Business solutions

What is the difference between upselling and cross-selling

10 min read
What is the difference between upselling and cross-selling

Acquiring a new customer is way more expensive than retaining an existing one. Besides, loyal clients purchase more frequently compared to new prospects. So, if you ignore cross-selling and upselling to your current buyers, you leave money on the table and miss zillions of profit-enhancing opportunities.

We are here to ease your confusion about these sales techniques. You won’t doubt their effectiveness anymore after reading this piece. Here we go!

What is upselling: Definition with the example

What is upselling: Definition with the example

Upselling is a sales strategy when a customer is encouraged to buy anything that would make their primary purchase even better. It’s like an upgrade to an existing order. Marketers often use this tactic in their campaigns to generate more sales.

The upselling technique also provides value to customers because it offers them to pay a little more but wind up with a better product. It's a mutually beneficial deal. That's right, savvy marketers will never suggest buying the last iPhone model if a person is looking for a cheap smartphone. It doesn't make any sense. But it's a good idea to offer a phone that's 10-15% more expensive but equipped with a better camera, for example.

We bet you’ve experienced upselling many times, perhaps, even not realising that. When you buy a big latte, a barista may suggest paying extra for chocolate crisps and vanilla syrup. As a result, you get an A1 coffee, and the barista ramps their daily receipts up.

Upselling is everywhere, especially on the Internet. When shopping online, you must have seen comparison charts or some banners on product pages. They demonstrate the same products you’re seeking but of better quality. You may also be offered a higher-end item during the checkout process.

As you see, upselling is an effective practice that’s beneficial for both merchants and customers. The former can scale up their AOV (average order value), while the latter walks away with a better product. More of the upselling benefits – we’ll discuss later on.

Covering the basics: What is cross-selling

Covering the basics: What is cross-selling

Cross-selling is another great practice to encourage people to buy more. Here how it works: a customer is shown a variety of products that may complement their needs. For instance, you are purchasing a pillow. The related products will be a set of sheets or pillowcases. In fact, marketers often suggest those products that a client would buy anyway. They just do it at the right time and place.

In e-commerce, cross-selling is used all the time. You can see complementary items on the product pages, in the shopping cart or during the checkout process. You may also be emailed a list of additional products that would perfectly suit your order.

This practice is quite common at physical locations as well. For example, at McDonald’s, you are likely to be offered French fries along with your cheeseburger. If you’re ordering chicken nuggets, get ready to be asked: “Would you like to grab a sauce?”. And you normally would! Because it’s more delicious to savour them in tandem.

If you think that cross-selling is utilised in direct sales only, you are wrong. This technique is helpful everywhere. When you’re opening a savings account, you might be cross-sold a credit card. Even at the dentist’s, you can be offered a tooth cleaning service alongside filling.

Both strategies are highly effective to generate repeat purchases, retain existing customers and increase revenues. Now let’s take a glance at the main difference between them.

Difference between cross-selling and upselling

Upselling and cross-selling are very similar tactics. They both increase the merchant’s profit, although in different ways. Upselling grows the revenue by promising a higher level product, while cross-selling does the same by suggesting more products to buy.

The difference between these techniques also lies in the customer’s intention. When a shopper is cross-sold additional items, they have no intention of buying them before. After the suggestion arises, the customer may consider adding those items as they match the primary order.

Upselling appeals to the customer’s desire to buy something. Sellers offer to check out for a better quality product, and that’s it.

You can think of upselling as an upgrade to the existing purchase when cross-selling is an additional purchase. Each of these strategies works well for B2C and B2B niches, but together they can significantly change your business for the better.

Advantages of upselling and cross-selling

The main idea of upselling and cross-selling is to boost the merchant’s revenues and the overall bottom line. But it isn’t only about money, it’s also about providing real value to clients. Here is what else these sales tactics can help you with:

  • Adding a personal touch. Although quality and pricing are important, an individual approach really matters to shoppers now. They want you to predict their wants, fully understand their needs and offer them relevant suggestions. Cross-selling/upselling is based on the customer’s preferences and past purchases. Thus, these techniques allow you to improve personalisation for a better customer experience.
  • Optimising a sales value. Statistically, the probability of selling products to existing customers is 60-70% higher than to new prospects. Loyal shoppers are ready to spend 31% more than first-time buyers. Cross-selling and upselling help you retain existing clients by offering them compliments or upgrades to their purchases.
  • Increasing customer lifetime value. When exposed to relevant recommendations, clients buy more often from you and bring more money to your brand.
  • Enhancing trust. If you cross-sell something that meshes with your customer’s needs, they will trust your brand even more. Why? Because a client understands that you care about their interests. It’s not just a blatant ad or irrelevant offering.

Closing thoughts

Cross-selling and upselling are total winners when it comes to increasing sales. If done right, you’ll get loyal customers and a boosted bottom line. However, you should act wisely not to end up with shoppers blind to your promotions.

Before getting started, make a list of your products and the items you can cross-sell and upsell with them. Then test them all. The best tip is – the more you test, the better your results will be.

And remember that successful sales always come hand in hand with fast and easy online payments. Every error or malfunction at the checkout stage ruins your conversion rate. So, don’t gloss over the importance of adding a tried-and-tested payment system to your website. Consider using Tranzzo. We develop payment solutions for numerous businesses, including education projects, online stores, delivery services, marketplaces, etc.

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