Your current customers spend an average of 67% more than new customers. Why? Current customers are more familiar with and loyal to your brand. And, you have upselling and cross-selling opportunities when it comes to your current customer base.
What business owner doesn’t want to bring in more revenue?
Learn about upselling and cross-selling, the difference between them, and how to effectively implement strategies in your business.
What is upselling and cross-selling?
Cross-selling and upselling products or services can help maximize your business’s potential earnings. Review the difference between the two marketing and sales strategies below.
What is cross-selling?
“Would you like a pastry with your coffee?”
Cross-selling is when a business attempts to sell a related product or service to a customer in addition to one the customer already purchased or is purchasing.
If you try to cross-sell, the product or service you suggest should complement what the customer already has. You can cross-sell in your marketing materials or at the point of sale.
A cross-selling marketing example would be: “You bought the purse. Now get the matching wallet!”
At the point of sale, a cross-selling example would be: “Oh, this bracelet would go great with those earrings.”
What is upselling?
“If you want to avoid running out of data, opt for our unlimited data plan instead!”
Upselling is when a business tries to sell an upgraded or more expensive product or service to a customer.
Like with cross-selling, you can upsell at the point of sale or in your marketing materials. Here are a few examples:
- “Trade in your car and get a brand new 2019 model” (upselling in your marketing materials)
- “For only $1 more, you can make it a large” (upselling at the point of sale)
Upselling and cross-selling strategies
According to one report, 65% of companies successfully upsell or cross-sell to their current customers. How can you be one of them?
Done ineffectively, upselling and cross-selling can end up scaring away your loyal customers. But with an effective strategy, you can use upselling and cross-selling opportunities to increase your business profits and improve customer satisfaction.
So, do you know the do’s and don’ts of upselling and cross-selling?
1. Consider your customer’s needs
Ask not what your customer can do for you, but what you can do for your customer. This is a great motto to have in business, especially when trying to cross-sell or upsell.
Before even pitching other products or services, you need to really get to know who you’re selling to. Sure, you may have already done your target market analysis and know your ideal customer. But, how much do you know about this specific person?
You should gather information about each of your customers, like their names, purchasing history, and likes and dislikes. Having a system in place, like customer relationship management (CRM) software, can help you keep track of critical customer information.
After learning a customer’s purchasing history, tailor your suggestions based on their needs. If you’re attempting to cross-sell or upsell at the point of sale, find out why they need the product or service.
Assess your motives. Are you cross-selling or upselling to increase your business profits? (Probably). But, try putting your customers’ needs before your business’s. By taking a selfless approach, you may wind up with a happy customer and increased profits.
2. Don’t be annoying
Nobody wants to deal with a salesperson who is hounding them to buy more. Not only is it annoying, but it shows customers that the business doesn’t really care about their needs.
When cross-selling or upselling, know when to stop. Repeated attempts to get a customer to spend more might result in no sale at all.
Imagine you’re at a restaurant with your significant other. The waiter repeatedly tries to push a bottle of wine on you, even after you’ve said no repeatedly. After the fourth attempt, wouldn’t you be ready to call it quits on the whole dinner itself?
Avoid being annoying when cross-selling or upselling. Keeping your customer’s needs at the forefront of your mind can help you know when to stop. Don’t pitch a product or service your customer clearly doesn’t want.
3. Know your products and services
Advocating for something you know nothing about can lead to tension and conflict. The same goes for upselling and cross-selling products or services you’re unfamiliar with.
If you don’t know your products and services before cross-selling or upselling, a few things can happen:
- You make unrelated suggestions to the customer
- You’re unable to answer the customer’s follow-up questions
- You aren’t transparent about your business’s offerings (e.g., overpromising)
- The customer distrusts your judgment and recommendations
As a small business owner, you typically know your offerings like the back of your hand. But what about your employees?
Your employees should know your business’s products and services. To make sure everyone is on the same page, you might implement employee training so they can master what your business has to offer.
Eighty-four percent of consumers get frustrated when a business doesn’t have information. Make sure you and your staff either know the information your customers need or know where to look for it.
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This is not intended as legal advice; for more information, please click here.