The Art of Upselling and Cross-Selling Your Way to Bigger Profits

by Greg DePersio

2 min read

Upselling and cross-selling are sales practices you can implement in selling your small business’s products or services to generate substantial increases in your total revenues and bottom-line profit margin. Upsells or cross sells can improve your profitability because upsell and cross-sell items typically carry higher profit margins than the basic item your customer is buying. Upsells and cross-sells account for up to 30% of total e-commerce revenues. When they’re done intelligently, upselling and cross-selling can improve your customers’ buying experience and customer satisfaction, Upsells and cross-sells provide an excellent opportunity for a “win-win” result for both your business and your patrons.

Understanding Upselling and Cross-Selling

The concepts of upselling and cross-selling are simple. An upsell is when you sell a more expensive version of a product or service to a customer than one they have or, more commonly, are in the process of buying. An upsell can also consist of selling additional features added to a product. For example, a computer upsell might be opting for a faster processor or buying an extended warranty plan. Cross-selling involves selling products related to the main product that a customer is buying. Staying with the example of a computer purchase, a cross-sell item would be a carrying case for the computer. A classic example of cross-selling is the sale of batteries for electronic products. An example of cross-selling services is selling a pedicure or massage to a client paying for a manicure. Upsells and cross sells represent opportunities to sell more products to existing customers, which is nearly always much easier than closing a sale with a new customer. According to some studies, the probability of making additional sales to an existing customer is more than three times higher than the probability of making a sale to a new customer. Upselling and cross selling aren’t just a great opportunity to increase your sales – they’re an equally great opportunity to serve your customers better, strengthening customer relationships and loyalty. For example, when you cross-sell batteries with an electronic product that requires batteries to operate but is sold “batteries not included,” your customer will be much happier when they unbox the product to use it than if you had neglected to mention buying batteries.

Tips on Cross-Selling and Upselling

The ideal upsell or cross sell shouldn’t increase the total purchase price by more than 25%. A customer is likely to look unfavorably on your attempt to sell a $99 extended warranty for a product that only costs $100 to buy brand new. Limit cross sells to items that are genuinely related to a customer’s main purchase, and avoid potentially confusing the customer by presenting items they’re totally unfamiliar with. Headphones are a good offer connected to buying a stereo, but a home security system is not. Finally, don’t overdo upsells or cross sells. It is good customer service to offer one or two optional purchases the customer may want, but it is a turnoff to go down an endless list of possible add-ons or extras.

References & Resources

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