Many companies focus a great deal on customer acquisition as their main source of revenue growth. While this is certainly an effective sales tactic to an extent, it’s important not to put all of your eggs in one basket. Sometimes, it can be hard to appreciate what you have right in front of you. Existing customers present a golden opportunity for organically increasing your sales numbers. Through processes known as upselling and cross-selling, you can improve customer relations, experience, and buying potential. These processes enhance customer retention practices, which is arguably equally valuable to onboarding new customers.
What Is Upselling?
Anyone who has ever shopped in a retail environment or signed up for a food subscription program probably already knows what upselling is, even if they don’t realize it. Upselling is a sales tactic where a sales or customer service representative convinces you to upgrade your existing purchase or order to a larger size or quantity. Sometimes, it doesn’t take that much convincing as much as simply asking a customer if they want to upgrade to a larger size or quantity for a little more money.
For instance, when you purchase a slushie or soda pop from a convenience store, the clerk might say something like, “For an extra 25 cents, you can upgrade to a large size instead of a small or medium”. This is a common example of upselling. Even though the additional profit is minimal for the business owner, it’s still enticing to the customer because they’re getting a lot more for their money. Plus, if the business owner gets enough upsells from people purchasing slushies and soda pops, they can turn a profit. Moreover, customers will appreciate the great deal and keep coming back.
What Is Cross-Selling?
Cross-selling is the sibling of upselling. It’s when businesses offer additional products or services that complement whatever customers are already purchasing.
To build on the above example, the store clerk might suggest that you purchase a plate of nachos or bagged chips to accompany your drink of choice for an additional small fee. Basically, they’re making a tempting offer that you’ll have a hard time refusing because it’s such a great deal. Buying the chips and drink as a combo might be a lot cheaper than buying each item separately and this is meant to entice customers to increase their orders.
What’s the Difference between Upselling and Cross-Selling?
As demonstrated by the above examples, upselling and cross-selling are in the same family of sales tactics. Both are geared toward increasing sales and boosting customer experiences. The idea is to make customers feel like they’re getting a great deal of value out of their purchase, which is the case.
The main difference is that upselling focuses on selling more of the same product or service, whereas cross-selling is geared toward selling add-on products or services that complement the original purchase.
The digital marketing equivalent to cross-selling is the “Customers also purchased” or “Customers also viewed” section of e-commerce sales platforms. This section isn’t placed on your order by accident. It’s fully intentional and it’s meant to pique your interest in these other products or services that are related to the one you’re currently purchasing. It’s a clever marketing tactic that works in instances where customers can see the true value of purchasing these additional products, especially if they didn’t previously know that the add-on products existed and can get them for a significant discount with their original purchase.
The Importance of Upselling and Cross-Selling
Upselling and cross-selling aren’t new sales tactics. In fact, marketers and business owners have most likely been unwittingly employing these sales techniques long before they even had a name. Traditional sales funnels concentrate on one basic outcome: sell the customer a product or service and then move on to the next customer.
The reason upselling and cross-selling are actually far more effective sales methods in the long run is because they place a strong focus on customer service and interactions. Basically, if a customer is already satisfied with their product or service purchase, then why not take the opportunity to further build on that positive momentum by offering them a little something more? In this market, the competition for customer loyalty is fierce.
Every business is striving to disrupt their industry by differentiating themselves from their competition. The best way to accomplish this goal is to offer a unique product, service, and overall customer experience.
Here are a few benefits of implementing strong upselling and cross-selling services for your business.
Strong upselling and cross-selling tactics help you sell more products and improve value-driven customer retention rates. When customers see the value in upgrading their purchases or including complementary add-ons, they’re more likely to do so. Plus, making appropriate customer product and service recommendations based on past purchases will only increase your customers’ confidence in your business. When Amazon added their “customers who bought this item” section in 2006, they saw a 35% sales increase and it’s been going steady since then.
Increase Customer Loyalty
Show your customers how well you know them by making appropriate product and service recommendations based on their past purchases and interests. Customers are more willing to continue to support businesses that align with their personal interests and offer budget-friendly value-driven promotions. Upselling and cross-selling are essentially viewed as an incentive to make more purchases because customers see the value in purchasing certain products together for a lower price than purchasing each item separately for a higher market value.
Improve ROI and CLV
ROI and CLV stand for Return on Investment and Customer Lifetime Value, respectively. These two concepts go hand in hand. The former is a measure of cost ratio between your net and income investment. The latter measures the overall lifetime value of retaining a specific customer (how much capital they contribute to the financial success of your business over time). Upselling and cross-selling can help improve both ROI and CLV exponentially while offering convenience and flexibility in return to your customers.
Basically, this is a win-win situation for both the business and the customers as both parties get something valuable out of it.
Upselling and Cross-Selling Services from 3C Contact Services
3C Contact Services can help you increase your business’s growth potential through extensive professional upselling and cross-selling services. Our fully trained sales and customer service representatives have extensive knowledge of how your business operates as well as the products and services you offer. With a strong focus on customer service and experience, we have the technical and interpersonal skills to boost your ROI. Contact us today to learn more.