Last time, we had a sneak peek at the Anatomy of Upselling and Cross-selling. We also know that upselling and cross-selling can have major benefits toward a sale revenue. But believe it or not, people often (mistakenly) seen these strategies as unethical practices to squeeze more out of the customer.
The Discussion Over The Validation of Upsell and Cross-selling
I had been telling you about an example of cross-selling. It went like this:
“Well, these trousers fit the jacket that you bought. You should take those just in case you need to wear them together” – Mom sincerely advised, pointing to the pair of trousers she found in the “Things you may want” section on Amazon.com. Cringing a little bit and having done what she told, the boy just got cross-sell.
There are people say ‘people who cringe’ are proofs that customers hate being cross-sold to’.
However, I disagree as any white-hat marketer. Because as a target customer, the boy found value, then he demanded it. The mother did not push him to buy the product whatsoever. In fact, the mom and her son had reached a consensus.
In Upselling and Cross-selling defense
The predicament of whether upselling/cross-selling is ethical or not has its roots in the means and ends of the deeds. It is the means that make all the difference because virtually any business pursues the end goal as more profit. As long as upselling and cross-selling are NOT used in a pushy sort of way, to make the customer shell out more, they should NOT be seen as unethical. Additionally, such negative tactics above are the peril of such businesses and don’t last long.
As a strategy, however, upselling and cross-selling should be used to ‘help customers win’ as illustrated beautifully by Jeffrey Gittomer in this video. Looked that way, upselling and cross-selling become more of friendly suggestions and a helping hand to make the ‘right’ purchase.
Remind Dan to buy some batteries along with his new wall-clock
Bob might be looking for something more powerful than an i5 processor, show him the i7, too.
How Does Upselling Help You?
#1 Increases Customer Returning
Steve Job once said ‘people don’t know what they want until you show it to them.’ If you leave aside impulse buys, customers buy products/services to solve a problem. They are aware of the problem, but might not be aware of the best solution to the problem. When you offer them a product, it is not only a number of sales but also a resolution suggested to your customer’s problems. Upselling or cross-selling done right helps the customer find more value than he was expecting. You become his best friend.
Best friends who return drive 43% of your revenues.
Looking at the graph again, you see that the top companies – those on the far right – are getting around 75% of their revenue from repeat purchases.
#2 Increases Average Order Value and Lifetime Value
A Marketing Metric study reports that the probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%. Upsell to existing customers to boost LTV.
Cross-sell/upsell increases your average order value (disclaimer: only if you don’t upsell in an obnoxiously stubborn way like this)
Should You Upsell or Cross-Sell in eCommerce?
Even though in many ways, upsell and cross-sell are similar, there’s a clear Winner in terms of numbers.
According to Predictive Intent, upsell can work up to 20 times better than cross-sell.
Over 4% of all customers who were faced with an upsell bought it.
While less than merely 0.5% of customers took baits when shown a cross-sell…
Where should you use Cross-selling?
Despite, being far more inferior to upselling in term of numbers of sale in product pages. Yet when it comes to the checkout page, cross-sell nails it with 3% conversions.
PRWD head of usability Paul Rouke pointed that there is a significant opportunity for retailers to increase their average order size. That is providing more intelligent cross-sells through the browsing and buying journey. In addition, another key technique for driving sales is keeping consumers on the product page after adding to the bag. As a result, customers are encouraged to stay in ‘buying mode’ rather than ‘checkout mode’. one of the primary methods to cross-sell is providing intelligent, clear and customer driven cross-sells withhold on product pages.
In conclusion, if you don’t know any better, stick to the primary method to cross-sell which is providing intelligent, clear and customer driven cross-sells withhold on product pages.
A well-designed checkout process is important to prevent dropped sales; fashion retailer ASOS was able to reduce its basket abandonment rate by 50% by redesigning its checkout experience, while HMV is still making elementary errors.
The data from Predictive Intent’s study show that a mere 4% of customers convert on average through upselling. It’s not much, you might think. But if you read the Pareto principle you would know that the minority of customer will generate the majority of your revenue. In this case, it’s 4% minority of customers will buy a better product if offered, and are ready to pay a premium for that. They will not shy away from going extra miles to make sure the solution to their problem is straight up right because they aren’t usually looking for “just enough”.
Finally, saying upsell and cross-sell are wholly good or bad would be an incomplete statement. Since I regard upsell and cross-sell as marketing tools, their pros and cons are in the hand of the users. Therefore, the more you maneuver the tools thoughtfully, the more satisfactions customers, having been treated nicely, will give you. In another word, you will be less worried about those complaints from your customers about marketing ethics.