We've all seen cross-selling and upselling techniques play out at some point in our lives. Whether it's a salesperson trying to sell a better version of a smartphone to you or suggesting you get some earplugs or a screen guard in addition. Upselling and cross-selling are effective techniques that drive sales and profits.
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 upselling and cross-selling are, their differences, examples, and strategies from Amazon FBA that you can implement in your online store.
Upselling is a sales strategy that involves influencing a customer to buy more expensive products or upgrades than the customer initially planned to.
Upselling examples include offering a bigger version of a backpack or offering a larger television set with more features at a higher cost.
Cross-selling is a strategy that promotes another product or service to increase a customer's order value. Cross-selling attempts to show customers that they need the additional product because it serves as a complement. 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.
Any business that wants to grow needs to take advantage of upselling and cross-selling opportunities. Here's why:
The most obvious benefit of upselling and cross-selling is increased profit. You can sell a more expensive product or have customers buy an additional product which ultimately increases revenue and profit.
Upselling and cross-selling don't just increase profits, it also adds 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.
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.
Upselling and cross-selling are often used together, however, they are two different sales strategies. As we defined earlier, upselling is offering a more expensive product with additional features or 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.
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:
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.
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’.
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.
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.
So how can you effectively cross-sell and upsell products? Here are a few tips and tricks:
To create effective upselling and cross-selling 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.
Cross-selling and upselling random products 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).
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.
One important principle of upselling and cross-selling 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.
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%.
Limited-time offers can work effectively for cross-selling. By creating limited-time offers to buy additional products, you are creating a sense of urgency in your customers.
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.
Here are a few brands that successfully use upselling and cross-selling techniques:
Being one of the largest ecommerce companies in the world, Amazon is also a master in cross-selling and upselling. Amazon offers recommendations right from its Homepage to the Thank You page. They also recommend bundles and updated versions of various products.
Tesla uses the upselling technique so well by allowing customers to configure their cars before making a purchase. Customers can configure their cars with additional features that come at a higher cost.
Upselling and cross-selling are sales tactics that help you retain customers and increase profits. Don't forget that the focus of upselling and cross-selling should be first to provide value to your customers. Your recommendations should make their lives better.