Knowledge blog

The difference between upselling and cross-selling

Upselling and cross-selling are commonly confused and the terms are many times used interchangeably, however, there’s a difference. However they both are techniques used to boost the revenue within the sales. Let’s see the definition of upselling and cross-selling first and then go into the differences. Upselling is the practice of encouraging customers to purchase a comparable higher-end product than the one in question, while cross-selling invites customers to buy related or complementary items. Upselling and cross-selling are mutually beneficial when done properly, providing maximum value to customers and increasing revenue without the recurring cost of many marketing channels.

Cross-selling

Cross-selling identifies products that satisfy additional, complementary needs that are unfulfilled by the original item. For example, a head set could be cross-sold to a customer purchasing a mobile phone. Oftentimes, cross-selling points users to products they would have purchased anyways; by showing them at the right time, a store ensures they make the sale. Cross-selling is prevalent in every type of commerce, including banks and insurance agencies. Credit cards are cross-sold to people registering a savings account, while life insurance is commonly suggested to customers buying car coverage. In ecommerce, cross-selling is often utilized on product pages, during the checkout process, and in lifecycle campaigns. It is a highly-effective tactic for generating repeat purchases, demonstrating the breadth of a catalog to customers. Cross-selling can alert users to products they didn’t previously know you offered, further earning their confidence as the best retailer to satisfy a particular need.

Up-selling

Upselling often employs comparison charts to market higher-end products to customers. Showing visitors that other versions or models may better fulfill their needs can increase AOV (Average Order Value) and help users walk away more satisfied with their purchase. Companies that excel at upselling are effective at helping customers visualize the value they will get by ordering a higher-priced item. The automobile salesman often engages in up-selling by showing the customer multiple versions of the same product. In Ecommerce example, after selecting a laptop, the customer is immediately presented with several options for upgrading the processor. In this case, the merchant is trying to upsell the customer to a more powerful (and expensive) computer. Essentially they are trying to get the customer to spend more on the same product or product type that they are currently looking at.

Cross-selling and upselling are similar in that they both focus on providing additional value to customers, instead of limiting them to already-encountered products. In both cases, the business objective is to increase order value inform customers about additional product options they may not already know about. The key to success in both is to truly understand what your customers value and then responding with products and corresponding features that truly meet those needs.

There is one more popular selling technique known as bundling. Bundling is the offspring of cross sell and upsell. You bundle together the main product and other auxiliary products for a higher price than what the single product is sold for.