Key takeaways:
- Amazon upselling is a sales technique where Amazon sellers try to offer an advanced or premium version of the product or service the customer is using or trying to purchase. Amazon cross-selling is a strategy used to suggest related or complementary products to customers, aiming to help them find what's missing to complete their needs.
- Upselling is about increasing the value of the customer's purchase by offering a more premium version, while cross-selling is about enhancing the customer's experience by offering complementary products that add value to their original purchase.
- Amazon uses recommendations like ‘Customers Who Viewed This Also Bought’, ‘Customers who bought this item also bought’, ‘Frequently Bought Together’, ‘Related Products’, etc to upsell and cross-sell products.
- You want to ensure that your offer (upsell or cross-sell) is no more than 25% of the price of the original product’s price.
We've all seen cross-selling and upselling techniques at some point. Whether it's a salesperson trying to sell you a better version of a smartphone or suggesting you get some earplugs or a screen guard, upselling and cross-selling are effective techniques that drive sales and profits. These selling techniques can help you maximize revenue and improve customer satisfaction by encouraging buyers to purchase higher-value products or additional complementary items.
Amazon, a leading ecommerce company, effectively uses cross-selling and upselling strategies like product recommendations at the checkout phase and “frequently bought together” widgets that appear on product listings.
Read on as we look at what Amazon cross-selling and upselling are, the differences between upselling and cross-selling on Amazon, examples, and strategies from Amazon FBA that you can implement in your online store.
What is Amazon Upselling?
Amazon upselling refers to a sales technique where sellers on Amazon try to sell an advanced or premium version of the product or service the customer is using or trying to purchase. This strategy typically aims to increase the customer's lifetime value (CLV) by encouraging customers to spend more on your products over time. Upselling is particularly effective because the cost of attracting new customers is significantly higher than retaining existing ones. In addition, existing customers are more likely to try new products and spend more than new prospects.
Upselling examples include offering a bigger version of a backpack or offering a larger television set with more features at a higher cost. On Amazon, if a customer views a basic coffee maker, Amazon might display a more advanced model with better features at a slightly higher price to entice them to upgrade.
How Amazon upselling works:
Product detail pages – Amazon displays "Compare with similar items" or "Customers also bought" sections, featuring higher-end alternatives.
Frequently bought together – This suggests premium add-ons to improve the customer's purchase.
Sponsored & featured recommendations – Amazon promotes premium versions of products based on browsing history and behavior.
Amazon Assistant & Alexa – These tools suggest better models or bundles when customers are shopping.
What is Amazon Cross-selling?
Amazon cross-selling is a strategy used to suggest related or complementary products to customers, aiming to help them find what's missing to complete their needs. Amazon cross-selling promotes another product or service to increase a customer's order value. With Amazon cross-selling, customers are presented with additional products to consider purchasing, such as "Frequently bought together" or "You may also like" sections on product pages. For example, a customer may order a camera and you can show them a camera stand or photo film that they can buy additionally. You may even create a bundle to increase their order value.
How Amazon cross-selling works:
- "Frequently bought together" - Amazon suggests complementary products that other customers often purchase together.
- "Customers who bought this also bought" – Amazon recommends products that previous buyers have purchased in addition to the main item.
- Product bundles – Amazon sellers create bundles of related products, offering discounts or convenience.
- Amazon ads & Sponsored Products – Cross-selling items are promoted through targeted ads based on customer behavior.
- Checkout & post-purchase offers – Amazon may suggest accessories or related products at checkout or after the purchase is made.
The 25% rule of thumb for cross-selling and upselling
The 25% Rule of Thumb for Cross-Selling suggests that a cross-sell offer should be no more than 25% of the price of the original product’s price.
Why does the 25% rule of thumb work?
- Minimizes hesitation from customers: Customers are more likely to add a complementary item if it’s a smaller percentage of their main purchase.
- Keeps the offer affordable: A lower-priced add-on feels like a logical and easy decision rather than a big extra expense.
- Boosts average order value (AOV): Helps sellers increase revenue without making the purchase feel too expensive.
For example, if a smartphone costs $800, it means the complementary product will be no more than $200. Since the add-on is under 25% of the smartphone’s price, customers are more likely to buy them without hesitation.
Why are upselling and cross-selling important for your ecommerce business?
Any business that wants to grow needs to take advantage of upselling and cross-selling opportunities. Here's why:
Increased profits
The most obvious benefit of upselling and cross-selling is increased profit. These strategies help in increasing the average order value, which directly boosts revenue and profit. By encouraging customers to purchase more expensive or upgraded versions of products, or by offering complementary products, you can significantly increase your sales and profits.
Adds value and increases customer loyalty
Upselling and cross-selling don't just increase profits, they also add value to the customer. At the end of the day, customers get an upgraded or additional product that increases convenience and adds value to their lives. Ultimately, this increases customer loyalty which is a win-win situation.
Also, cross-selling and upselling to existing customers is more profitable than trying to sell your products to new customers. This can help you save the costs of acquiring new leads.
Enhances customer experience
Upselling and cross-selling provide customers with a more personalized and convenient shopping experience. By offering products that complement or enhance the items they have already selected, you can help your customers create a complete solution that meets their needs, leading to higher customer satisfaction.
Improves Return on Investment (ROI)
Upselling and cross-selling allow you to enhance the value generated from existing customers, helping to attract returns on existing investments without delay. This is because acquiring new customers is both expensive and time-consuming, whereas retaining and increasing the value of existing customers is a more efficient and profitable strategy.
Increases your customer lifetime value (CLV)
Customer lifetime value (CLV) measures the profitability a customer brings to a business as long as they remain customers.
As your customers see the value of your upselling and cross-selling techniques, it keeps them coming back for more, increasing their CLV.
Difference between upselling and cross-selling
Upselling and cross-selling are often used together, however, they are two different sales strategies. The difference between upselling and cross-selling lies in the products or services being offered to the customer. As we defined earlier, upselling is offering a more expensive product with additional features or it could be an upgraded version of a product.
On the other hand, cross-selling involves selling an additional product that complements the original product.
A simple example is an iPhone. A customer may purchase an iPhone X and you may suggest an iPhone 13 as an upgrade. This is an example of upselling. If you suggest AirPods to go with the iPhone X, that's an example of cross-selling.
Both strategies are effective for driving sales and profits, but they serve different purposes. Upselling is about increasing the value of the customer's purchase by offering a more premium version, while cross-selling is about enhancing the customer's experience by offering complementary products that add value to their original purchase.
Amazon cross-selling and upselling strategies
Amazon uses various strategies to cross-sell and upsell products before purchase, during purchase, and after purchase. Here are ways Amazon uses cross-selling and upselling to sell its products:
Homepage recommendations
As soon as you land on Amazon’s homepage, you get to see a wide range of product recommendations that you can easily look through and shop for.
You will find recommendation widgets including New products and collections, Your recently viewed items, Inspired by browsing history, and Related products. All these categories offer personalized product recommendations to both new and existing customers.
Product page recommendations
Amazon uses cross-sell and upsell techniques to ensure customers keep browsing for more products. As an Amazon seller, you can take advantage of this to ensure shoppers stay on your product page for longer and end up purchasing a product.
Some Amazon product page recommendations include ‘Customers Who Viewed This Also Bought’, ‘Customers who bought this item also bought’, ‘Bestsellers’, and ‘Your browsing history’.
Cart page recommendations
Before customers checkout of your product page, you can add some cross-sell recommendations to increase your average order value. Amazon uses cross-sell recommendations like ‘Frequently Bought Together’ and upsell recommendations like ‘Related Products’ before customers check out.
Thank You page recommendations
As we mentioned earlier, selling to an existing customer is more profitable than selling to new customers. What better way to keep existing customers engaged than including cross-sell recommendations on the Thank You page?
Amazon effectively does this by using cross-sell recommendations like “Related to Items You’ve Viewed” after a customer places an order.
By using cross-sell recommendations on your Thank You page, you can easily reconvert an existing customer as quickly as possible.
13 cross-selling and upselling tips and tricks
So how can you effectively cross-sell and upsell products? Here are a few tips and tricks:
- Study your audience
- Personalize your recommendations
- Identify problems and offer products and services as solutions
- Narrow choices for upselling
- Offer product bundles
- Highlight benefits and value propositions
- Avoid being too pushy
- Limit increase in price
- Create limited-time offers
- Use social proof
- Simplify the checkout process
- Follow-up after purchase
- Test and refine your strategies
Study your audience
To create effective Amazon cross-selling and upselling techniques, you need to understand your audience deeply. Study your audience and analyze the information they may have provided. This could be their work details, residential information, purchase patterns, and so on. You want to analyze all the information you have to ensure you are offering recommendations that genuinely make their lives better.
This doesn't end with the customer making a purchase. You also need to follow their journey as they grow to offer more recommendations at the right time. If a customer constantly derives value from your products, they are more likely to follow your recommendations.
Personalize your recommendations
Personalization is key to making upselling and cross-selling efforts feel natural rather than pushy. Tailor your upselling and cross-selling recommendations to each customer's unique preferences and buying habits. Leverage data-driven insights to suggest products that align with their interests, previous purchases, or items currently in their shopping cart. Analyze their past purchases, browsing behavior, and preferences to recommend relevant items. Personalization enhances the customer experience and increases the likelihood of conversion.
Identify problems and offer products and services as solutions
Upselling and cross-selling Amazon products randomly may not cut it, especially for existing customers. You want to look hard and long for problems a customer may have and offer products and services that genuinely address that problem. Doing this repeatedly over time will increase your customer lifetime value (CLV).
Narrow choices for upselling
When upselling, you want to narrow your choices to the minimum. Bombarding your customers with too many upgraded versions of a product may leave your customers confused and get them to do just the opposite of what you are trying to achieve. Instead, narrow your choices to
just two options or one.
Offering product bundles is one great way to cross-sell products or services. Offering bundles makes it easier for customers to make a buying decision and eliminates the stress of purchasing products separately.
Highlight benefits and value propositions.
When presenting upsell or cross-sell options, emphasize the benefits and value propositions of the additional products or upgrades. Communicate how these offerings address the customer's needs, solve their problems, or enhance their experience. Focus on value rather than simply pushing for a sale, ensuring that customers feel confident in their purchase decisions.
Avoid being too pushy.
One important principle of Amazon cross-selling and upselling is to focus on helping the customer and offering value. Instead of trying to make sales, study consumer behavior and offer products and services that meet their needs or solve their problems. Avoid trying to be sneaky or aggressive with your recommendations.
Limit increase in price.
The goal of upselling is to give customers more value for their money. Customers should feel happy to pay more to derive more value. This means that the upgraded version or alternative option should not come at a much higher price than what the customer planned to purchase. We suggest that you increase your prices by not more than 40%.
Create limited-time offers
Limited-time offers can work effectively for cross-selling. Creating a sense of urgency can motivate customers to act quickly. Limited-time discounts on upgrades or complementary products encourage customers to make an immediate decision, increasing the likelihood of additional purchases.
Use social proof
Customers are more likely to trust recommendations backed by social proof. Use customer reviews, testimonials, or case studies to highlight the benefits of an upsell or cross-sell. Phrases like “Customers who bought this also purchased…” can influence purchasing decisions.
Simplify the checkout process.
Streamline the checkout process to make it easy for customers to add recommended products or upgrades to their orders. Implement one-click upsell options or prominently display cross-selling suggestions on the checkout page. Minimize friction and make it convenient for customers to make additional purchases without disrupting their shopping experience.
Follow-up after purchase
You can still cross-sell or upsell even after customers check out. In fact, this is a crucial opportunity to develop stronger relationships with your customers. You can send special offers, discounts, and incentives on an upgraded or related product via emails and other channels of communication.
Test and refine your strategies
Continuously test different upselling and cross-selling strategies to see what works best for your business and customers. Use A/B testing to compare the effectiveness of different approaches and refine your strategies based on the results.
