Last updated: November 8, 2022
Just because you’ve attracted a lead to your Shopify store and they’ve reached the checkout, it doesn’t mean your work is over. There are many ways to facilitate more sales. Cross-selling and upselling are two of the most powerful strategies for achieving this, yet only 20% of organizations successfully reach their cross-selling goals, according to a McKinsey study.
If you don’t want to be one of them, you need to make sure you know your stuff. At Upscribe, we’ve helped countless brands to grow their sales through cross-selling and subscriptions. We’ll run through everything you need to know to supercharge your store, including how cross-selling vs upselling compare, why you should use them, and how to carry them out effectively.
What is upselling and cross-selling?
Cross-selling is all about encouraging customers to buy items that are complementary to an original purchase.
A simple example is suggesting a collection of “related products” to someone when they head to checkout, such as a phone case or charger for someone who just purchased a phone. Houseplant ecommerce store The Sill did this by recommending gardening tools to customers that bought plants.
In this example from Gymshark, a customer adds a sports bra to their bag, and they get recommendations for cycling shorts or leggings to complete the look. This is cross-selling in action. The leggings or shorts both complement the sports bra and create a full workout outfit.
Cross-selling is different from Upselling, which is an upgrade to a more premium or expensive product. With cross-selling, you’re suggesting the customer adds more to their product purchase. On the other hand, by upselling, you’re getting the customer to change the product altogether.
Why cross-selling is important for your Shopify store
The average order value is the average dollar amount a customer spends in one transaction in your store. Recommending other products that complement each other can increase average order value. Instead of buying just one product for a lower amount, they can buy more products which increases the order value and sales. In fact, McKinsey found that if done right, cross-selling can increase sales by 20% and profits by 30%.
But cross-selling doesn’t necessarily mean promoting a single complementary item. You can also sell bundles or subscriptions, for instance — and we’ll dig a little deeper into the different methods and strategies shortly.
So, what does upselling mean? The practice involves encouraging customers to buy more expensive items. This might mean that, instead of offering phone add-ons, you encourage customers to buy a better, more expensive phone.
Types of upselling and cross-selling
In the case of both upselling and cross-selling, there are two main types: Post-purchase and pre-purchase.
- As the names suggest, pre-purchase strategies target customers before they make purchases. Customers may see special offers or product suggestions when they’re viewing a product page or their basket, often in the form of a pop-up or a banner
- Post-purchase strategies encourage sales once someone has already bought an item. In this case, product recommendations may feature on the order confirmation page or through a confirmation email. This is a more traditional way of marketing, but it can still be effective.
Upselling vs cross-selling: Which should you use?
The terms upselling and cross-selling are sometimes used interchangeably, but there are clear differences between them. Upselling boosts revenue by encouraging higher-value sales, while cross-selling aims to foster a higher number of sales of (usually) lower-price items.
Same end result, but different ways of getting there.
Is one better than the other? Not exactly. There’s not one universal answer for whether you should pursue cross-selling or upselling. That will depend on your business model and who your customers are.
In extreme cases, you may not have a realistic choice. For example, if you only sell a few versions of one product, cross-selling doesn’t make sense (such as an electronics company that sells three models of its coffee machine but no accessories). Likewise, if you only sell various products at the same price level, upselling is going to be tough (such as ultra-budget clothing lines).
But this doesn’t apply to many companies. A more likely case is that you could pursue both strategies, though you might find that one of the methods works out better for your company’s margins.
If you have a Shopify store, selling multiple items to the same person will help to increase your profit margins because you’ll only have to pay for shipping and customer acquisition once, despite making multiple sales. Yet, if you’re selling very high-value items (like technology), upselling may be more profitable. You’ll make more from encouraging someone to spend $200 more on a laptop than nudging them to buy a webcam worth $100.
You don’t necessarily have to choose one strategy and shun the other. Why not do both?
Advantages of upselling and cross-selling
Both cross-selling and upselling can boost the average order value (AOV) of any given sale, which allows you to make more revenue and grow your business.
Even better, they offer a more efficient way to achieve revenue growth than trying to bring in new leads. By some estimations, 65% of purchases come from repeat customers rather than new leads. After all, if you’ve already done the due diligence to get a new customer on board and they were happy with your service, they’re more likely to buy from you again than a brand-new lead who’s unsure if they can trust you.
This leads to another major advantage of cross-selling and upselling: They can increase trust and deepen your relationship with your customers. As long as your recommendations are relevant and useful, your customers will feel like you really “get them” and offer them value. Naturally, if you get it wrong, you may have the opposite impact.
Finally, if you pursue cross-selling or upselling strategies, you’ll begin collecting your customers’ data. This will help you to understand who they are, what they want, and provide a better customer experience. For example, you might realize that a certain customer is interested in purchasing matching accessories when they buy clothes, but they don’t want to buy shoes from you. You can then use this information to give them tailored recommendations (and maybe even apply the same lessons to future customers).
How to cross-sell and upsell
Now you have a solid understanding of what cross-selling and upselling are, let’s take a deeper look at how exactly you can pull them off effectively.
Understand your customers
Before attempting upselling or cross-selling, you need to understand who your customers are and how they plan to use your products. This will give you clues about the kinds of products they value and need, and how to get them interested in more products from you.
You should be able to obtain a lot of this info from the analytics you have about your website visitors and their demographics. This includes factors like:
- Where they live
- How old they are
- What their interests are
- Whether they’re on a low-end or high-end budget
Also think about what a typical experience for them would be when using your product. For instance, what time of the day would they use it, how many times per week, and what products would they use it with?
You may find you have a range of customers and prefer to segment them so you can target different groups differently.
Consider pricing strategies
Next, you need to think about which strategies make sense for your customer base and your business. We’ve already established the most simple method, which involves promoting add-ons when customers are browsing your website. But you can go beyond this if you really want to boost your revenue.
For cross-selling, a great option is to offer discounts as an incentive to buy more. Domino’s used this method effectively by giving takeaway customers a chance to save money on side dishes if they’d already bought a main meal.
A similar method is to build bundles by giving customers a significant discount for buying multiple items together. The savings can seem irresistible, even if the person wasn’t initially interested in all of the items included.
Upscribe offers an easy way to achieve this on Shopify by giving you the chance to set discounts based on how many items a customer purchases, all through an intuitive interface. Plus, we let customers build their own tailored bundles for greater flexibility — they can also subscribe to your product.
We’ve generated over $500 million worth of subscription revenue for customers on Shopify so far.
A final option is loyalty programs, which provide a way of rewarding your most faithful customers with perks or points. 56% of consumers say they’re more likely to make a purchase if a brand offers a loyalty program. Offering rewards also means that, when they make a purchase for something related to what you’re offering, they’re likely to think of you.
Another consideration for your cross-selling and upselling strategies should be how you market them.
One option is “retargeting,” which involves sending tailored adverts to people who have previously visited your website or purchased from you. You can configure this tool through the platform you’re using to carry out an ad campaign (e.g., Facebook), and customers will automatically see adverts from your site.
This can be a great way to carry out post-purchase cross-selling by reminding people of items related to their purchases.
The beauty brand BOOM! by Cindy Joseph used a retargeting strategy through Facebook to promote its moisturizer to previous website visitors. By including text with testimonials and key product benefits, this gives potential customers an extra push to make a purchase.
You could also consider sending personalized messages to past customers if you have their details (and they’ve consented). This could include additional discounts tailored to them or product recommendations based on their demographics.
Don’t overdo it
As with anything, moderation is key. If you’re overloading your customers with loyalty programs, bundles, and discounts while also bombarding them with marketing materials, they may end up getting fatigued and shifting away from purchases.
It’s best to choose a few strategies that work for you and stick to them.
Watch that revenue rise
Cross-selling and upselling are two strategies that should be part of every Shopify store owner’s arsenal.
Ready to take your store to the next level? Upscribe helps you build product bundles to cross-sell and upsell to customers and offer them more value in the process. We also offer a range of other useful features, including subscriptions and advanced analytics. Why not learn more and schedule your demo?