Cross Sell vs. Upsell: How to Boost Your E-commerce Revenue - Tweakwise

Cross Sell vs. Upsell: How to Boost Your E-commerce Revenue

Cross-selling and upselling are two commonly used sales and marketing tactics today. Many brick-and-mortar and e-commerce stores cross-sell and upsell to achieve their business goals. But there’s a difference between the two that all marketers and businesses must understand to properly use them for profit-enhancing opportunities.
To draw a clear line between upselling vs. cross-selling, let’s take a look at the difference between the two tactics, their overall effectiveness, and how to use both to boost your e-commerce revenue.

What is Cross-Selling?

Cross-selling is a marketing tactic or process that aims to increase the value of a sale by offering a different product or service to a customer. The included product or service acts as a complementary add-on when purchasing the original product.

Cross-selling, as a marketing tactic, is present everywhere in retail and e-commerce. “It ranks as a top strategic priority for many industries, including financial services, insurance, health care, accounting, telecommunications, airlines, and retailing,” said a 2011 study published in the Journal of Marketing Research.

Advantages of Cross Selling

Cross-selling is one way to increase revenue without using a lot of money to target more new and existing customers, so it has lots of advantages when used correctly and strategically.
On the side of the marketer or business, cross-selling can help increase earnings and build brand loyalty. It’s a no-brainer that when you successfully manage to convince a customer to buy additional products or services, you’ll earn more. And when these customers are satisfied by the multiple products they didn’t originally intend to purchase, it builds brand loyalty. They know that you have multiple quality products to offer, so they will keep coming back for more as a loyal customer.
On the buyer or customer side, cross-selling can offer convenience and connectivity—factors that contribute to the buyer’s journey. Consumers today prize convenience; that’s why they go to e-commerce sites instead of brick-and-mortar stores. And they want one e-commerce site that can offer them what they’re looking for and more without the headache of accessing multiple pages and undergoing long processes before checkout. Cross-selling can give them the convenience of buying products and services they need or might need and the added boost to move through the buying journey.

Examples of Cross-Selling

Cross-selling is almost offered at every retail and e-commerce store today, so it won’t be difficult to find the best and most effective examples of its usage. Stores that offer multiple products or services under multiple categories mostly apply cross-selling to their marketing strategies.

Examples of Cross-Selling in Brick-And-Mortar Stores:

  • A fast-food cashier asking customers if they would like an additional side to their meals
  • A furniture store offering additional pieces of furniture in the same set
  • A tech store offering accessories, such as phone cases, screen protectors, and wireless earphones to customers buying devices like tablets and smartphones

Examples of Cross-Selling in E-commerce Stores:

  • A fashion website suggesting compatible products that can build a full outfit
  • An online marketplace suggesting products that are frequently bought together by other customers
  • A cosmetics company offering other products that can build a full make-up look

What is Upselling?

Stephan Schiffman, a well-known author of best-selling marketing books and one of the global leaders in marketing and sales training since 1979, defines upselling as “what happens when you take the initiative to ask someone who already has purchased something you offer to purchase more of it – or more of something else”.

The difference between cross-selling and upselling lies in the way products and services are offered. If cross-selling capitalizes on offering additional or complementary products and services, upselling is a marketing technique that aims to persuade customers to purchase an upgraded or premium version of the chosen product or service. In this way, the marketer explicitly states that there are better products or services available. Of course, the upgraded and premium ones are more expensive than the original product, increasing the final amount of the sale and the store’s overall revenue.

Advantages of Upselling

Upselling techniques also offer many advantages—both to the stores or marketers and the customers. When used right, upselling can offer better products and services and increase the store’s overall revenue.
On the side of the marketer or business, upselling offers opportunities to increase revenue and solidify brand loyalty. When you upsell, you identify where your company earns the most, what your clients’ needs are, and how to best offer your more expensive products strategically—so this tactic gives you the best chance to earn more and welcome more returning customers.
On the side of the buyer or customer, upselling increases customer satisfaction and loyalty. Since you’re offering them better products and services, they get the idea that you know what they want and need. And when they appreciate this idea, they will keep coming back for more.

Examples of Upselling

Like cross-selling, upselling is also being utilized by many retail and e-commerce stores today, especially marketplaces that carry multiple products and services with different variations or from different brands.

Examples of Upselling in Brick-And-Mortar Stores

  • A restaurant introducing premium or limited-edition flavors of its standard drinks or desserts
  • A tech store offering a more expensive tech product or brand with better features (e.g. standard earphones to noise-canceling headphones, a smartphone with 35 GB storage to 128 GB storage)
  • A car company offering packages with protection plans to its customers

Examples of Upselling in E-commerce Stores

  • An SEO company offering SEO services in packages—from standard to premium; the premium version comes with better features offered at a discounted price
  • A fashion brand introducing premium, best-selling, or limited-edition products that are better in quality and design
  • A marketplace offering premium gift sets that include the initial item the customer plans to buy

How Effective Are Cross-Selling and Upselling?

Although the two tactics are different, both are actually effective in maximizing revenue when used right and strategically. Many brick-and-mortar stores and e-commerce websites around the world have witnessed the effectiveness of upselling vs. cross-selling.

According to a recent 2020 study conducted by McKinsey & Company, a global management consulting firm to many of the world’s most influential businesses and institutions, cross-selling and other category-penetration techniques can increase sales by 20% and profits by 30%.

An analysis 6 months after conducting the pilots showed sustained “aisle-crossing” in the customers we’d targeted. A broader rollout yielded a jump in email conversions of 25 percent and a 60 percent increase in on-site conversions. Overall marketing ROI rose nearly 30 percent. These improved metrics translated into an increase in overall yearly sales of about 20 percent and an increased annual EBITDA of roughly 30 percent.” McKinsey & Company concluded.

In other news, Sucharita Kodali, a Forrester Research analyst found out that 10% to 30% of online marketplaces revenue came from product recommendations through upselling techniques, proving that offering recommendations is one of the best ways to sell more products.

Amazon, the world’s largest online retailer that sells almost anything, even revealed in 2006 that 35% of its revenues increased when it introduced upselling, starting with a selling tactic that included a “Frequently Bought Together” section.

These numbers are just some examples of how effective cross-sell and upsell techniques are in different industries, especially in e-commerce. The secret, of course, lies in understanding your own products, services, and customers.

How To Boost Your E-commerce Revenue Through Cross-Sell and Upsell Techniques

As mentioned before, many brick-and-mortar and e-commerce stores today cross-sell and upsell, and their revenues have proven the effectiveness of both marketing tactics when used right and strategically. If you plan to cross-sell and upsell products and services to increase revenue, acquire new customers, and retain loyal customers, here are some effective strategies to achieve your goals:

Use The Tactic That Can Get The Best Results

You may pit upsell vs. cross-sell against each other or use them both, depending on the products and services you offer and your overall marketing strategy. You need to identify which technique works best for the store and its customers, so it could be a trial-and-error process.

Offer New Or Additional Products And Services That Make Sense

When you bundle up products for cross-selling or offer premium products for upselling, make sure that your offerings make sense. You can start by making a list of products and services you want to include, then test them one by one or all at once.
Don’t blind your customers with products and services that are unrelated or not beneficial to the ones they originally plan to purchase as it can decrease customer satisfaction and worse, derail a purchase.

Utilize The Buyer’s Persona

Take advantage of all the data and information you have about your existing and prospective customers to build effective cross-sell and upsell strategies. Compile effective data from your customer’s wants, needs, hobbies, interests, previous purchases, and even financial capabilities.

Aim To Close Product Gaps

When you cross-sell and upsell, you should simultaneously aim to identify and close product gaps. Look for opportunities and market segments that you have yet to offer. You can conduct a product gap analysis by studying competitors that offer similar products and utilize cross-selling and upselling techniques; exploring possible products and services you can offer now and in the future; and thinking of useful features you can add to your existing products and services.

Expand Your Territory

A regular e-commerce store usually upsells and cross-sells when customers browse or add products and services to their carts. But if you wish to expand your territory and attract new customers, you can grab more opportunities by introducing special offers and upgrades through email or social media marketing. Through this, you can have direct contact with each of your customers.

Upselling vs. Cross-Selling: The Bottom Line

You can choose to cross-sell and upsell or settle for one marketing tactic that can improve your overall strategy and realize your goals. The effectiveness of each tactic depends on the type of your e-commerce store and the whole strategy you plan to use. As such, Tweakwise is here to remind you that both tactics are total winners in increasing e-commerce revenue when done right. Always aim to give your customers the best personalized shopping experience when upselling and cross-selling.

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