The business and marketing world is filled with a lot of confusing terms. And if you’re new to it, you might find it difficult to differentiate between up-selling and cross-selling.
It can be far more expensive to acquire a new customer rather retaining an existing one. Moreover, if you can increase the average order value (AOV) of your customers, you will have a better profit margin.
In this article, we’ll be discussing up-selling, cross-selling, and the key differences between both.
What is Cross-selling?
Have you ever purchased a smartphone online and while checking out, you got a smartphone case as a product recommendation? Or if you were purchasing a laptop, you were also recommended a mouse or keyboard? In a nutshell, that’s exactly what cross-selling is.
Cross Selling is a term that refers to the practice of selling products or services that complement each other. Basically, you’re offering additional products or services that complement the primary product or service being sold.
If your company offers a separate product/service that enhances a customer’s first purchase, it can be a great way to generate additional revenue. According to a 2022 HubSpot Blog survey, 72% of salespeople who upsell and 74% who cross-sell say that it drives up to 30% of their revenue.
What is Upselling?
Upselling refers to the practice of selling additional products or services to a customer after they have already purchased something else from you. In some cases, these additional products or services may not even be related to what they sold you originally.
It is the practice of encouraging a customer to purchase a higher-end than the one they’re currently about to buy. It’s like providing a premium alternative to an existing choice a customer is about to make.
For example, if you’re running a software company that sells automation software, you could have three different subscription options of $50, $100 & $150. If a customer is about to purchase the first option, recommending the second or third option as a better choice with more perks would be an upselling strategy.
It also adds value to the customers because it offers them a better option with slightly higher pay. It can be a mutually beneficial deal because up-selling can’t be done without a cause in hand. You cannot suggest an iPhone to someone looking to buy a low-range smartphone. But it can be a good idea to offer a smartphone 15% more expensive but comes with a better camera.
There are many ways businesses use upsell strategies. One way is to offer discounts on their original product or service if you purchase an additional item. Another way is to give you free samples of their products so you’ll buy more. A third way is to sell you things you didn’t know you wanted.
Both cross-selling and up-selling require great timing and careful knowledge of audience choices, preferences and empathy. It is crucial to have an idea of the features or products they stand the most to gain from to implement a successful cross-sell & up-sell strategy. One aims to sell a superior product while the other aims to sell a complementing one.
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