There is the perception that upselling and cross-selling are underhanded selling techniques and that they only favour the seller. However, on the contrary, these two techniques can build stronger customer relationships and result in a win-win situation for both the customer and the seller.<\/p>\n
But first, what is upselling and cross-selling?<\/p>\n
Upselling is when the seller encourages a customer to purchase a more expensive item (in the same family or category) or to upgrade their current purchase to something better. Upselling can also include the provision of add-ons to a purchase. The upsell product doesn\u2019t necessarily need to be more expensive but it usually is. An example of upselling would be the offer of adding luxury finishes (like leather upholstery) to a car the customer plans to purchase.<\/p>\n
The term cross-selling is often used interchangeably with upselling, but they are different. Cross-selling is the selling of an additional or complementary product to add onto a current purchase. The suggested products are not usually the same type of product. For example, when someone purchases coffee, a cross-sell product can be donuts. Donuts and coffee are not the same type of product, but they are known to go well together. You can also see cross-selling in the \u201cFrequently Bought Together\u201d and \u201cCustomers who bought this item also bought\u201d sections of websites.<\/p>\n
So, what are the advantages of upselling and cross-selling?<\/p>\n
CLV is the prediction of future value to be derived from a customer and their entire future relationship with a company. An upsell can increase CLV as it extends the relationship between the customer and the company by adding more purchases. A valued purchase represents something positive to the customer and encourages them to keep coming back.<\/p>\n
It is easier and cheaper to sell to an existing customer than it is to sell to a new customer. By upselling and cross-selling to existing customers you lower the costs involved with acquiring new one. This can result in an increase in profit.<\/p>\n
When using upselling the customer is getting a product that could be considered of better value. Even though the item may be more expensive the value thereof is increased, for example, in terms of features or a better quality brand.<\/p>\n
Instead of increasing your profit one item at a time, customers now buy multiple items at once. This means that it will take a shorter amount of time to reach a certain profit goal while at the same time giving the customer more value.<\/p>\n
Instead of the customer buying only one thing and then discovering later that they need an additional product, they get everything they need in one purchase through cross-selling.
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