Cross Sell vs. Upsell: Which Strategy is Right for Your Business?
Cross selling and upselling are two influential strategies to increase revenue per order and customer satisfaction. Often, these terms are used interchangeably but they are not the same.
Cross selling refers to offering products complementary to the initial purchase, while upselling involves trying to sell an upgraded or more expensive version of the same product.
Understanding these subtle differences can help you efficiently manage your email campaigns and target email marketing subscribers with content depending on their customer journey.
This guide will help you spot the differences between cross sell vs. upsell and determine which strategy is better for your business.
Upselling and Cross Selling: Which One is Better?
The answer often depends on your marketing goals and target audience. For example, if your email list contains more Gen-Z and millennial audiences, upselling could work better. According to Ecocart, the Gen-Z spend an average $115 monthly, and are willing to pay more for sustainable products.
Both upselling and cross selling can be effective strategies. We’ll review them in detail to help you find the best option.
| Aspect | Upselling | Cross selling |
|---|---|---|
| Definition | It encourages customers to buy a more expensive product than the original | It provides products that support and enhance the original purchase |
| Objective | To increase the total order value by providing an upgrade | To increase the order value by offering extra products |
| Examples | Suggesting a higher end car model | Offering sun roof along with a car purchase |
| When to use | When the customer is already considering a premium version | When the customer is hesitant because of the price |
| Common in industries | Technology goods, luxury, automotive | Retail, e-commerce, hospitality |
Before choosing a marketing strategy, consider the pointers leading up to the decision. For example, are your customers more likely to spend more or purchase more products to cover the same costs?
There’s no right or wrong approach to choosing between upsell or cross sells. It comes down to audience preferences and context. Regardless, it works better when you know the factors that determine an appropriate decision.
Upsell vs. Cross Sell: Factors to Consider When Choosing One
Tapping into customer psychology can bring your business closer to your audience and maximize sales. Often, the smallest of differences can lead to a big increase in your email marketing conversions. For example, offering a larger size pet food bag might look like a small difference in pricing. But, it could make a big impact on the overall revenue.
But how do you know if upsell or cross sell is better?
We’ll discuss the common factors that will help you make a concrete choice.
| Things to consider | Upsell | Cross sell |
|---|---|---|
| Do you offer a product or service? | It’s best for businesses with different product tiers and premium versions. | It works well with complementary products that enhance customer experience. |
| Who are your target audience? | It’s effective for users willing to pay for a premium product. | It’s best for customers open to suggestions. |
| What are your business goals? | It can improve profit margins. | It can improve average order value and customer loyalty. |
| How do customers behave? | It’s effective for customers who are open to expensive items. | It’s better for customers who are not aware of the existence of certain products. |
| What are the capabilities of your sales teams? | Requires sales teams with complete product knowledge and skills. | Requires sales teams who know how to pair items properly. |
Timing is another crucial factor differentiating cross sells from upsells. If you plan to send a cross sell email, find the best time when your customers are the most active. Similarly, if you prefer to include them on your website, choose a strategic timing.
In simpler terms, cross selling occurs before a purchase and upselling happens after a customer has purchased a product or service.
Benefits and Downsides of Upselling
Upselling can significantly boost your revenue — you can include them in promotional emails, post-purchase messages, or retention emails. However, it’s important to handle it strategically to avoid negative consequences.
The table outlines the primary pros and cons of upselling.
| Benefits | Downsides |
|---|---|
| It increases revenue | Might look like aggressive selling |
| It improves customer satisfaction | Can lead to lost sales |
| Higher customer lifetime value | Might damage brand reputation |
| Reduced marketing costs | Often involves ethical concerns |
Let’s understand them in depth.
Pros of Upselling
- Increased revenue: By persuading customers to buy the premium version of a product, you get to increase the total revenue per order.
- Leads to positive customer experience: Understanding customers’ needs and providing appropriate email content can lead to a better customer satisfaction.
- Increases lifetime value: Proper upselling tactics can increase the overall value a customer brings to your brand. When you lead them to a more expensive product, you’re indirectly giving them the best version of it, too.
- Reduces costs: Sometimes, email marketing costs can go overboard due to a shift in consumer mindset and technology. However, upselling allows you to promote to existing customers, reducing the chances of higher unsubscribe rates.
Cons of Upselling
- Customer dissatisfaction: When done aggressively, customers may feel dissatisfied and pressured into buying things.
- Lost sales: If you present an upsell offer without properly segmenting the audience, they may never purchase anything at all.
- Damage to brand reputation: A poor experience can lead to lowered trust in your brand.
- Ethical concerns: Aggressive upselling can lead to higher email opt outs, damaging your email sender reputation and IP reputation.
Advantages and Disadvantages of Cross Selling
When customers are hesitant about the upsell offer, cross selling can be a great way to still make a sale. Ensure the additional products are priced less than the original item. This way, customers think they receive many items for a similar value.
Cross selling is effective, but it can still come with its flaws.
The table demonstrates the majority of them.
| Advantages | Disadvantages |
|---|---|
| It increases revenue | Customer annoyance |
| It improves customer retention and loyalty | Dilution of core product/service |
| It offers better customer experience | Complex sales process |
| Is cost efficient | Negative impact on brand reputation |
| Increased product awareness | Operational challenges |
Advantages of Cross Selling
- Increased revenue: Cross selling can drive up your revenue without having to acquire new customers. However, use targeted email marketing to cater to the needs of each consumer.
- Customer loyalty: When customers know that you understand their wants, they are likely to stay with your brand. This can drastically cut short on the need to send re-engagement emails, last chance emails, or similar.
- Better customer experience: Whether a Saas business or a startup, offering cross sell products that genuinely meet customers’ needs can strengthen customer ties with your company.
- Cost efficiency: Since the trust is already established, you don’t have to spend more on acquiring new customers.
- Increased product awareness: Not all customers might be aware of your product catalog. Cross selling can be an effective way to let them know.
- Enhanced insights: Tracking cross sell emails can provide insights into customer behavior and preferences. Analyze your cross sell email open rates, click-through rates, and total conversion rates.
Disadvantages of Cross Selling
- Customer annoyance: If cross selling is aggressive or irrelevant, it can lead to frustration and email fatigue.
- Shift in focus: Highlighting additional products can often shift focus from the original product.
- Complex sales process: Cross selling may complicate the buying process leading to indecisiveness.
- Negative brand impact: Poorly executed cross sell email campaigns can leave users with a negative brand connotation.
- Operational challenges: Effective cross selling requires proper training of your sales teams, complicating the whole process.
You must know to skillfully promote your products and cut through the competition. That doesn’t mean including cross sell and upsell offers in every email you send out.
Consider the time, situation, and the customer’s journey to determine the right fit. To make it super easy, we’ll examine the best time to send cross and upsell emails.
When to Use Cross Selling
Cross selling requires sales expertise and might be more complex than upselling. You need to know more about your customers’ needs and wants to be able to promote relevant products.
Here are 9 key circumstances when cross selling is more effective:
- Natural pairing: When products or services naturally complement each other, you don’t need aggressive selling techniques; they sell themselves. For instance, when a customer buys a shoe, a pair of socks naturally complements the purchase. Similarly, you can cross sell breakfast cereal with milk.
- Products that enhance customer experience: If you think certain products will complete a customer’s product journey, cross selling can be effective. For example, you can cross sell a charger and laptop skin with the purchase of a laptop.
- Bundle deals: If you have more products that can be bundled at discounted prices, cross sell them immediately. For example, you can combine cleanser, toner, moisturizer, and serum.
- Personalized recommendations: When the customers have a need for certain products but are hesitant to purchase, giving them more options encourages them to purchase at least one product.
- Post-purchase follow-up: Sending follow-up emails with cross sell options can maximize the chances of purchase.
- Seasonal or limited time promotions: Include cross sell offers in holiday emails or seasonal promotions to pique customers’ curiosity and increase sales. Most consumers are looking for gifts and cross selling can be a game-changer.
- During the purchase process: Present related complementary products when a customer is nearing the checkout process.
- After key milestones: Gather user feedback on the original product and present complementary products after a while.
- Loyalty programs: Implement cross sells or exclusive deals to loyal customers or repeat purchasers.
When to Use Upselling
Upselling can be more straightforward since customers explicitly express interest in upgrades. However, overdoing it will lead to users pulling away, resulting in lost sales and a negative brand reputation.
Sometimes, aggressive selling can also lead to a shoot up in unsubscribe rates and spam complaints. Ensure to follow the unsubscribe laws and prevent overwhelming readers.
It’s best to upsell in the following situations:
- When the customer shows interest: When a customer is already interested in your product, this is a good time to introduce them to an upgrade.
- During the checkout process: Although not very usual, this step can be effective when you present the premium version just before the purchase. It can increase the chances of customers buying the higher-priced product.
- When it adds value: Showcase the upsell offer when the product meets more of the customer’s needs.
- To loyal customers: Honor loyal customers by giving them a sneak peek into the product features.
- When discounts apply: Upselling with a discount can make it seem like customers are getting more for their money.
- Post-purchase: Sometimes, it’s best to wait until the customer has used the initial product. Satisfied users are more likely to upgrade.
- When customers buy complementary products: If consumers show interest in cross selling, you can try upselling to see their reactions.
Timing and email tone is key in upselling and cross selling. If you have a bigger product portfolio, you can combine both methods to increase the likelihood of more sales.
Strategies to Combine Cross-Selling and Upselling
The strategies below are effective because they adapt to the current email marketing trends:
- Analyze buying patterns: Segment consumers and use data to understand when and how often upsell and cross sell offers are taken.
- Use AI-driven recommendations: While dynamic email content is one thing, dynamic product recommendation can take your business to the next level. AI can analyze vast amounts of data to provide tailored solutions.
- Offer tiered pricing options: Provide customers with different tiers of products or services with varying features and pricing.
- Use strategic timing: Try cross selling during checkout and upsell in your post-purchase or customer feedback emails.
- Create a sense of urgency: Implement time-sensitive offers to encourage immediate action.
- Promote cross-channel consistency: Maintain consistent messaging, discounts, and deals across multiple channels, including websites, social media, and ads.
- Train your sales team: Provide product knowledge and teach them persuasive sales techniques.
Customer data can give you information about their past behavior and purchase actions. However, never pick particular users to upsell or cross sell. You never know when someone might be willing to upgrade or purchase complementary items.
The best approach is to present upsell or cross sell opportunities and wait for them to decide.
In the next step, we’ll review the best practices to keep your customers happy and returning for more.
Best Practices for Effective Upselling and Cross-Selling
Customer preferences are constantly evolving, and it may not be possible to predict the behavior of a specific audience segment.
But you can use these tactics to ensure your messages resonate with each consumer:
- Identify high-value customers: If upselling is your strategy, focus on buyers with a history of making larger purchases.
- Segment customer base: Group customers with similar interests and characteristics together. This will give you more room to target upsell and cross sell offers effectively. You can utilize demographic segmentation, psychographic data, behavioral data, or geographic segmentation for easier classification of the audience.
- Increase your product knowledge: Train sales teams and understand the best ways to offer complementary items or upgrades.
- Highlight value proposition: Emphasize the added value and benefits users will receive by choosing upsell or cross sell offers.
- Offer suggestions at the right time: Include upsell or cross-sell offers when customers are the most receptive, such as during the checkout process or after the initial purchase.
- Use simple language: Implement clear and concise explanations to avoid overwhelming customers. You can also clarify any questions or concerns before they arise, increasing trust in your business.
- Experiment with different strategies: Instead of sticking to a single method, present customers with other techniques. You can also add interactive elements to retain recipient interest. Campaign Refinery’s gamification system allows clients to set points for each action subscribers take on their emails. You can then decide how you want customers to redeem their points.
Pull People into Your Sales Funnel the Right Way
It’s easy to create good-looking emails and highlight your product values. Yet, it can still be challenging to attract people into your email marketing funnel.
Our Lead Magnet Multiplier Course helps email marketers spot the right leads, provide value, and move them through the upsell or cross sell funnels. The only condition is to complete the course within 7 days to retain life-time access.
Creating upsell and cross sell offers involves reading customer data correctly to craft relevant offers and promotions. You could do it manually if you have the time and resources.
Or use a reliable email marketing platform like Campaign Refinery and let us handle everything for you.
We understand every business is unique, and we work one-on-one to create customized email marketing agendas. But no matter who we work with or which pricing tier clients choose, they receive top-notch email deliverability and access to premium tools and features.
We offer the highest inbox placement rate on the market. Clients noticed a 600% increase in inbox placement rates after onboarding with us.
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