What Is Cross-Selling and How Does It Increase Customer Spending?
Wouldn’t it be fantastic if you could create more customer value by infusing your website with a classic retail sales technique? Good news: You can, through cross-selling.
Some of the world’s global retailers use cross-selling techniques to increase revenue. Amazon, for example, attributes 35 percent of its revenue to cross-selling.
In this article, we’ll dive into the benefits of enhancing your ecommerce site with cross-selling opportunities and give you some advice about how best to use this approach.
Get all the tools you need to quickly find new customers and grow your retail store’s sales.
What is cross-selling?
In the retail environment, cross-selling refers to a technique sales professionals use to drive up the value of a sale. Often, this includes an appeal to a committed buyer to add on related or complementary products.
While cross-selling may seem better suited for an in-person retail transaction, many ecommerce retailers also use it to enhance online sales.
You likely already use cross-selling, even if you don’t think of it that way. Here are a few examples of in-person and online cross-selling approaches:
- Suggesting small appliance accessories that are sold separately
- Offering an extended warranty
- Showing the customer clothing pieces that go well with their selections
- Linking to related products in product descriptions
- Sending automated follow-up emails with complementary product suggestions
- Targeting emails based on previous sales
How can cross-selling increase retail revenue?
Cross-selling boosts retail revenue by convincing shoppers to buy related products in addition to their primary selection. Successful cross-selling increases the purchasing potential of committed customers.
Cross-selling techniques can go beyond product purchases. When you cross-sell services like paid loyalty programs alongside products, you bring in more revenue and open the door to more opportunities for sales down the road. An example is a bookseller offering a discounted price on its paid loyalty program, which offers perks like free shipping and exclusive discounts.
Cross-sell versus upsell
Sometimes, people confuse cross-selling with upselling, but there are important distinctions. Cross-selling involves related products or services, but upselling is geared toward convincing the customer to buy a better, more expensive option than they initially selected.
Developing a strategy
Even if you find that you’re already incorporating cross-selling into your product pages, it’s a good idea to develop a more defined approach. Consider running through this checklist each time you encounter a cross-selling opportunity. Ask yourself:
- Does the product actually complement the item the customer is buying?
- Will the additional product provide some kind of benefit?
- Which products do other customers often buy together?
Essentially, you want to get to know your customer base so you can better understand their buying motivations. Create a customer journey experience that leads customers through a series of decisions that give you more insight into why they’re shopping on your site.
For example, a customer who buys an expensive digital camera might be a good candidate for cross-selling an additional lens. However, if the customer is a novice photographer just starting out, an expensive extra lens may not be a great fit. It might make more sense to steer this buyer toward a camera bag instead.
Cross-selling best practices
Effective cross-selling requires intuition, good communication skills, and an ability to put yourself in the customer’s shoes. Keeping these best practices in mind will help you hone your cross-selling skills.
Keep it simple
Don’t overwhelm the customer with too many options for complementary products or services. If you confuse and dilute the customer’s attention, you’re unlikely to be successful at cross-selling.
Focus on one or two items that offer a clear benefit to the customer. This is more effective than filling their screen with all the possibilities. Customers who want more detail won’t mind an extra click or two to find it.
Show customers the possibilities
As is so often the case in the retail sales world, customers respond better when you show rather than tell. It makes sense. Put yourself in the customer’s shoes: Would you feel enthusiastic if the sales professional launched into a long list of benefits for the product? You’d most likely feel more compelled to buy if the salesperson showed you the product in action.
For example, if you’re an online apparel retailer, you could include an image of the clothing the customer clicked on paired with various accessories or complementary pieces.
Apply your customer research findings
If you analyze your customers’ buying behavior, put that knowledge to good use. Study your data to determine which services and products to offer to which customers. Purchase history can help you categorize your inventory by customer segment, which will help you decide which products are more likely to appeal to individual customers.
You can also dig into your data to capitalize on special dates like birthdays and anniversaries. Offer customers exclusive deals on their special days, like a gift with a purchase or a one-day discount coupon.
TIP: Use an email automation tool to send birthday and anniversary coupons and other offers to your customers automatically.
Don’t suggest products with the wrong price points
Carefully consider the customer’s initial selection, and keep related product suggestions within the same pricing bracket. If a customer is buying a $25 watch, it doesn’t make much sense to suggest they purchase a $50 watch stand. On the other hand, if the customer is buying a $500 watch, the stand could be a great fit. A good rule of thumb is not exceeding a certain percentage of the original item’s cost.
The airline industry has become quite adept at using this cross-selling technique effectively. A customer who purchases an economy seat may be open to springing for extra legroom for a reasonable fee, but it’s unlikely that they’d jump up to an expensive first-class seat. It would be more appropriate to suggest a first-class upgrade to passengers with business-class seats.
Give customers incentives
Have you ever added more items to your cart when a retail site offers free shipping at a specific price point? This is an excellent example of a cross-selling incentive. Other incentives might include BOGO sales or discounted accessories with a purchase.
If you decide to offer incentives to encourage cross-selling, be sure to carefully calculate your margin to make sure you aren’t being too generous.
Offer bundled packages
Create bundles of complementary products to encourage bigger sales. You can offer a discount on bundled packages or highlight the convenience factor. Customers will appreciate not spending their time searching your site for everything they need to make a product work.
Bundling specialized products that require specific accessories can be especially effective. For example, you could bundle the correct battery with a digital product purchase, saving the customer time and potential frustration later.
Cross-selling after the sale
Sometimes, the most lucrative cross-selling opportunities appear after customers have made their purchase. Follow up with customers to make sure they’re happy with the product and suggest related items. Reach out through follow-up emails, phone calls, or text messages.
Enhance your eCommerce strategy with cross-selling
Cross-selling can help you increase customer spending and build on customer relationships. To use this technique effectively, it’s important to consider factors like the initial purchase price, customer signals, and previous experiences.
Remember to follow good cross-selling best practices like focusing on a simple approach, incentivizing customers, and looking for unique opportunities for cross-selling, such as after the sale.
The Constant Contact retail marketing guide, The Download, offers a wealth of tips and tricks aimed at helping you showcase your brand effectively. Download your copy today to learn how you can increase traffic, build customer loyalty, and generate more revenue with techniques like cross-selling and many others.
The post What Is Cross-Selling and How Does It Increase Customer Spending? appeared first on Constant Contact.