How to Establish a Winning Upsell Strategy

In 2019, Amazon made around $11.59 billion in income, and its revenue was a bit north of $280.5 billion for the same year. 

As a result, Amazon outperforms all other online stores: it has overtaken Walmart as the world’s largest retailer. It also controls around half of the entire eCommerce market in the U.S.

There are many reasons behind the company’s crazy success, but one of the most prominent ones is its upselling and cross-selling to its customers. 

In fact, as far back as 2006, Amazon CEO, Jeff Bezos, announced that more than one-third of Amazon’s sales could be attributed to cross-selling alone.

With that said, let’s talk about upselling and cross-selling strategies, and let’s see how you can master them.

What Are Upselling and Cross-Selling?

Upselling refers to offering the customer a better and more expensive product than the one they were originally thinking of buying. 

For instance, if a customer is considering buying a smartphone for $500, your site might offer them a better one for $600. 

Of course, this strategy will work provided that the more expensive phone is better in some significant way or offers extra features the customer could benefit from.

Cross-selling is offering the customer some ancillary products to complement the main purchase. 

For instance, if a customer is considering buying a smartphone for $500, your site might offer a screen protector for $20, a phone case for $40, and a memory card for $30.

Now, one way companies cross-sell their customers is through bundling. 

The idea is to offer the main product along with the ancillary ones at a lower price than if the customer purchased each one separately.

Are Upselling and Cross-Selling Really That Important?

Upselling and cross-selling have several benefits, the most obvious of which is boosting a company’s revenue. 

As a matter of fact, B2B companies harvest 90 percent of their customer’s value after the initial sale. 

Additionally, more than three-quarters of their revenue will come from already established customers, be it through cross-selling, upselling, or renewing subscriptions.

Upselling and cross-selling are not only convenient solutions that offer customers additional value, but they are also responsible for increasing customer retention. 

On the one hand, customers want a smooth experience, and offering them a one-stop-shop solution is a magnificent way to make their lives easier. 

Nevertheless, if your product recommendations are on point, giving customers options that actually end up benefiting them, this will increase the customers’ trust in your brand.

In other words, you will be regarded as a reliable seller in their eyes.

How to Develop a General Upselling/ Cross-Selling Strategy

To successfully upsell and cross-sell your customers, you need a solid upselling strategy. In a nutshell, here is what you need to do.

Begin With the End in Mind

You need to start with the strategic goals of your company and brand as a whole. 

After all, upselling and cross-selling aren’t ends in themselves; rather, they are useful tools to help you attain your overarching goals. 

Ergo, you want to ensure that your upselling and cross-selling efforts align with your vision.

Moreover, once you are clear on your goals, it will be easier to set actionable and easy-to-measure metrics. 

These metrics could include your revenue, your number of sales, or qualified leads.

It is imperative that you track these crucial metrics as they will be key in later determining the success or failure of your upselling or cross-selling efforts. 

Furthermore, if you are ever unsure of the best way to upsell a customer or the best bundle that might add value, these metrics will help you split test different options to find the best one.

Know Who You’re Selling To

You need to know what your customers want and what they perceive as a win. In other words, you have to know what counts as success in the eyes of your client.

This means knowing both their short-term goals and long-term plans.

In fact, you should group your customers into different target segments, each with its wants and needs. 

These segments will differ by age, sex, socioeconomic status, or even geography. Your company ought to have different personas or customer profiles representing different target segments. 

This information will prove critical when it comes to personalization.

Each segment will have certain preferences regarding the products and solutions that best fit them. Here, historical data will prove incredibly useful.

For example, if a customer who fits a particular persona finds a specific bundle useful, chances are that other customers who fit the same persona will appreciate that bundle as well.

Craft Clear Customer Journeys

Different customers will go through different customer journeys, so you need to be aware of each journey and its progression. 

In addition to helping you improve your sales efforts, having a clear idea of your customer journey will enable you to time your upsell/ cross-sell offers.

Tactics and Tips for Successful Upselling/ Cross-Selling 

The above strategy arms you with the necessary information to successfully upsell and cross-sell your customers. 

However, at the end of the day, sales is a numbers game and what really matters is your bottom line.

With that in mind, here are a few tips to increase your chances of success.

Add Value

Before we get into any tips, we need to reiterate that upselling and cross-selling need to be about adding value to the customer rather than just profits. 

If you succeed in conveying to the customer that your main objective is to improve their lives, this will place you ahead of the competition.

Here are a few ways you can achieve this.

Begin With Customers Who Actually Need Additional Services

Instead of trying to upsell to every customer who goes to your check-out page, make the effort to identify those who actually need extra services or better products. 

After all, value is dependent on what makes the customers’ lives better. Not all customers would benefit from a better and more expensive phone.

In fact, you might want to consider down-selling some customers. 

This means selling them a cheaper product than the one they had originally picked, and even though down-selling might harm your immediate revenue in the short-term, it will pay dividends in the long run.

Downselling creates a sense of trust between you and the customer, premised on the understanding that you will always do what’s best for your clients.

Provide Context for Your Recommendations

Don’t just offer an upsell or a cross-sell without explanation; what you want to do is convey why your recommendation will improve the customers’ lives better. 

You need to explain the benefits the customers will get for taking you up on your offer and paint them a picture of how big of a difference it will make.

Personalization Is Key

Earlier, when talking about your strategy, we briefly touched on the importance of personalization. 

While there are numerous ways you can personalize your upsells and cross-sells, here are a few that stand out as the most important.

Utilize Historical Data

Historical data will prove critical in several aspects of your interaction with your customer. For one thing, it will prove integral to your personas. 

Additionally, it will aid you in making more relevant recommendations. 

Over and above, the historical data will inform you of the likelihood of success of any specific campaign, including emails with incentives and loyalty programs.

There are many ways you can collect pertinent data. 

You can start by monitoring the activity on your site to see how different customer segments interact with your products and services. 

An alternative solution that’s becoming increasingly popular is to create a mobile app and harness all the data generated from it.

Time Things Well

One of the main reasons upsells and cross-sells work is because they come after the customer has made the most important decision of all — to buy. 

That said, there are times throughout the customer journey where a client will be more amenable to your recommendations than others.

For instance, according to the post-purchase on-click upsell, the best time to offer an upsell is right after the customer has hit that “complete purchase” button. 

Alternatively, you might decide to wait and look for signs that your customer is ready for an upsell.

The bottom line is that, like everything else in life, timing is everything.

Use Psychology to Your Advantage

While your customers need to be clear that your objective is to accommodate them, some of them will always be hesitant to close a deal.

Try nudging this group by using some psychological techniques, most of which have been thoroughly studied by the likes of Dan Ariely and Robert Cialdini.

Here are two examples:

1. Social Proof

The power of social proof cannot be overstated. People feel safer making a purchase when they know other people before them were satisfied with a product. 

Some forms of social proof include:

• leveraging user-reviews
• posting user-generated content
• writing customer case studies
• highlighting the best selling products
• showing what items similar customers bought after making the same purchase.

Your job is to find ways to use this to your advantage.

2. Anchoring

In the simplest of terms, anchoring means that people have a bias to assess new information based on old information they already have. 

Thus, a customer will judge whether a particular upsell is expensive or not based on how it compares to the original product they were planning to buy. 

This is why it is recommended for the product you are trying to upsell to be no more than 25 percent costlier than the original offering. 

Similarly, any product that is offered as a cross-sell ought to be 60 percent cheaper, if not more, than the original product.

Don’t Overdo It

Although we have been expounding the benefits of upselling and cross-selling, it is worth taking a minute to talk about the dangers of overdoing it before we wrap up.

At the end of the day, no customer wants to be bombarded with countless upsell and cross-sell offers, as this makes them feel that the seller is trying to drain them of every penny they have.

To avoid falling into this trap, there are a few things you want to do. 

Firstly, always make sure that your offers are relevant to the buyer and add value. 

Secondly, just as there is the right moment to make an offer, there are bad times as well. Offering a customer an upsell before they’ve even decided to make a purchase is just bad timing. 

Thirdly, limit the number of offers you present to your clients.

And, finally, you need to be transparent at all times. 

Never hide pre-selected add-ons and bet that the customer will fail to realize this in time. You will lose your customers’ trust. 

Instead, you should be very clear about the price breakdown and give your buyers all the relevant information to make an informed decision.