How to Increase Your Revenue by Upselling and Cross-Selling
Your company’s growth and profits depend on increasing your sales yearly. Maintaining the prior year’s level of performance should not be what you consider successful. Some of the highest-grossing businesses in the world know this, which is why they strive to innovate and reach new customers constantly.
One of the best ways to increase your sales performance each year is cross-selling and upselling, which can include additional products or add-ons on your product page at checkout. In this article, we’ll break down the differences between sales, cross-selling, and upselling and look at some companies that thrive in this area.
Cross-Selling
There are several ways that cross-selling can help your company increase annual sales, whether you are an eCommerce company or a traditional brick-and-mortar business.
Cross-Selling at a Glance:
- Impulse Purchase
- Value Purchase
- Brand Lock-in
- The Complete Package
Impulse Purchase
Impulse purchasing is the most convenient way for your company to increase sales, and it derives from cross-selling. The critical advantage of impulse purchasing is that you don’t have to actively sell the customer the product. With impulse purchasing, you’re subtle encouraging customers into an impulse purchase by placing a related product at a strategically enticing place in the sales funnel.
You’ve likely made an impulse purchase even if you didn’t realize it. You probably do it at least once a week. Some of the best companies at this sales technique are grocery and convenience stores, two places most of us visit at least once a week.
Have you ever been standing in line at the grocery store, waiting for the customer ahead of you to finish, and seen the most perfectly packaged Snicker bar or ice cold 20oz Coke sitting there staring back at you? How many times have you bought that Snickers or Coke? Probably more than once. You probably didn’t head to the grocery store with the conscious intention of purchasing last-minute snacks. So why did you? The effectiveness of impulse cross-selling accounts for these purchases.
Value Purchase
Another successful way to cross-sell is from the vantage point of value purchasing. The most classic example of this is the universally favorite BOGO offers. How many extra graphic shirts have you purchased from Old Navy because of BOGO sales? We’ve bought a warehouse full.
By giving your customer a slight discount for purchasing in bulk, you are cross-selling items they did not intend to buy. In the Old Navy example above, if you saw a shirt that stood out to you and realized you could get one for $20 or two for $20, would you buy one or two? You’d buy two. But, you may not have realized at that moment that Old Navy was just selling you two shirts for $10 each. Nothing is free is the way the adage goes.
However, you feel like you walked out the door with a deal and purchased products at a value price. Because of that sentiment, you will likely return and do business with them again. Offering your customers a discount on a second or third product if they buy in bulk gives them value and gives you increased sales.
Brand Lock-In
Locking your customers into your brand is a tremendous cross-selling method and increases brand loyalty. Insurance companies and smartphone manufacturers are two of the best industries. Locking you into their brand’s ecosystem increases the likelihood that you will remain a customer.
For example, nearly every Property and Casualty insurance company in America today offers their customers bundle discounts for combining all of their insurance with them. They are also beginning to provide banking options, such as credit cards and installment loans. By getting you to insure your cars, homes, boats, and motorcycles, as well as your mortgage and credit cards with them, they are betting that you will be less inclined to leave.
Doing so would mean you’d have to refinance your home and cards and provide a new company with your auto VINs and serial numbers. In other words, it would be difficult to leave. They’ve locked you in.
Apple is another company famous for being very good at this. Purchasing an iPhone is only the beginning of your customer journey. Next comes complementary products like iCloud, where all your photos and documents are backed up, and then comes iTunes with all your music streams, libraries, and playlists. Recently Apple has added the Apple Card, a credit card that is difficult to pay back without an iPhone. All of these cross-sells make it inconvenient for you to leave their ecosystem.
The Complete Package
Lastly, providing your customers with a complete package is an easy way to cross-sell your products. You can develop and sell accessories for your product to be purchased, giving your customer a complete package.
Google is another tech giant that excels at cross-selling from the complete package mindset. When you buy a Google Home, you’ll likely add YouTube Premium so you can watch videos and listen to music uninterrupted. You’ll also purchase additional intelligent speakers, thermostats, and cameras because they all work seamlessly together.
In this example, one of the products would work fine, but combining it with other products gives you the most advanced usage possible. You get the complete package.
Upselling
While cross-selling significantly increases your overall sales performance, upselling strategies increase your profits from each sale. For example, when you purchase a Samsung Galaxy phone, you are given an option to advance your storage capacity for extra money. Same phone, different price. If you then purchase a Galaxy Watch (Cross-sell and Brand Lock-in), you can upgrade the case to higher quality material.
In this way, upselling increases the average order value (AOV) during the checkout process, not like cross-selling, which induces additional purchases, but by addressing a customer’s needs or promising a higher-endfunctionality experience with the initial investment. Essentially, you offer the same product but with an increased cost and quality. The customer buys your $100 shoes but buys a similar shoe for $200 because you upsold them.
Combining cross-selling and upselling results in exponentially higher sales, sustained growth, and loyal customers. We encourage you to study companies that are very successful at doing both of these sales tactics and even look at your buying practices and identify moments where you happily and willingly spent more money on more products.
Icy Sales: A Case Study in Upselling and Cross-Selling
We know you know what sales are, but why are some companies better at it than others? This is an age-old question business owners have asked themselves for millennia. We’d like to say that it isn’t rocket science, but the truth is it isn’t First Grade math either. If it were, every company ever started would be successful and never shut down.
While outside forces beyond your control can impact your sales performance, failure is often a series of choices that culminate in a going out of the business sale, no pun intended. We mean that companies that fail often do because they become stagnant or complacent or unwilling to adapt or evolve with societal shifts and technological advancements.
For example, before the invention and widespread availability of electricity, if you wanted ice to help store your food, you had to purchase it from a business that sold and delivered ice. As technology advanced, the demand for ice largely diminished because electricity and home refrigerators eliminated the need to purchase ice outside the home.
Fast forward to today, and ice is still a very profitable business, but the face of the company has shifted dramatically. Ice vending machines provide ice for customers seeking to fill their coolers for a day out on the beach but not to store their food at home.
If you were a natural ice harvesting company in the 19th Century and refused to shift your business towards capitalizing on technological advances related to your industry, you were out of business by the second World War.
Learning to upsell and cross-sale your products to your consumers is paramount to your business, maintaining growth and profits yearly. Missing these opportunities means your sales growth will melt away, just like the natural ice harvesters of the 19th Century.
Wrapping Up
The marketplace of the 21st Century is far from what it was 100 years ago. Still, the lessons from disappearing industries like ice harvesters should be a warning sign that complacency and refusal to seek growth yearly is a death wish. We want your business to continue to thrive long after you’ve retired, and we would love to partner with you on that journey.
At Awesome CX, we specialize in enhancing and amplifying the customer experience. Using our services, you can find and reach new customers, proactively contact existing customers, and build brand loyalty for your company.
Connect with us today, and our team can show you how enhancing your customers’ experience can increase your sales, especially your cross-sell and upselling opportunities. Don’t let your business melt away; call us today.
Sources:
The shady economics of ‘buy one, get one free’ deals | The Hustle
The Apple Ecosystem Is Terrific But It Sucks Sometimes | PITAKA