Entice Customers to Make Additional and Larger Purchases Using These Two Tactics With transparency, permission, and an eye on the customer's perception of value, you can knock both cross-selling and upselling out of the park.
By David Partain Edited by Maria Bailey
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If the subscription methodology utilized by many software companies has served a larger purpose, it is that companies will benefit financially by focusing beyond just one-and-done purchases. Instead, they want repeat purchases from engaged customers. To entice customers to make more purchases, marketers may choose from two approaches — the cross-sell or the upsell. Both of these tactics are viable and convince shoppers to purchase something they hadn't planned to buy when they first interacted with your brand. But because they're fundamentally different approaches, they're best deployed with a few considerations in mind.
Understanding two different animals
Upselling is where a company promises an upgraded or higher-value product version to a customer. It attempts to move the buyer from something relatively basic to a bit more advanced. A classic upsell is McDonald's asking if customers would like to supersize their meals. But other upsells might include moving a customer to a higher tier in a subscription plan, showcasing a featured product, or offering a discount or free shipping if the customer spends a set amount.
Cross-selling promotes additional products that supplement what the customer has already purchased or is looking to buy. The classic cross-sell at restaurants is to ask if the customer wants to add fries to their order. On a company's website, if a customer has given permission to offer personalized recommendations, they should see articles with products that align with whatever they just bought. So if they bought an investment that focuses on energy companies, they might be open to learning more about another investment that focuses on water or utility companies. Many companies do excellent cross-selling by showing buyers what other customers frequently purchase together, or by offering product or service bundles.
Related: Customer Service Is the New Upsell
The perception of value
If upselling and cross-selling can both generate an additional or larger sale, how do you know which one to use with a customer? It's all about their perception of value, rather than your own. If they would see something more advanced as valuable, you upsell. If they would see something supplemental as valuable, you cross-sell. This concept challenges many professionals who let their own preferences, biases or excitement around their innovations drive what they market.
So then how do you know what the customer thinks is valuable? You go back to your data. Look at the history of what they've bought and try to anticipate future needs based on that information. Previous sales open the door to talking with them about purchasing an additional or enhanced product. With the information about what they've already done on hand, you can educate them on better uses of the product, advise them on new ones, and even validate their purchase decision with case studies that demonstrate the value of that choice.
You have many good options for applying your customer data in post-purchase communication. You can have a sales representative contact a customer after the sale to see if they'd like to upgrade or purchase anything else. Another website-based option many companies use is to show customers other products they might be interested in once they've made their purchase. Even if you don't have a website, you can track what a customer searches for on a landing page. Whatever they enter can direct you to make an offer within an email, call or personalized exit/confirmation page.
Related: How Up-selling and Cross-Selling Can Increase Your Revenues with Minimal Efforts
Personalization makes a difference, but permission counts
Personalization works wonders with upselling and cross-selling because each buyer's interests and purchase history give you insight into what other products they may find valuable. It helps ensure that your recommendations are relevant and useful.
The key is to remember that personalization requires permission. Without permission, you run the risk of violating privacy regulations. Even if you stay within the legal boundaries, customers can perceive it as unnerving if you know information that they didn't volunteer. Opt-in is vital. It ensures that when you look at their history or other information to produce a new offer, the upsell or cross-sell seems like a logical progression in the interaction they're having with you.
In both upselling and cross-selling processes, be transparent
Getting permission and buy-in by nature requires transparency between you and your customer. Be clear and honest not just about how their additional purchases can add value for them, but also about the ways in which you use their data.
On the back end, transparency also means pulling in multiple data sources so you can see the big picture around the information you have. Those sources might include which pages the client has viewed on your website, which emails they've opened, what landing pages they've visited, etc. It's important to track interactions on both the sales and marketing sides to get the most complete picture of how your customers interact with your brand. Once you can see everything they've done with you, you'll have a core sense of the best way to provide value to them.
Effective upselling and cross-selling create new opportunities
Despite their differences, upselling and cross-selling can help to maintain a strong connection between you and your customers. The trick to choosing the best approach is determining what they will perceive as adding the most value. To make that determination, customer history is your best friend — so long as you've gotten permission to use this data. But if you're transparent about what you're doing and consider multiple data sources for the big picture, it becomes easier to figure out when and what to offer. Once you've mastered cross-selling and upselling, and when to use each approach, the potential within your sales is limitless.
