Upselling and Cross-Selling [How To Make More Money Per Customer]

The truth is: Loyal clients purchase more often than new prospects. 

Acquiring a new customer can cost five times higher than maintaining an existing relationship. 

Upselling to your existing customers will save your company hundreds of thousands of dollars and increase profits by billions. 

A customer’s revenue potential does not end at the point of sale. When businesses focus on cross-sell and upsell skills, they can generate more income from each client/customer.

Learn how to use the pro strategies of cross-selling and upselling effectively in this article. 

What is Upselling?

Upselling is when an upgrade, enhancement, or premium option would make a customer’s additional purchase more expensive.

Whenever a customer wants to purchase from your business, you could offer something similar or a more high-value version. This tactic is motivated by a customer’s desire to get the best value for their money and the seller’s desire to make more from each client/customer. For instance, a laptop buyer might be offered a more powerful model by the same brand. 

An online shop typically uses this strategy on the product page before the checkout process. It prevents customers from being deceived by last-minute upgrade offers before purchasing.

Delayed upselling is also an option for frequently purchased products. This method works exceptionally well with loyal customers. For example, you might entice them to switch to a better alternative after buying a certain product several times. 

Unlike lateral product sales, upselling involves offering an upgraded or premium version of the product the customer is about to purchase.

When you upsell, you’re “piling on” the product rather than “building around” it.

What is Cross-Selling?

Any product sold in conjunction with the primary product is classified as cross selling. For instance, when a customer has already subscribed to your marketing tool, cross selling encourages them to subscribe to your CRM.

It’s common practice in e-commerce to cross-sell products. Complementary items can be found on product pages, in the shopping cart, or during checkout. Alternatively, a list of compatible products may be emailed to you.

Ideally, cross-sellers should pitch items that will enhance the person’s purchase or make it easier for the person to use it. In online businesses that sell digital products, it could be an additional bonus package that is sold with the online course that the client is purchasing.

Amazon is a great example. If you scroll down when viewing a product, you’ll always see a “Customers also bought” section. Amazon uses automated purchase history analysis, as well as identifies customers with similar buying habits. That way, items are recommended based on your own purchase history as well as from others’ buying habits that are similar to yours.

Upselling vs. Cross Selling

Typically, upselling and cross-selling occur in the middle to late stages of the conversion funnel after a customer has indicated they are likely to purchase. Both strategies promote products or services similar to the item the customer originally intended to buy.

Both upsell and cross sell skills are essential for improving average order value (AOV) and profitability. It’s important to know that their effects on the business are slightly different.

Upselling is typically used to encourage customers to upgrade to a product that has a higher margin.

By adding additional products, cross-selling may not necessarily increase margin rates, but it can increase average order values.

Benefits of Upselling And Cross Selling

Upselling and cross selling are aimed at increasing a merchant’s revenues and profits. The goal isn’t only to make money but also to provide clients with real value. Advantages of how to cross sell and upsell for business owners:

Personalization

Shoppers today care more about a personalized approach than quality and price. They want you to anticipate their wants, fully understand their needs, and offer them relevant suggestions. 

A cross-sell or upsell is based on the customer’s preferences and past purchases. By using these techniques, you can improve personalization for a better customer experience.

Maximizing A Sale’s Value

According to statistics, existing customers have a 60-70% higher chance of buying than new prospects. A loyal shopper is ready to spend 31% more than a first-time buyer. By offering compliments or upgrades to existing clients, upselling and cross-selling help you retain them.

Long-Term Customer Retention

Clients who receive relevant recommendations are more likely to purchase from you and spend more money with you.

Establishes Trust

Adding a cross sell that meets your customers’ needs will increase their trust in your brand. This is because the client notices that you care about them. The offer is not just a blatant ad.

Upselling Vs. Cross Selling: What’s Better For Your Business? 

Ultimately, a company’s business model will determine whether upselling or cross selling is more beneficial. In e-commerce, where customer acquisition and shipping add a high fixed cost to orders, businesses want to maximize average order value to minimize their impact.

Let’s take a small business selling scented candles as an example (shown below):

Upselling and Cross-Selling related products

When you buy a relaxing candle, the site will recognize more types of relaxing candles. Cross selling isn’t just about getting customers to buy similar items now—it’s also about introducing them to new products. 

Remember that even though products need not be identical, they must complement one another. In cross selling, you’re not just trying to get your customers to buy more right now; you’re also exposing them to new products and services for them to know about for future purchases. 

Brand exposure can be more impactful than you think when combined with a particular purchase a customer has already decided to make. Although you may not make the extra sale today, you increase the chances of the customer returning in the future.

Examples Of  Cross-Selling And Upselling 

Cross selling and upselling can occur at any stage of the buyer’s journey. The most effective way to upsell and cross-sell is by mapping out the customer journey.

Wondering how to upsell & cross-sell for your business? Some of the best brands use upselling and cross-selling strategies. Let’s dive right in.  

Upselling Spotify

Let’s be real. Your customers will likely not go to your pricing page to learn about your pricing plans.

Rather than expecting them to hunt down this information, make your customers aware of premium features by positioning reminders within the user interface.

Spotify allows free customers to skip six tracks per hour, and then they are prompted to upgrade to a premium account. The premium features are built into the user experience, which allows the listener to see it in context and know how it will profit them.

Upselling and Cross-Selling via popups

Upselling Netflix

As a subscription-based video service provider, Netflix upsells its services by offering $7.99, $10.99, and $13.99 options. Additionally, the service prices are within a decent range, which adds to the appeal of the upsell. In terms of the upgraded services, a price increase of $3 isn’t a big deal.

Upselling and Cross-Selling via pricing structure

Cross Selling McDonalds

McDonald’s is not just a hamburger franchise. From a branding perspective, yes – they sell burgers. However, McDonald’s doesn’t make money from selling burgers. Their major revenue is generated by selling fries and soft drinks.

Next time you order a burger, wait for the question, “Would you like fries with that? “or “Would you like to make that into a meal?” 

They’re cross selling – by adding fries and Coke to your Big Mac, they will increase the order value.

Upselling and Cross-Selling mcdonalds

Have you ever ordered a soft drink at McDonald’s? The staff rarely asks if you want a burger. A Big Mac is just a gimmick to get you to order a Coke.

Understanding Aspects Of Upselling And Cross-Selling (Strategies)

1. Business Needs Scarcity

When you upsell and cross-sell, be sure not to detract from the original product your customer purchased. 

Consider that you’re an E-commerce site that sells T-shirts. You offer one t-shirt on the front page that’s worth $30. Once they go to the next page, you try to cross-sell another t-shirt worth $20. It’s a different t-shirt. The second t-shirt might cause buyer’s remorse if they liked it more than the first, and they may say, ‘Oh, I wish I had bought it instead of the first.’

That’s why some of the world’s biggest clothing and e-commerce brands, like Amazon or Zappos, will say, “Hey, people who bought this also bought these things,” which can mean, “Instead of offering a different t-shirt, I am offering pants that match this t-shirt to the next page.” The two complement each other.

For example, you could upsell them instead of making people wish they had bought the second t-shirt instead of the first. Instead of cross selling, they buy a nice t-shirt. Then they move on to the next page. This is where you say, “Oh, you bought one quantity for $20.”

However, if you purchase two more shirts, we will give them to you for $15 each. Rather than paying $5 for each shirt, you’re paying $10 in total. You already know they like what they bought, so they get additional products. This leads to you getting additional ones that say, hey, buy it for your brother, dad, cousin, etc. 

In sales, ensure a scarcity element. Otherwise, people won’t buy. We’re not talking about fake scarcity guffs, like fake timers on a website.

Maybe you’re trying to cross-sell them on a website design by offering design in addition to social media management. You can say, ‘Hey, we can only take on two clients monthly for website design. If you’re interested in getting this going, we can make sure your personal brand takes off.’

2. Recurring Base Model 

To build a successful business, like most of our clients do with systems, we recommend having at least one of those upsells or cross-sells be a recurring model. Let’s assume your core offer is a one-time fee or product. In that case, your clients should have a monthly recurring subscription.

For example, if you own a website design company, you could charge a one-time fee to build and create a website and then charge a $50-$100 monthly management fee so that they can ask questions and have you quickly make any edits needed. This will add value to the customer.

It allows you to create a powerful subscription-based model in which you get paid more than others.

How To Upsell & Cross-Sell: FAQs

Which is better: cross-selling or upselling?

In most cases, upselling works much better than cross selling, since it is easier to improve the commitment of a purchase decision that the customer has already made.

Who benefits from upselling?

Upselling is one of the most effective ways to turn shoppers into very profitable customers and keep them coming back. Customers come back for more. Upselling is unique in the way it adds value to customers that makes them want to come back for more.

What is an upsell funnel?

When a customer accepts an offer, you can set up consecutive offers that they can add to their cart until they click “decline.” When they decline an offer, the upsell window will show them one last offer before closing.

Bottom Line: Upselling and Cross-selling

Upselling and cross-selling are sometimes complicated. With a pulse on your customer’s feelings and an understanding of what features or products they would benefit most from, you can upsell and cross-sell effectively.

Don’t make assumptions about what will work for your customers. To increase sales, test different upsell and cross-sell strategies for your multiple visitor segments to determine which drives results.

We know you’re serious about scaling your business. At Scaling With Systems, we’ve helped thousands of B2B companies create a profitable client acquisition system that generates revenue for you on autopilot. To find out how we can help you, book a free consultation call, and one of our advisors will contact you. 

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