Recommending relevant products to your existing customers is a key step in increasing revenue.
With returning customers often bringing in the bulk of the profits, e-commerce stores should use all available tools to increase their visitors’ average order value (AOV) and, in turn, focus on an increased customer lifetime value (CLTV) to tap into the users’ buying potential.
There’s hardly a better way to achieve this than to utilize cross-selling techniques. Effective cross-selling can help you reach the potential of your online store while providing immense value to your customers.
What is cross-selling?
Cross-selling is the act of offering additional products or additional services to complement the initial purchase and effectively maximize profits. In other words, it’s recommending items on top of what’s already been added to a cart.
Here is a cross selling example.
Let’s take a man who’s preparing to travel. He’s about to buy a carry-on luggage bag when the attendant offers him a fanny pack for his passport and money. Here the shop attendant has attempted a cross-sell. While this is a classic example of retail cross-selling, ecommerce websites are also capable of running cross-selling initiatives, if not more so.
However, it’s essential to understand the difference between cross-selling and upselling, as these terms are often used interchangeably, despite having a different impact on the customer journey.
What’s the difference between upselling and cross-selling?
Upselling is another form of an additional purchase used to increase revenue.
- Cross-selling is recommending additional, unique products to complement the original purchase;
- Upselling is offering an upgrade or extension of the original purchase. Suggesting a bigger size, additional quantities, cosmetic upgrades, or quality-of-life additions are all considered upsells.
Cross-sell and upsell techniques are not mutually exclusive. In fact, you’ll often see both in many physical and online retail stores. But keeping a good balance and avoiding overwhelming your customer’s initial purchase is important.
How to sell more complementary products and services?
In most cases, the priority of a sales team should be to go for an upsell first – it’s much easier to add value to what a customer already wants than to add something entirely new to the table. With a discounted price, relevant upsells can make for irresistible offers that genuinely improve customer loyalty.
On the other hand, cross-sells generally have the potential to bring in more revenue. As a matter of fact, in 2022, a HubSpot survey showed that 74% of sales reps who cross-sell report that it drives up to 30% of their entire revenue.
Best of all, cross-selling is easy!
Your goal is to sell complementary products. That could be a complete outfit that runs with a particular clothing piece. If you know your audience and set up your sales processes accordingly, you stand to gain a lot from cross-selling promotions.
In most cases, a cross-sell is as simple as an email or a pop-up to remind customers about your selection of products. With high-ticket products and services, businesses often employ cold callers for their cross-selling strategy.
Today, we’re looking at the most effective cross-selling strategies and techniques that will tap into the potential of your existing customer base and increase your revenue.
Track customer purchasing behavior
A genuinely effective cross-selling campaign can only be built after collecting insights about your customers. By monitoring and analyzing your users’ buying patterns, you can establish their interests and habits, allowing you to develop offers and recommendations that match their needs.
Keeping an organized customer database will go a long way in establishing the following key metrics:
- What products are frequently bought together? When you establish what items complement each other, you’ll know exactly which items are thematically adjacent so that potential customers don’t miss out. If there is still some resistance, you can encourage shoppers by adding a small discount to cross-selling products.
- What product pages do users linger on while considering a purchase? Studying this metric will give insight into your users’ interests. If a product is viewed but rarely included in the final purchase, you can develop a cross-selling technique that will easily convert customers.
- Can you identify any seasonal or temporal trends? Notice customer purchasing throughout time and try to find any seasonal patterns that take place. It’s okay if you haven’t noticed that some of your goods make great complementary items – it’s part of the process. Establishing item “bundles” will help you develop a temporal marketing and sales strategy around cross-selling opportunities.
- Are there any demographic trends? Do you notice any demographic trends with certain products or services? It could mean that a specific age group, nationality, or gender has a higher chance of buying certain products. If you analyze these patterns and cross-sell products that are relevant to the specific group, you’ll be on your way to achieving better profits and overall higher customer satisfaction.
- What products do people come back for after their initial purchase? After a customer buys once, they may become a returning buyer, thus adding more value to your business. A healthy rate of returning customers is 20-30%. But more often than not, people will not revisit your online store. If you analyze the data of the returning customers, you’ll be prepared to maximize the total order value of your one-time visitors.
Especially in a competitive industry, making data-driven decisions is key to providing a complete and satisfactory customer experience. Utilizing user data maximizes profits in a way entrepreneurial intuition can’t – so start tracking as early as possible.
Match services with client goals
Understanding your users’ intent and goals is imperative in any marketing or sales technique.
Why are they buying from you? What problem are they trying to solve through you?
If you can answer these questions, you’re on the right track.
For example, you run an online store for dog merchandise. Your highest-selling products are harnesses. In this case, your customers are trying to find high-quality and affordable gear so their dog walks are safer, more reliable, and stylish. Now that you know the goal, you can design a cross-selling process that satisfies it – you can offer leashes, collars, and treats.
It applies to service-based businesses as well. For instance, you might own a web design agency where your client’s main desire is to have an effective and successful website. Besides building the website, you can satisfy your client’s fundamental needs by offering an SEO package, website maintenance, content creation, copywriting, website analytics, etc.
Cross-selling is flexible. It can be done pre-sale (in the website or app’s UI) or even in post-purchase communications via e-mail or phone call.
Visualize your happy customer
Showcase what acquiring the whole “bundle” would look like. It is usually done through images, copy, or showing off your client reviews.
How does it solve the central problem of your users? If you present your products or services as your client’s final destination, you’ll inspire them to complete a more fulfilling purchase.
Divide customers into segments and map product recommendations
Dividing customers into groups and adjusting product recommendations respectively is a powerful marketing strategy that allows you to personalize your cross-selling efforts and maximize their effectiveness.
It is done by assessing the analytic data and segmenting your customers based on demographic and psychographic data and their purchase history.
Once you’ve identified the segregated customer groups, you have to develop recommendations tailored to the specific needs of the different segments.
Here’s a breakdown of the entire process:
- Analyze your data. As we mentioned earlier, it all starts with understanding your audience. Study your users’ habits, demographics, social media, and behavior. Use this data to get a clearer understanding of preferences.
- Identify segments. The next step is identifying your key segments based on the acquired analytics. Do specific customers share behaviors or buying habits? You might notice that certain groups shop for a specific category of goods at a particular time of day. As abstract as it sounds, your goal here is to define these segmented profiles – establish their preferences, common pain points, desires, and goals.
- Establish product matches. Using the segment-specific profiles, create group-catered product recommendations. Scout your store for products that match your customers’ intent and align with their desires.
- Tweak recommendations. Personalizing your cross-selling efforts continues after your product recommendations. Certain groups prefer a different form of cross-selling. People in a rush might like receiving a post-purchase e-mail, while others prefer an in-cart pop-up.
- Perform A/B testing. Test different variations of your cross-selling efforts to measure results and adjust accordingly.
Marketing is all about targeting. Dividing your clients into segments will ensure a more personalized experience, increase your chances of additional conversions, and even improve your overall conversion rate.
Offer loyalty perks
Loyalty offerings are a proven way to monetize previous customers while offering great deals. Loyalty programs can offer exclusive benefits like discounts, freebies, early access, and limited-access cross-sale deals.
Loyalty programs are a fantastic way to build a sense of exclusivity and foster loyalty. These limited-access deals can be sent through mass e-mails or as personalized offers. Some businesses develop fully fleshed-out loyalty programs with point systems which is a great way to garner consistent sales and attract repeat customers.
Some businesses could even offer free products and services as a benefit to a purchase. For example, an electronics retailer who’s selling laptops could offer a free cross-sell of a phone (or a more expensive version of the laptop), making the initial primary product much more appealing and high-value.
In instances outside of e-commerce, you may lock certain services behind a “loyalty wall.” Effectively, this means only offering certain benefits to your most dedicated clients, such as cross-selling exclusive events or VIP access to workshops, seminars, and networking opportunities. It makes your business feel like a community – a part of something bigger, which in turn builds trust and excitement around your brand.
However, you decide to implement it in your specific business, offering loyalty perks is a surefire way to demonstrate commitment to your customer base and incentivize them to re-explore your products and services.
Use social proof
Highlighting customer reviews, ratings, or case studies can significantly boost cross-selling.
Displaying images, customer reviews, and testimonials can greatly impact a client’s perception of your products and services, allowing them to see themselves at the end of their buying journey. If you can provide such a visualization, your cross-selling effectiveness will significantly increase. On top of that, stars and other rating systems bring great authority to a product page.
Other forms of social proof include:
- Social media posts;
- User-generated content;
- Industry awards;
- Influencer marketing;
- Case studies, etc.
Use auto-triggered messages to deliver at the right time
Strategizing e-mail chains and auto-triggered messages is a marketing campaign in its own right.
Here are some types of auto-triggered messages to consider:
- Behavioral triggers. You can prepare e-mails to be automatically sent out to customers depending on their user behavior and the actions they take on your website or app. Suppose a customer interacts with specific products or explores a particular category in your online store. In that case, you can send them semi-personalized e-mails with special offers, including cross-sells and upsells.
- Seasonal or event triggers. You can set up automatic e-mails upon entering a universally accepted commercial holiday or season. For example, sending special Christmas discounts, bundles, or cross-sells is an incredibly lucrative practice.
- Purchase history triggers. You can analyze a customer’s purchase history to identify cross-selling opportunities. You can send out automatically triggered messages after completing a transaction to recommend complementary items.
- Abandoned cart triggers. Incentivize customers to revisit their carts by offering exclusive cross-selling discounts.
Demonstrate a use case for the product you’re offering
Use cases and demos help customers understand the value of an additional purchase. Try visualizing or explaining the practical value of the cross-sell.
While images and videos are a great way to do this, one of the most efficient methods of demonstrating use cases is by letting other customers’ reactions and words speak on your behalf. Display user-generated content, ratings, and reviews – show, don’t tell.
Using product images that feature all relevant products (instead of only the one you’re initially selling) makes it seem like the products you’re selling separately actually form a “kit.” Utilize this to provide as much value as possible to your clients through cross-selling important additional goods and services.
Make the offers available for a limited time
Creating a sense of urgency incentivizes users to buy more products through FOMO (fear of missing out). It is a standard practice in e-commerce, where an online store offers a temporary cross-selling discount that expires in a few hours.
Make sure you set realistic time frames and expectations. Many online stores run discounts every hour daily, making discount campaigns look cheap and forced. Be transparent and fair.
You can also showcase your stock numbers to elicit a sense of scarcity and exclusivity.
Sending out personalized cross-selling offers is usually not time-efficient as it requires time and effort to analyze an individual customer and prepare a unique offer.
However, this can be an extremely profitable practice outside of a traditional retail/e-commerce setting. When offering high-ticket products or services (think the sailing niche or marketing), a single cross-sell or upsell can make you upwards of 5 figures.
In any case, personalized cross-sells are a free marketing tool – as long as you have the time to invest in them.
Frequently asked questions
What are the key factors to consider when pricing cross-selling offers?
Consider the complementary product or service’s perceived value and profit margin. You’ll usually cross-sell at a minor discount, but it’s essential to maintain a good profit.
What are the common pitfalls to avoid when implementing cross-selling techniques?
Avoid being excessively pushy or aggressive with your cross-selling placements or efforts. Another mistake is recommending irrelevant products.
Can I use AI for cross-selling?
Yes. You can use AI machine learning algorithms to analyze customer data and automatically personalize cross-selling recommendations. Numerous cross-selling apps can be integrated directly into your online store.