A customer’s revenue potential continues beyond the point of sale. There’s a wealth of opportunity for more business after purchase — and practices such as cross-selling and upselling can help you tap into it. In fact, according to a survey of more than 500 sales professionals, 72% of salespeople who upsell and 74% who cross-sell say that it drives up to 30% of their revenue.
What is cross-selling?
Cross-selling is a strategy to sell complementary products related to the one a customer already owns (or is buying). Such products generally belong to different categories but will be complementary, like socks with a pair of shoes or an email marketing tool with CRM software in a B2B cross-selling.
Cross-selling is a battle-ready strategy. Here’s how McDonald’s does it: Their apple pie dispensers are kept right behind the cashier, in full view of customers. In an interview, the head of the U.S. division for McDonald’s Corp., Jeff Stratton, said that moving the dispensers to the back kitchen area would cut apple pie orders by half.
What is upselling?
Upselling is a strategy to sell a premium, more expensive version of a product that the customer already owns (or is buying). A premium version is:
- a higher, better model of the product or
- same product with value-add features that raise the perceived value of the offering
Upselling is why we have a 54″ television instead of the 48″ we planned for. It’s also why you might have subscriptions that include services you don’t use.
Bundling
There is another popular sales technique known as bundling. Bundling is the offspring of cross-selling and upselling. You bundle together the main product and other auxiliary products for a higher price than what the single products are sold for alone.
Industry Examples of Upselling & Cross-selling
Upselling and cross-selling apply to any industry. Here are just a few examples:
Manufacturing
While selling a major piece of equipment to an enterprise-level organization, the sales representative offers the customer additional coverage through an extended warranty.
Field Service
While performing routine maintenance for a customer, a field service technician notices that another piece of equipment needs repair, if not replacement. The technician uses an app on their mobile device to capture and enter the sales opportunity into the system, including notes and pictures. A sales team member then receives an alert about the potential sales opportunity, assesses the opportunity, and follows up directly with the customer.
Financial Services
Based on household data, a bank teller pulls up a customer’s profile and sees that the customer has a child nearing college age. Based on this information, the teller sends the customer promotional materials about student checking accounts and loan options.
Insurance
While onboarding a new home insurance policy holder, a property and casualty insurance agent notifies customers that they can lower their monthly rate by bundling home and auto insurance policies.
Retail
A major clothing company offers automatically generated product recommendations based on previously viewed items and purchases to customers browsing its website.
Consumer-packaged Goods
Based on customer purchase history data, a CPG company notices that three items are frequently bought together. The company offers these items as a bundle to customers as a promotion.
How to Cross-Sell and Upsell
Cross-selling and upselling can happen at any point in the buyer’s journey. And HubSpot research says that mapping out the customer journey to identify the most effective opportunities to upsell or cross-sell is one of the most effective strategies. Other top strategies include:
- Establishing customer trust
- Researching your client’s business to identify challenges and opportunities
- Using personalization or behavioral segmentation
Below are our best practices for learning how to cross-sell and upsell:
1. Get to know your audience
You may already know about buyer personas, but getting to know your audience once they’ve already bought your product is important. Use demographic and psychographic information about your customers and customer feedback to create personas for them and understand their goals and challenges to identify the most helpful, relevant products you could cross-sell and upsell.
2. Build out customer journeys
Next, map out customer journeys to identify how they will use your product and how it will help them grow. When your customers get to the point where they’re seeing results (thanks to your product), they’ll start telling other people about it and driving referrals.
At that point in the customer journey, they’ll likely be excited to hear your cross-sell or upsell pitch and spring some extra money for your additional offering.
Wait until they’re ready before trying to cross-sell or upsell. You’ll have difficulty selling them on additional products or features during the post-purchase period — after purchase, during onboarding, and before they’ve seen its value.
3. Think about problems and offer solutions that map to products
Before you hop on a call or email and attempt to sell to an existing customer, take some time to review your product offerings and find their current spot on your customer journey.
That way, you’ll have a clear idea of common challenges your customers face — and exactly which of your products you can try to cross-sell or upsell as a possible solution.
4. Practice active listening
You might be able to cross-sell or upsell to your customers on the fly during a phone call or over an email exchange — so make sure to hone in on your active listening and reading skills for signals your customer might be ready to hear your offer.
If your customer wants expanded capabilities or is actively working to reach their goals faster, it might be the right time to mention how your other products or services can help get them there.
Benefits of Upselling & Cross-selling
Increasing revenue is one of the many ways your business can benefit from upselling and cross-selling. Let’s look at the other advantages that upselling and cross-selling offer.
Upselling and cross-selling can strengthen customer relationships
Upselling and cross-selling are more complex than offering customers the next best version of your company’s product or service or promoting other products from your catalog. Truly effective upselling and cross-selling require sales reps to understand who their customer is, their goals, and what’s important to them. This information allows reps to tailor their product and service recommendations to the customer’s specific needs.
Naturally, this means that sales reps need to take the time to get to know their customers; this level of care and attention increases the likelihood of a successful upsell, makes customers feel valued, and promotes long-term loyalty. To make your sales reps’ jobs easier, invest in a customer relationship management (CRM) system that enables them to store customer information, build detailed customer profiles, and review purchase history.
Upselling and cross-selling can increase a customer’s lifetime value (LTV)
Speaking of loyalty, 57% of customers report spending more on brands or providers to which they are loyal. To that end, upselling and cross-selling strengthen relationships and secure loyalty — they can also increase the average order value of each purchase and turn one-time customers into repeat buyers, thereby increasing their LTV. Additionally, using your company’s CRM, you can segment customers based on whether they’ve made upsell or cross-sell purchases and retarget them with new upsell and cross-sell offers.
Upselling and cross-selling build customer equity
Customer equity is the total combined LTVs of your company’s customers. It stands to reason that, given that upselling and cross-selling increase each customer’s LTV, they also increase your company’s customer equity.
Upselling and cross-selling can grow your business
Not only does selling to existing customers require less effort than working to attract new ones, but it also requires less market spend. You can dramatically increase profits and grow your business faster by creating new revenue streams, building customer equity, and decreasing your total marketing spend.
Upselling and cross-selling can enhance your market position
In today’s competitive market, it isn’t enough to say that your products and services are the best in the business — you must show your work. Similar to how upselling and cross-selling require sales reps to get to know customers, they also require reps to show customers how your company’s offerings can help them achieve their goals. The most effective way is to upsell and cross-sell strategies with CRM data. Any CRM system worth it’s salt will provide full access to campaign analytics, real-time reporting, and easy-to-understand data visualizations that sales reps can use to highlight opportunities and demonstrate to customers how they can benefit from your products and services. This level of insight provides full visibility into your products and services’ value, differentiates your business from competitors, and can enhance your market position.
Conclusion
Cross-selling and upselling are sometimes complicated. Doing this tactic right takes optimal timing, keen awareness, and empathy.
If you can keep a pulse on how your customer feels, have an idea of the features or products they stand to gain the most from and know when they’ll be most receptive to an additional offer, you’ll be able to upsell and cross-sell with the best of them.
