The No Jargon Email

Cross selling v upselling - Small differences but big gains

I used to work in a sports store and i had a bit of knack for turning a single item purchase into a package deal. We had all kinds of useful accessories right at the checkout so i could always make recommendations on items customers can add to their first purchase - his was a cross-selling tactic, a strategy businesses use to sell more, with less—less time, less money, less resources.

Upselling and cross-selling are often confused because, in some ways, they accomplish the same goal of increasing the amount a customer will buy. But there are distinct differences between the two. Understanding these differences and then applying them to your business can have huge impacts on your commercial goals.

Lets dive in and look at the difference and come examples of each tactic in action.

What is upselling?

Upselling is about upgrading the customer to a bigger or better version of the product or service they're already buying. Most industries do it but the ones that you will notice this most is food - more specifically Fast Food!

As customers we are always encouraged to "supersize" the size of an item. Ordering small fries? Make it a large for only an extra 25 cents.

Once you know what upselling looks like, you'll start to notice it everywhere.....

• Promoting a warranty when someone buys an appliance
• Upgrading to a spa package when someone goes to book a massage
• Offering more analytical accounting services in addition to your standard transitional bookkeeping services
• When someone hires you to design their logo, proposing an entire branding package instead
• Switching people to a retainer for marketing services over the one-off project

Best to use up-selling when the customer is in the middle of a purchase decision or has just decided to purchase...

• When the customer has expressed interest in a particular tiered product or service (think iPhones or app subscriptions)
• During the checkout process, when the customer is already in a buying mindset
• In response to specific customer inquiries, where an upsell can provide a tailored solution
• As part of a loyalty program or customer retention strategy, to reward and incentivise repeat business

Note, dont be to pushy (dont bu that guy or gal) as it can impact future sales and brand reputation.

What is cross-selling?

In contrast, Cross-selling is about getting customers to buy different, related items in addition to what they're already buying.

Effective cross-selling pitches items that will enhance whatever the person is buying or make using that item much easier.

Think buying a ball and offering a pump so you can use it!

The most important thing to keep in mind is that while products you suggest don't need to be extremely similar, they do need to be complementary. Cross-selling isn't just about getting customers to buy more items right this moment—it's about exposing your customers to new products and offerings they may not have seen before. You may not make the extra sale today, but you increase the likelihood that the customer comes back at some point down the line.

Using cross-sell is more nuanced it requires paying close attention to individual customer needs and finding ways to map them back to complementary offerings - adding value

• When a customer is purchasing a product or service that naturally pairs with another item
• When you can bundle items together, like offering a discounted package of related software tools to encourage customers to buy several items rather than just one
• When you have insight into the customer's browsing activity
• When launching a new product or service, promote it to existing customers who have previously purchased related items
• During customer support interactions, suggest relevant cross-sells that can address their specific needs or concerns

Examples of cross-selling and upselling to inspire action

Upselling works in all industries, not just consumer-focused ones. If your business pays for software, for example, you've almost definitely seen upselling in action.

Let's take a look at Airtable

Airtable's pricing structure is laid out in such a way that you can see every plan's capabilities all in one place (a very common approach for SaaS businesses). This approach makes you consider the options around the service...

As you're contemplating how much you need, you'll also notice that the prices don't increase proportionately with the increase in services. The Business plan costs more than twice as much as the Team plan, but offers four times more attachment space. When the higher overall price means a lower price per item, people are much more susceptible to being upsold.

As for cross-selling, the most clear-cut example is Amazon. Whenever you're looking at a product, if you scroll down, you'll always see a "Frequently bought together" section. Amazon also uses automated purchase history analysis to look at what you've bought in the past, find customers with similar buying habits, and suggest items that are popular among people who are looking for the same things you are.

Take action

Upselling and cross-selling are both an art and a science. You need to think creatively about your offerings (and potential offerings) and how they might complement existing purchases. So dive in and use this information to up your cross sell and upsell game.

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In the news - Must read updates for this week

• No more WeWork - Look i know this is not strictly about marketing but the WeWork rise and fall is such an intersting case study in self hype and the incidious world VC backed companies that comes as no surprse that the "Grim reaper" has finally caught up as they file for bankruptcy​
• YouTube battles Ad Blockers - Privacy has been front and centre in the digital marketing world since Apple thumbed its nose at Meta a few years back with its IOS 13 Ad privacy changes. So no surprise that YouTube is doubling down on trying to beat the blockers. Expect to see more prompts to sign up for its premium service
• Businesses create own influencers - This is a facinating 4 min read on how Cirque du Soleil has used its more than 1500 artists to build its own influencer network to collaborate with brands. Its dives into how this is a growing trend for business to circumvent the every increasing rise in costs and pivot to "short form" Video
• TikTok's longform Video Play - TikTok has confirmed that its testing 15 min video uploads putting it on an even more direct collision course with YouTube - game on.

Chat next week

Martin - Founder Relearn Digital

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