Upselling is a method of encouraging customers to buy products or services that are as expensive or more expensive than the products they normally buy. Cross-selling is a technique that encourages users to purchase related or complementary products. Although often used interchangeably, both offer distinct benefits and can be used in tandem to increase effectiveness.
This time, we will introduce upsells and cross-sells, including their overviews, differences, effective timing, and case studies as strategies.
Difference between upsell and cross-sell
Upselling and cross-selling are similar in that they add value to the user. Both are methods that gradually take shape as you gain customers, and then propose additional options such as “I want to increase sales” or “I want customers to know more about the product.”
The main difference is that upsell refers to getting users to move the products and services they are currently using to a higher plan, while cross-selling refers to getting users to purchase additional products and services that they have not yet used. point.
What is upsell?
Upsells encourage customers to upgrade the items or services they purchase or include additional services.
This is a method of selling more expensive products to users, often using comparison charts. By showing your customers that other versions or products might better meet their
needs
, you provide an incentive for them to make a satisfied purchase.
What is cross-selling?
Cross-selling is by proposing a different item to the item that the customer has already purchased or the item or service that they have decided to purchase, to compensate for the unmet needs of the current item and encourage them to purchase a related item. I urge you to do so.
In many cases, cross-sold items have a complementary effect on each other, so customers have the potential to purchase both.
Amazon, a major e-commerce company, reports that 35% of its revenue comes from cross-selling.
The importance of upselling and cross-selling
First of all, we can expect an increase in the customer unit price (revenue per customer), which is important for doing business. Here are some other examples of the importance of upselling and cross-selling.
Increase sales
You can learn about the needs of your customers, such as what they want and what they are trying to do. By understanding needs and trends, you can develop new strategies and maximize your profitability.
increase fans
Providing better service to users will lead to customer satisfaction. Customer satisfaction increases, your company’s fan base increases, word of mouth increases, and your company’s visibility increases.
Increase customer satisfaction
Even if customers are satisfied with their current products and services, they can learn about better products and services and have a wider range of choices, which increases customer satisfaction.
This is a method that has many benefits from both a business perspective and a customer perspective.
Types and strategy examples of upsell and cross-sell
Upsell and cross-sell are terms that are somewhat familiar to those involved in business. Not many people understand what these strategies are and how they are implemented.
This is a sales promotion method that is necessary for smoothing and expanding your business, so let’s learn how to use it by including strategic examples.
However, by upselling and cross-selling without understanding customer psychology, there is a risk that the proposed product will be completely misplaced, and that the customer will have a negative impression of being forced into a hard sell or receiving pushy customer service. There are so you need to be careful.
upsell
Upsells can be used in all types of transactions, including in-store and e-commerce. To use an analogy in the financial industry, upselling means selling an upgraded product even though it has similar properties to increase the transaction amount.
It is best to suggest something good from the beginning, but the key is whether or not you can propose something even better depending on the customer’s situation.
The types and examples of upsells are as follows.
Upsell on similar products
For example, let’s say there is a user who is considering purchasing a computer. If you like a particular computer, we will explain in detail the features and benefits of the computer we offer. We will then introduce higher-end models with more features. Successful upselling can be achieved by analyzing and understanding what users want.
However, if the price is too high compared to the original item, there is a risk of negatively changing customer sentiment, so you need to be careful about the price difference between the products when upselling.
Upsell with discount
Upselling with a discount is a great technique for items you use every day, like shoes or cosmetics. For example, if a user is looking to buy a body wash, they can upgrade to a more expensive product of the same type by offering a specific discount on the more expensive body wash. This offer can be made more attractive to customers, which in turn can lead to higher profits.
This technique also helps you appeal to specific users by distinguishing them between customers and new users. Discounts such as free shipping are also effective.
Upsell from free to paid
This is a method of upgrading something that was originally provided for free, such as a subscription or email newsletter, to a paid plan. It is important to appeal to customers that they can receive better service by switching to a paid plan.
In addition, lowering barriers to entry has the effect of increasing purchase opportunities, such as changing paid plans to higher grades and encouraging customers to change their monthly plans to long-term contracts. These are the “sunk cost effects” in which users who have invested money, effort, and time feel that it would be a waste to cancel their membership even though they have no hope of recovering those costs, and end up making further investments. This is a business model aimed at
cross sell
Cross-selling can be used in all types of transactions, including in-store and e-commerce.
Similar to upselling, in the financial industry, cross-selling refers to selling and providing related financial products such as insurance in addition to deposits and securities management.
From those that can be completed in-house to those that can be completed in-house, various types of cross-selling are possible depending on the partner. Whether or not you can cross-sell depends on understanding what each business person is dealing with and how you approach them.
The types and examples of cross-selling are as follows.
①Additional cross-selling
A common technique for cross-selling, which is an additional appeal to a product that complements the value of the item the customer has selected.
For example, by introducing touch pens to customers purchasing tablets, they will be able to use their tablets more effectively, and by introducing tablet covers, they will be able to protect their tablets and use them for a long time. We can provide it.
In addition, credit cards will be introduced to users who create new bank accounts. This can be used in situations such as introducing life insurance to users who subscribe to car insurance.
②Seasonal cross-selling
This is a method that incorporates cross-selling depending on the season. By considering when your customers buy items, you can offer better cross-selling.
For example, if you purchase chocolate during the Valentine’s season in February, there is a high possibility that you purchased it as a Valentine’s gift. This makes it possible to recommend additional items such as wrapping paper and message cards as cross-sells.
The same goes for White Day in March, and pool and swimwear as summer items in July and August. For users purchasing swimwear, we can provide a wide range of related products such as flip-flops, sunscreen, towels, and beach balls. By incorporating seasonal elements, you can greatly influence user psychology.
③Promotional cross-selling
This is a method of offering promotions related to purchased items. For example, you can expand your reach and reduce advertising costs by providing promotions related to items you have already decided to purchase, such as value-added points cards and incentive programs.
Effective timing for upselling and cross-selling
Both upsells and cross-sells are often carried out at a later stage, when the customer has already indicated that they are likely to purchase.
Furthermore, both strategies offer products or services that are similar to items that customers are considering or planning to purchase. If you upsell or cross-sell indiscriminately, there is a risk of giving negative psychology to your customers and causing them to switch to other companies’ products, so it is important to know the timing and other tricks.
The right time to upsell
The right time to upsell depends on whether you are a new customer or whether you have established a relationship of trust with the customer. It is important to analyze your customers and create opportunities to get them interested in your top-ranked items and services. By lowering barriers through free trial periods and campaigns, and building a relationship of trust first, you will be able to make proposals more smoothly.
The right time to cross sell
The best time to cross-sell is after you have already made up your mind to buy. If you can make them feel that the item is better and more comfortable to use, they may consider purchasing additional items.
summary
This time we talked about cross-selling and up-selling.
Many of the commonly seen unsuccessful business patterns include fixating on one product or service and not focusing on the quality or quantity of the service. Losing the opportunity to succeed in your business can lead to lost opportunities, and even to the inability to satisfy your customers, which can put you at risk in the long run.
When done properly, upselling and cross-selling are mutually beneficial and can increase customer satisfaction by providing maximum value to your customers. In order to successfully upsell and cross-sell, it is important to know what customers want and value. In addition, sales can be expected to increase if business operators recognize that they are professionals in their field and strive to create an environment in which they can provide better items and services.