Cross-selling vs. Upselling: What's the Difference? 5 Actionable Strategies for Ecommerce

With advertising costs rising every passing year, businesses are pressed to make the most out of each new customer. Otherwise, growing customer acquisition costs will bite into already slimming profit margins. Making just one sale is not enough in the current ecommerce landscape.

That’s where upselling and cross-selling come into play. Through smart recommendations based on existing customer intent, businesses can increase their average order value. But these strategies do more than just increase your revenue. If done right, it will deepen the relationship with your customers by providing value-added services and products that meet their needs.

In this article, we’re going to explore cross-selling and upselling deeper. We’ll learn about both these strategies and their differences. Furthermore, we are going to discover how to apply these in ecommerce. And then, we’ll look at practical examples. Let’s move on.

What is Cross-selling?

Cross-selling is an approach in sales where customers are offered complementary products based on their current or previous purchases. It implements the idea that most items can be paired with others for better results.

Let’s say you’re running an apparel store. A customer just bought a pair of jeans from you. Now you can offer a pair of shoes and a T-shirt that go well together with their new jeans. If done well, you’re not only increasing your revenue but improving customer experience. Now your client has a full outfit they can wear, not only jeans.

The psychology behind cross-selling is rooted in the principle of relevance and convenience. By presenting customers with products that complement their initial choice, businesses tap into their desire for a complete solution. This strategy increases the perceived value of the purchase and improves clients’ satisfaction.

51% of businesses treat cross-selling as their primary source of growth. But it’s not only smaller businesses that do this. For example, Amazon gets an astonishing 35% of revenue from using blocks such as “Often bought together” or “Customers also bought.”

So, why does cross-selling work so well? It boils down to understanding customer needs and presenting them with options that resonate with their user journey. By simplifying the search for related products, you improve the experience of your customers as well as increase average order value. A win-win for both sides.

 That’s why it’s always important to treat this as not a mere sales tactic. Instead, look at it as a powerful way to strengthen relationships and boost customer loyalty.

What is Upselling?

Upselling is a technique where the customer is encouraged to buy more expensive items, add-ons, or other upgrades. Let’s get back to our example with an apparel store. Consider a situation – instead of selling a regular pair of jeans, you convinced the buyer to go for a premium model made of expensive denim. Congrats, you’ve successfully upsold them.

Another classic example is McDonald’s famous line, "Would you like to supersize that?" Even something as trivial as getting large fries is considered to be an upselling. But for online retailers, it’s often more complex.

Digital platforms use data to make suggestions based on the buyer's preferences and previous purchases. For instance, a customer buying a camera might be shown higher-end models or lenses as an upgrade. For this approach to work, you’ll need to have a lot of data on your hands, and that’s where a tool like customer data platform (CDP) could help.

This differs from traditional upselling, which mostly relies on face-to-face interaction.

So, what makes upselling a win-win for both the seller and the buyer? From the seller's perspective, upselling increases the average order value and boosts revenue. For the buyer, the key to successful upselling lies in offering real value. It’s about presenting options that enhance the product they are already committed to buying. For example, a smartphone with a better camera or a larger pack of dog food.

Upselling, when the person's needs are considered, can increase customer satisfaction. It offers clients premium products that better meet their needs while also increasing the seller's profitability. That’s why for a good upsell you need to find the right balance.

Cross-selling vs Upselling: What’s the Difference?

Cross-selling and upselling are both vital strategies in sales, but they serve distinct purposes and are applied in different contexts.

Cross-selling offers complementary products to buyers. It’s about improving the purchase by suggesting related items that add value. The goal here is to increase the customer's purchase value by adding more to their cart.

Upselling, on the other hand, encourages customers to get a higher-end product than the one they are considering. The objective is to increase the value of the sale by upgrading the customer to a premium product.

Point in the sales cycle

Both strategies can work during different parts of the sales cycle. However, there’s a small variation here.

Cross-selling is quite effective during the early stages when the customer is still considering options. By showing the whole range of your products, you can convince them to buy more than one item.

Upselling tends to work slightly better when the customer is ready to commit. They know what they want but could be swayed towards a better option that fulfills their needs more.

Value of products

There’s a principal difference in the value of products sold through both approaches. Cross-selling usually deals with products in the same price bracket or lower. Consider a smartphone with a cross-sell of a phone case. Upselling deals with more expensive options with expanded features and add-ons.

Implementation in online businesses

While there’s a huge overlap between how both approaches can be implemented in a typical online store, there are slight differences. Strategies for both can be broadly bundled into pre-purchase and post-purchase, depending on when they occur.

Pre-purchase cross-selling usually occurs on the product page where visitors see a section like Amazon’s “Frequently bought together.” Another good place to try cross-selling is during the checkout process.

Post-purchase cross-selling can happen on the “Thank You” page or via transactional email. By showing complementary items right after the purchase, it’s easy to convince your customer to buy more right away.

Pre-purchase upselling is somewhat similar to cross-selling and takes place on product and cart pages. Popups and banners during the checkout process could be particularly effective here.

Post-purchase upsell can appear on a “Thank You” page and on subsequent communications. Speed is key here, as you don’t want to wait for too long before you offer the upgrade.

Both strategies require timing, understanding of clients' needs, and a delicate balance of suggesting without overselling. The key is to enhance the customer experience, offering options that add real value.

Cross-selling and Upselling Examples

Let’s take a look at how upselling and cross-selling strategies are implemented by the industry leaders, as well as smaller brands that, nevertheless, punch above one's weight.

Amazon

There’s a good reason why Amazon is in the top 5 of businesses by market cap globally and the biggest ecommerce business ever. When Amazon does something, you better pay attention and emulate it in your own business.

Their famous "Customers who bought this also bought" feature is a classic cross-selling example. By suggesting related products based on customer purchase history and behaviors, Amazon effectively increases the number of items in a shopper’s basket.

For upselling, Amazon utilizes its "Compare with similar items" feature. This allows customers to view and compare higher-end products that have better features or ratings, encouraging them to consider upgrading their choice. This strategy not only drives higher sales but also aids customers in making informed decisions.

Zara

Zara, a global leader in fashion retail, excels in cross-selling. Their strategy involves showcasing complementary products that complete an outfit. When a customer views a dress, for instance, Zara suggests accessories like handbags and shoes that pair well with it. Such a method increases the average order value and also provides customers with a complete shopping experience.

Zara's online platform uses customer browsing history and purchasing habits to personalize recommendations. This level of customization ensures that the cross-sell feels natural and relevant rather than forced or random.

Apple

Unlike our previous examples, Apple doesn’t have a lot of similar products available on its website, so its strategy is slightly different.

When making a purchase from their online store, you are prompted to buy an additional AppleCare+ protection package. The option is flawlessly integrated into the whole process, which makes it a simple choice for buyers.

Once you proceed to the checkout, you’re offered a list of supplemental items for your new iPhone. It’s a huge list sorted into categories. And since most of these items cost just 5-10% of the price of the phone, it’s likely that customers will grab at least one or two items from the list.

LARQ

A brand for fashionable hi-tech water bottles that became popular after being featured in Shark Tank is thriving. Apart from selling rather expensive bottles and water purifiers, they also sell accessories for their gadgets. Once the customer adds something to their cart, they are presented with an option to add accessories to the order. That’s a solid increase in average order value and an even better experience for the customer.

Away

Away, a brand for premium travel accessories and luggage, does an excellent job with how it uses upselling and cross-selling techniques on its checkout page. Visitors aren’t only offered supplementary items, but they are also being shown a more expensive option right before they pay for their purchase. Perfect timing to persuade someone to buy a more expensive item.

What can we learn from these examples? The key takeaway is the importance of personalization and relevance in both cross-selling and upselling. By introducing similar personalized and data-driven approaches, ecommerce businesses can improve customer satisfaction and multiply sales.

How to Cross-Sell and Upsell: Best Strategies for Ecommerce

It’s vital for ecommerce businesses to master the art of cross-selling and upselling if they are seeking to maximize revenue and enhance customer experience. These strategies can boost sales while providing value to the clients.

Data-Driven Recommendations

The key to successful cross-selling and upselling lies in understanding your customers. Analyzing customer data and buying behaviors allows ecommerce platforms to make personalized product recommendations. For instance, using past purchase history to suggest complementary products increases the likelihood of a customer making an additional purchase. Tools like AI-driven analytics can predict customer preferences, leading to more effective cross-sell and upsell opportunities.

Product bundling

Product bundling is an effective cross-selling technique. By grouping related products together at a slightly reduced price, customers perceive higher value. For example, a skincare bundle might include a cleanser, toner, and moisturizer at a price lower than buying each item separately. This strategy increases the average order value and introduces customers to new products they might not have considered otherwise.

Tiered pricing

Tiered pricing is a classic upselling technique. Offering products in different price ranges encourages customers to consider higher-priced options. For instance, a basic, standard, and premium subscription model clearly delineates the value offered at each price point, making customers upgrade for better features or services. This tactic is more common among subscription-based services, but clever ecommerce businesses can adapt this to their product ranges too.

Creating urgency

Creating a sense of urgency can effectively boost both cross-selling and upselling. Limited-time offers or highlighting the scarcity of high-demand products can compel customers to make quicker and potentially larger purchases. This strategy taps into the consumer's fear of missing out (FOMO), encouraging them to act fast.

Customizing strategies for different platforms

But how can these strategies be customized for different types of businesses? The key is to understand the unique audience of each platform. For a luxury brand's site, emphasizing exclusivity and premium products might be more effective. In contrast, for a budget-friendly store, highlighting savings and value through bundling would resonate more with its customer base.

Incorporating these strategies requires understanding your customers, leveraging data, and creating irresistible offers. With the help of it, you can encourage customer purchases and improve their experience.

Improve Your Cross-selling and Upselling with Yespo

Creating a successful upselling and cross-selling strategy for an online store can be a daunting task. There are so many parts to it that you just can’t do it manually. But when it comes to data collection and processing, a reliable CDP like Yespo could be helpful.

Yespo aggregates information from all your data sources to create a single customer profile that stores all customer information. This is helpful when you want to launch omnichannel campaigns from one place avoiding data silos.

After the data is gathered, it can be processed and used to run marketing campaigns. The next step should be the segmentation of gathered data. It allows the creation of narrow groups of customers. This way, you can improve your cross- and upsell game by showing the buyers the products they are most likely to buy.

In Yespo, you can perform advanced customer segmentation that’s based not only on simple criteria like demographics or location. You can create complex dynamic segments that get populated automatically based on any combination of criteria matched by your customers. With proper segments in place, you can proceed to create automated workflows where the system sends messages with custom content for any predefined segment.

With your segments in place, the most important part begins. Yespo excels in providing personalized product recommendations. By leveraging advanced analytics and machine learning algorithms, Yespo identifies patterns and preferences in consumer behavior, suggesting products that customers are more likely to buy. These recommendations can be used in the website, app, messages, and more. This increases the likelihood of a sale and improves the customer shopping experience by making it more relevant and personal.

Let’s take a case study of Pampik, for example. By implementing smart recommendations across their site, they managed to increase ROI to an astonishing 1734%! This was achieved by adding recommendation blocks not only to the most obvious places like the main page or the cart but even to the 404 page.

And the best part? You can create recommendations in multiple channels, not only on traditional blocks on the website. Let’s consider Stylus, a major Ukrainian electronics retailer. Personalized product recommendations in their trigger-based newsletters managed to generate 20% of orders.

By utilizing Yespo, ecommerce businesses can transform their approach to cross-selling and upselling. It’s not just about selling more; it’s about selling smarter – understanding what your client wants and delivering it at the right time. Yespo provides the tools – communication channels such as website widgets, AI, advanced analytics and so on – to make this a reality, turning every customer interaction into a personalized shopping experience.

Final Thoughts

Hopefully, by now, you have a solid understanding of both cross-selling and upselling: definitions, the difference between them, and how leading businesses like Amazon and Apple use these strategies. We’ve learned about many techniques, such as bundling and tiered pricing, that help companies encourage purchases and improve customer experience.

Looking ahead, the future of ecommerce will continue to be shaped by innovative approaches to sales and customer engagement. Embracing these strategies today will not only prepare your business for the challenges of tomorrow but also ensure that you remain at the forefront of a rapidly changing digital marketplace.

If you’d like to up your sales game and sell more while delivering even better service, consider Yespo CDP for your store. Our experienced team will gladly help you with solutions for any scenario that you might be facing.

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