Cross-selling and up-selling

Cross-selling and up-selling

Cross-selling is the action or practice of selling among or between clients, markets, traders, etc. or the action or practice of selling an additional product or service to an existing customer. This article deals exclusively with the latter meaning. In practice, businesses define cross-selling in many different ways. Elements that might influence the definition might include the size of the business, the industry sector it operates within and the financial motivations of those required to define the term.

The objectives of cross-selling can be either to increase the income derived from the client or clients or to protect the relationship with the client or clients. The approach to the process of cross-selling can be varied.

Up-selling is a sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. Up-selling usually involves marketing more profitable services or products but can also be simply exposing the customer to other options that were perhaps not considered previously. Up-selling implies selling something that is more profitable or otherwise preferable for the seller instead of, or in addition to, the original sale.

The difference between up-selling and cross-selling are fairly nuanced, which is why many sales reps and marketers talk about cross selling and up-selling as a single discipline. Philosophically, when sales reps up sell, they convince your customers to increase the value of their orders (both to you and to them) by:

- Moving up to a more expensive version of what they're already considering purchasing (e.g., the six cylinder vehicle instead of the four cylinder, upgrading from economy to business class for a flight, a 42” TV instead of a 40”)

- Adding to their orders with additional vertically related products or services (e.g., "Would you like fries with that?", extended warranty, DVD player to go with the TV, paper to go with a printer, a hands free car kit to go with a mobile phone)

Vertically related are products or services that enhance or are related to the core or base product. A cross-sell refers to sales of another product/service type horizontally related (i.e., another type of product/service usually orthogonally related if at all) to what you're already considering. For instance, when one purchases a new vehicle and the car salesman encourages the buyer to use the manufacturer's auto financing capabilities... Another cross selling example is when one calls the reservation centre of an airline and at the end of the call the agent asks if buyer needs a rental car at the destination, and if so, he/she would be delighted to connect him/her to one of their car rental partners.

How to up-sell

A little not a lot

Up-sell works better when there’s only a small difference in price between the item that you’re suggesting your customer purchases and the product they’re looking at. Otherwise it can be as successful as convincing someone who’s taken a second hand Toyota Corolla for a test drive that they should purchase a Porsche instead.

Match key features

Up-sell works best when the key features of the product are kept the same.

Be brand aware

For some products, a customer considering a particular brand is more likely to up-sell to products by the same brand. This is relevant for cross sell as well. Sure, that Canon lens does fit the model of Sony camera your customer’s looking at, but they are much more likely to purchase a Sony lens for their Sony camera. If they’re considering a Nokia phone you’ll probably have more luck up-selling them to the next model up also by Nokia.

Benefits count

When trying to persuade your customer to spend more, make sure you clearly spell out the benefits of upgrading from what they were originally considering.

How to cross-sell

Choose carefully

Certain products work better than others for cross-sell. Think like your local supermarket.

Watch the price

Cross-sell works better when the suggested items are half price or lower than the item being purchased.

Relate

Products that naturally go together work better for cross sell.

Higher price

Cross sell tends to be more effective when the original product is higher priced or requires more thought. Cross sell is less successful when trying to convince a customer to spend extra when they were going to buy a lower cost item.