to nudge your customers to buy additional products. Identify products that work best with each other and present them in the clearest and most appealing ways possible.
Tesla's Subtle Upselling Tactic
Tesla allows users to configure their cars before purchase. This allows the customer to customize their Tesla to their taste and make a purchase they are delighted in. However, this is Tesla’s upselling trap. These upgrades come at an additional cost. Thus, the customers get better products but at an increased price.
This tactic works with products that allow lots of customizations. Think of how you can allow your customers to implement these customizations from their initial purchase. It is an opportunity for you to help your customer fulfill their wishes and increase your sales.
Google’s Obvious Upselling Tactic
Google deploys its upselling tactics in a much more obvious way. They know that if your customers use a free or lower version of your product, you need to keep reminding them that a premium version exists. They do just that with their Drive product.
Google Drive notifies free plan users that their cloud storage is restricted. It does so with a persistent visual reminder on the Drive dashboard's side: a tiny CTA button to show its users how much storage is remaining. When it’s almost exhausted, the message color changes from blue to red to create a sense of urgency.
Google Drive is not aggressive or intrusive. It does not bombard users with notifications. Its visual reminder reinforces the idea ("you're running out of storage, so you should get more"). That’s an interesting twist on upselling tactics.
Is there a free plan available for your product? Imitate Google Drive's strategy by alerting users of your product's limits. This could be based on resources (such as storage and "credits") or features, with a call to action encouraging customers to upgrade their subscriptions.
What is suggestive selling?
Suggestive selling is a hybrid of cross-selling and upselling strategies. It is a delicate art of selling that entails gently nudging customers to purchase more and improved versions of their original order. The timing of the nudges is critical, as they can rapidly become obnoxious or pushy.
What is the difference between cross-selling and upselling?
The distinction between cross-selling and upselling is that the former seeks to generate new and distinct sales, whilst the latter seeks to raise the value of the initial purchase. Both strategies result in a net increase in order value, but in different ways. Cross-selling involves the addition of similar or complementary products to an order, whereas upselling involves upgrading the order to a high-priced version.
How do you cross-sell in retail?
To cross-sell in retail, you need to identify the potential products that work well with your customer’s order. Insights into what the customer aims to do with their purchased item may help to identify such products. Next, recommend these products to your buyer. The timing of your recommendation is important. One great time is when the customer is about to check out.
So far, we have discussed how cross-selling, upselling, and down selling can help you make sales in almost any circumstance and boost your revenue. The examples we discussed demonstrated creative and subtle ways you can implement these strategies.
Now, imagine that you run a clothing store. You notice a customer looking at a shirt and recommend they buy both the shirt and jeans since the two go so well together. The cross-sell either excites the customer or irritates them.
You're trying to capitalize on the fact that the buyer already finds value in the item they are about to purchase, so it will be easy for them to get the extra things. In contrast, because you are providing several options, your buyer may be less likely to purchase the things.
These tactics are not foolproof, but they boost your chances of selling. Making educated estimates about your customer's goals can help you refine these strategies for maximum efficacy. (A quick tip: you don't have to do it yourself; Argoid AI can assist you!)
Have a great time selling!