How To Leverage Cross-Selling And Upselling For Increased AOV
Our guide to cross-selling and upselling. Discover what each tactic is and how your ecommerce brand can implement them to meet goals.
What if you could elevate the customer experience and generate extra revenue at the same time?
Cross-selling and upselling offer an antidote to one-time buyers by serving relevant upgrades and complementary products that increase both average order value (AOV) and customer satisfaction.
What is the difference between cross-selling and upselling?
Cross-selling and upselling are two high-impact tactics merchants can use to generate more sales and improve the shopping experience. Here’s what they mean and, more importantly, how they differ from each other.
What is cross-selling?
Cross-selling is an ecommerce strategy that recommends complementary products to a shopper who has already made a purchase or has an item in their cart. For example, you might suggest a shopper add boot polish to their order if they’ve just bought a new pair of boots, or you might suggest batteries to go with a new camera.
Successful cross-selling campaigns include products that are highly relevant to the original purchase, and that will make a customer’s life easier. No one wants their new camera to arrive only to realize they don’t have the right batteries to use it.
Dollar Shave Club is a pro at cross-selling. When someone buys their first box, they’re invited to add complementary extras to their order, like shaving cream and cleanser.
What is upselling?
Upselling is a strategy used by retailers to encourage customers to upgrade their orders. Instead of recommending additional products, upselling invites shoppers to invest in a more expensive product or better version of the original item. For example, you might suggest a roller suitcase with added pockets and security or a kilo more coffee for $3 extra.
This cat food brand invites shoppers to upgrade their order to secure a discount. The customer gets a better product at a lower price, while the brand increases the value of the order.
Cross-sell vs upsell: The difference between upselling and cross-selling
It’s easy to confuse the two terms because they are very similar tactics. Both of them increase your profit but in slightly different ways. Upselling grows revenue by promoting higher-tier products, while cross-selling suggests more items a shopper could buy.
The key difference isn’t in how they work, though — it’s in their purpose. Cross-selling invites shoppers to purchase items they had no previous interest in buying. When they’re offered a complementary item or two (like batteries or boot polish), they might consider adding them to their order because it improves the experience of the product already in their cart. It will also likely make their life easier because they don’t have to go searching for the complimentary product they need.
Upselling, on the other hand, leverages the fact that a customer has already chosen a product and, therefore, must be very interested in buying it. You recommend the same product or service, but better. The customer has already shown a keen interest, so there is a chance they can be convinced to upgrade to better benefits and convert at a higher price.
Key differences between upselling and cross-selling:
- Cross-selling suggests additional products, whereas upselling suggests an upgraded version of the original product
- Cross-selling suggests products customers had no interest in buying before, whereas upselling suggests products that the customer has shown an interest in
- Cross-selling can be used post-purchase to encourage shoppers to come back, whereas upselling is all about upgrading the original order (no one needs to buy two iPhones in the space of two weeks!)
What’s the difference between upselling and downselling?
Downselling isn’t our main focus in this piece, but it’s worth giving it a quick mention so you can position it against the other methods. Unlike upselling, downselling suggests lesser-quality products that are cheaper to a customer who either can’t afford the original item or who has abandoned their cart.
Suppose a shopper has added a big tub of moisturizer to their cart but hasn’t yet checked out. You might get in touch a few days later offering a cheaper version, a smaller version, an incentive with purchase, or a complementary item that’s less expensive.
Downselling is common in subscription models. Customers can get a cheaper rate if they commit to a longer subscription, but those who don’t want to spend that much money can choose a smaller subscription level at less value.
The benefits of cross-selling and upselling in ecommerce
- Increase AOV: If a customer adds another item to their order or upgrades to a more expensive version, you automatically boost your AOV.
- Increase revenue: If the majority of customers spend more on their orders, your overall revenue will increase. Cross-selling accounts for 35% of Amazon’s revenue.
- Increase customer lifetime value (CLV): The probability of selling products to existing customers is 60–70% higher than selling to new customers. Serving complimentary products or add-ons is convenient for shoppers and will keep them coming back.
- Increase ROI: The higher your AOV and CLV, the better your ROI will be against your cost of acquisition.
- Increase product awareness: Cross-selling and upselling introduce customers to products they might otherwise not have come across.
- Improve customer experience: Suggesting related products personalizes the shopping experience and establishes a level of credibility.
How to upsell and cross-sell across the funnel and reach customers at every step
Cross-selling and upselling can lead to fruitful things for online retailers, but the key is to do it tastefully and organically. The last thing you want to do is paralyze new shoppers with too much choice or recommend irrelevant items that might turn them off.
“When you buy something and click on the buy button, you are at your most euphoric moment,” says Jordan Gal, CEO at Carthook, an upselling tool for Shopify stores. “That’s a good time to make an offer. If you can set up your offer in a way wherever it’s beneficial for both parties, then everybody wins.”
There are three key points in the sales funnel where you can effectively cross-sell and upsell:
- Pre-purchase: Promote cross-sells and upsells on the product page before a customer has added to their cart
- During purchase: Promote cross-sells and upsells during the checkout process or when a customer views their cart
- Post-purchase: Promote cross-sells and upsells after a customer has made a purchase, either via email, SMS, or when they return to your online store.
Get cross-selling and upselling right, and you can enjoy increased revenue and happier customers in no time at all. Here are some tips for successful cross-selling and upselling.
1. Offer product bundles
Product bundling is one of the easiest ways to expose customers to new products. Grouping together similar, complementary products not only gives shoppers the chance to try out other products in your catalog, but they’ll be willing to pay more because they’re getting additional items.
For example, if you sell beauty products, you might create a bundle for oily skin or anti-aging that brings together some of your best products that are cheaper to buy together but more expensive than buying one product on its own.
Take a leaf out of 3 Wise Men’s book. The clothes brand encourages shoppers to mix and match items and create their own personalized bundles.
2. Build a great post-purchase experience
The customer journey doesn’t end when a customer has placed an order. Now is the perfect time to recommend relevant, complementary products and remind shoppers about other items in your inventory.
“If you don’t offer anything post-purchase, you won’t make any money post-purchase,” says Jordan. “But if you do, roughly 20% of those customers will buy. You’ll make more revenue, have a better average order value, a better return on ad spend, and a lot of your shoppers will be happy for it.”
Put together a five-email sequence that introduces shoppers to other products that might benefit their original purchase.
For example, you might suggest a toner to go with the cleanser they’ve just bought, or a matching hat to go with their new scarf.
The key is to make it personal: Use purchase data you have available to cherry-pick the most relevant products to serve to customers.
KiwiCo encourages shoppers to upgrade to get a free book with their next subscription box.
3. Suggest bulk orders
Nobody likes running out of their favorite face cream, coffee, or snacks. Suggesting shoppers buy in bulk is a good way to increase AOV and secure long-term brand loyalty while you’re at it. This can be particularly effective if you have a shipping threshold. According to NRF, 90% of online customers claim that free shipping motivates them to purchase more, while 65% of buyers said they typically look for free shipping thresholds on items they plan to buy before adding to their cart.
For example, if you have a free shipping threshold of $50, encourage shoppers to upgrade or add items to their order to reach that threshold.
Birchbox offers a juicy discount and free shipping when customers spend over $125.
4. Pitch a subscription
One of the most effective ways to secure recurring revenue is to promote a subscription model — who doesn’t want their favorite coffee or wine delivered to their door every month?! If a customer regularly buys the same product or has shown an interest in several items, encourage them to sign up for a subscription.
Not only will this guarantee regular revenue, but it will improve the customer experience by ensuring shoppers are never out of their favorite products with repeat purchases.
Native offers customers the chance to get money off if they subscribe instead of making a one-time purchase.
Offering a post-purchase subscription has been incredibly effective for Kettle and Fire. The brand wanted to expose shoppers to its range of flavors, so the team created post-purchase upsells and cross-sells.
“The first iteration, we had just one upsell and one down-sell… and that gave us a 41% higher revenue per visitor,” says Wilson Hung, the Director of Growth. For the checkout conversions, over the course of three iterations, we’ve seen an increase of over 140%.” The brand now has a 10% higher AOV.
5. Recommend a complementary product
The simplest way of cross-selling is to recommend a complementary product or suggest products that other, similar shoppers have bought. You can do this on the product page, the checkout page, or post-purchase.
Amazon has made a huge chunk of its revenue using this model — but make sure you’re only recommending complementary products and not random items that come out of left-field.
Aesop includes complementary products on each product page.
6. Leverage cross-sell and upsell tools
It would be a real drag if you had to manually dig into customer data to promote relevant products. Luckily, there’s a handful of powerful apps and tools that you can plug and play for successful cross-selling and upselling campaigns.
These are some of our favorites:
- OrderBump: Create hyper-targeted promotional offers for your customers both before and after they’ve made a purchase for a personalized shopping experience.
- Selleasy: Choose from different types of cross-selling and upsell offers, like the “frequently bought together” bundle, a cart page upsell funnel, and discounts with countdown timers.
- Vitals: Includes many cross-selling and upselling features, like volume discounts, product bundles, and buy-one-get-one-free options.
- Rebuy: Personalize the shopping experience based on previous purchases, customer location, and products in the shopping cart. You can also add recommendations and offers at different points throughout the funnel.
- Honeycomb: Create post-purchase thank you pages with upsells, generate relevant cross-sell offers, and offer shoppers free gifts with additional purchases.
7. Test, test, and test some more
Not every cross-sell or upsell tactic will work for every brand. As with anything, we recommend testing different offers at different points throughout the sales cycle to see what works best with your audience.
Run A/B tests of pre-purchase, post-purchase, and during-purchase cross-sells and upsells, try out subscription options, and play around with your shipping threshold to see where the sweet spot is. The aim of every great cross-sell and upsell campaign should be to benefit both the brand and the customer. It should be a win-win, providing a better experience for customers and increasing your revenue, AOV, and CLV at the same time.
Get started with cross-selling and upselling
If you haven’t already started testing cross-selling and upselling options in your store, you might be leaving money on the table.
Experiment with the different tactics we’ve laid out here, but remember: the most important thing is that you find a strategy that resonates with your target shoppers.
Originally published on thegood.com