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Getting new customers is not the only way to grow. Upselling and cross-selling can also boost sales. Learn what they are!
Upselling and cross-selling techniques are essential for business growth, especially for a SaaS business. By leveraging existing customers, these strategies can generate more profit, increase customer retention, and strengthen your brand.
The potential for upselling and cross-selling is important if you want to make your business more appealing for selling.
Learn what upselling and cross-selling actually mean, the main differences, and tips to boost your business by using these strategies. Keep on reading!
Upselling and cross-selling techniques can take your business to the next level by expanding the customer journey. Both of these strategies focus on increasing revenue and retaining clients for a longer period by extending the reach of the original sale.
Upselling means offering a more extensive, improved, or premium version of the product or service. With upselling strategies, companies look to increase the value of the sale to reduce the cost of customer acquisition or maximize customer lifetime value.
An example of upselling is a car salesman who convinces customers to upgrade from the basic model to a more expensive, luxury version.
On a similar end, cross-selling also seeks additional revenue by offering additional features or products to existing customers.
We can find cross-selling examples in the banking and financial industry that constantly target users with marketing campaigns for additional services like insurance, loans, or investments beyond a savings account.
While both techniques encourage customers to spend more, they work differently. Here are some key differences between upselling and cross-selling.
We should highlight that upselling and cross-selling techniques can do wonders for businesses when applied at the same time. Ventures shouldn't have to choose between one of them, instead they can apply different versions of said strategies to increase sales revenue.
In a study for a leading online retailer, McKinsey found that cross-selling techniques increased sales by 20% and improved profits by 30%.
Hopefully, you're sold on why it's so important for your business to create and run upselling campaigns. If you're looking to learn more about what you can do, here is a list of trips that will guide you when crafting an upselling strategy for your venture.
No one wants to receive information about something they aren't interested in. Let's say that you're looking to buy a car for traveling long commuting distances, and instead of seeing the potential models that fit your needs and budget, the salesman keeps offering you motorcycles. A situation like that might be discouraging.
While doing the upselling, remember to point out why the upgraded product (or service) is the best option in the long run and how the consumer will benefit from this choice.
A study by Accenture found that 56% of consumers like it when a business recommends products based on their previous purchases. It's safe to say customers appreciate when a company gives them valuable options.
If you know and understand your customers, it'll be easier to upsell and cross-sell to them. Let's say that a consumer is looking for a new car because they want a safer vehicle. Knowing this will help the salesperson to offer an upsell 100% focused on that feature, and as a consequence will have an easier time whenever trying to engage with the potential customer.
When it comes to online shopping, a Deloitte survey found that 60% of consumers are willing to increase their sales if it means they'll access free shipping. And though this sounds more like a cross selling technique, it can also be applied for upselling. By suggesting a higher-priced product that qualifies for free shipping, users might consider it before they make their final decision.
Even if an upsell is a way to increase your revenue, this doesn't mean to overprice what you're selling. Clients should also win by acquiring a more expensive product. Though there might not be an accurate proper number the best thing to do is to test the waters by trying different extra percentages from the value of the original purchase.
Upselling offers are usually offered before the consumer makes the final decision, but this isn't always the rule. Sometimes, the upsell offer can come right after the purchase. Let's say that you already bought a product on an online store, and before it's sent to your home, you receive an email letting you know that for a small amount, you can get a better product that would actually cost more money.
Don't forget your consumers once you upsell. Through email campaigns, you'll be able to retain your client base and even move on to cross-selling products or services. And through a follow-up email campaign, you can still manage to do an upsell (in case it wasn't successful at the beginning).
Using the right cross-selling techniques will help you bring in more revenue, extend the client's lifecycle, and have a loyal client base. In this section, we'll give you some cross-selling tips that will help you craft successful strategies.
Going through an online store's catalog can be overwhelming, and when consumers are presented with a myriad of products, they can feel more uncomfortable than thankful. Providing clients with the right number of options can give them a positive user experience and, in return, make them come back.
Cross-selling is not only about suggesting similar products; instead, it is more about offering the right mix of goods and services that will add value to the client's purchase. Circling back to the car example, someone who just bought a car might receive an offer from the auto dealership about storing winter or summer wheels for a specific annual fee.
With a bundle or a package clients get to access extra products at a special rate. This is a win for them since it's cheaper to buy them like this instead of acquiring each item separately. A study published in the Journal of Risk and Financial Management discovered that when a bundle provides a 45% discount, users prefer to buy in packages instead of buying individual products.
Before creating any cross-selling strategy, you should do proper research about the wants and needs of your average existing customer. Customer feedback is key to understanding what your clients are looking for to offer them the best-recommended products. By learning more about the demographics and behaviors of your existing customers, you might be a step ahead about what they'll be looking for soon. This will make your cross-selling efforts more efficient to closely cater to your customers' needs.
The 25% rule establishes that whenever you're looking to increase your sales revenue through cross-selling, you shouldn't push your clients to spend over 25% of what they were originally planning to spend. If your customer has a full cart with a $100 USD value, the recommended additional products shouldn't be over 25$ USD.
Available offers for a limited time period can give your consumers a sense of urgency. Through this added pressure, consumers will be paying closer attention to your offer, and even weighing down how beneficial it's for them. You can find limited offers whenever in delivery apps that give their users discount codes that will expire in a couple of hours. By doing so, the company invites the user to buy again to benefit from the discount.
This one can work as an upselling and cross-selling technique. Whenever a user buys a bundle or additional products, they might qualify for extra rewards such as loyalty programs, club memberships, and access to premium features for a limited amount of time.
On the upselling front, clients can reach these rewards by spending a certain amount of money on a product or service. If the new benefits are attractive enough for users, they could also be used as another way to invite users to acquire a better version of a product.
Your only product or service might be good on its own, but additional features can change your clients' lives. Think about Salesforce (this and other SaaS companies) offering a core product that it's already good. But whenever a client purchases an extra feature of the platform, these companies enhance customer satisfaction because of what the extra services can do for their clients.
If you're looking into the option of buying a business or selling the one you already have, you might be interested in adding upselling and cross-selling techniques into the mix to increase revenue and get the most out of it.
At this point in your entrepreneurial life, it would be wise to know the value of your business. With Boopos' valuation tool, you'll be able to know how much your venture is worth and do something about it (in case you were expecting a higher number).
Remember that beyond increased revenue, upselling and cross-selling techniques can also help you bring in more potential buyers for your business due to an increase in profits or because they learned about your multiple efforts to grow your venture.
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