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Cross-Selling and Upselling

If you've done some research on selling strategies for e-commerce business owners, you've probably noticed the growing popularity of cross-selling and upselling.

While the terms cross-sell and upsell are clearly defined, you may also have noticed that they're used interchangeably by some authors. Worse yet, some authors actually use them backwards! This is probably due to the emergence of the strategies in the online realm and the relative scarcity of literature on the subject.



Let's examine the definitions:

• An upsell is simply convincing the buyer that he or she should purchase a more expensive (and higher quality or more versatile) product than the one under consideration.
• A cross-sell is an effort to encourage the committed buyer to add auxiliary items to the purchase, such as accessories or related items.

Have you been to a fast food restaurant lately? Chances are, the person taking your order will ask you two questions:

• "Do you want fries with that?" This is an example of a cross-sell. Everyone knows that fries go well with a hamburger.
• "Do you want to biggie-size that?" This is an example of an upsell. The order taker isn't asking you to buy additional items, but is encouraging you to buy a bigger and more expensive version of something you're already ordering.

There's always the chance that you'll suddenly decide to scrap your order and have a salad back at the office, but most people are happy to upgrade their orders if they feel they're getting a bargain. This happens at the snack counter at the movies too. "Would you like the 32-ounce drink? You get twice as much for just 50 cents more!"

Cross-Selling Online
Cross-selling from e-commerce sites has been quite effective, raising sale percentages by a satisfying amount for many online merchants. While you might initially hesitate, thinking that customers will exit quickly if they feel they're getting the hard sell, online customers tend to see cross-selling proposals as added value.

An excellent example of cross-selling is the Barnes & Noble website. For each book listing in the database, the buyer immediately sees a list of five books under the heading, "B&N Customers Who Bought This Book Also Bought." The list might include other works by the same author or a few works by that author and others of a similar genre. You might see a Stephen King book, for example, augmented by three more of his books and two by Dean Koontz, who also writes in the horror/science fiction genre.

Most products and services lend themselves well to cross-selling, if you sell or provide multiple items. Complementary items are great to offer, and the customer will appreciate your bringing his attention to the availability of these products. For example, a customer looking at a pair of red shoes might appreciate seeing thumbnails for matching handbags or belts. Or a customer buying a garment bag might be glad to see a matching duffel and carry-on bag.

The items need not match. They can be related products. If your customer is buying an iron, he might like to look at ironing boards or stands that clip onto the board to keep the iron out of the way. A client taking out an ad for a garage sale might be glad to pay an additional fee for a small map to locate his home.

Accessories do well in cross-selling. Electronics may have optional power supplies, USB cables and rechargeable batteries that you can sell at the same time. In fact, some vendors do well selling batteries by inviting the buyer to "add all the batteries needed for this product." Customers looking at cutlery sets may wish to add on the matching service pieces. If you sell appliances or electronics, consider cross-selling warranties. Banking, accounting and web design vendors can cross-sell an array of auxiliary services.

Rules for Cross-Selling
Experienced online cross-sellers know that selecting the items that are to appear alongside each product is a huge, time-consuming job. You want to get it right, and after it's done, you should plan to keep track of how well the cross-sellers are doing.

The selection and placement of cross-sell items should be part of your web design, so you'll need some guidelines for your designers. These rules should also serve the folks who'll be selecting the items for the product page. You can set whatever rules you want, but here are some samples of rules in use by other vendors that you can use as prompts:

• Display a maximum of three cross-sell items.
• All items should be in stock.
• The items should not be sale items.
• Each cross-sell item should be less expensive than the main item.
• The items should be familiar and not require descriptions and explanations.
• The items should have no options (size or color choice, for example).
• The images of the cross-sell items should be of a specific size (larger than thumbnail, but smaller than the main item, and tiled along the right margin.

The database of items you provide or sell may be organized with an "affinity" link that identifies them as possible cross-sell items for another product. If you have thousands of items, creating these figures is bound to take a long time, although you could well decide to cross-sell on just your best-sellers or major items. If you've decided to display three cross-sell items per page, you should identify five or six compatible items in your database to ensure that you're not offering items that are temporarily out of stock.

Here's a good hint for identifying cross-sell items. One large retailer identified a team of particularly perceptive floor salespersons and invited them to select the cross-sell items for their web site. This worked well, as these folks knew exactly what customers tended to buy along with major purchases when they were in the store.

Upselling Online
Upselling from your e-commerce web site is a bit riskier than cross-selling. You're taking a chance that the buyer will see your offer as a hard sell if it's not done smoothly. You should carefully monitor your buyers' behaviors when presenting upsell items.

Recall that upselling encourages the buyer to consider an alternate, more expensive item. The item may have additional features, more power, more options or higher quality. In fact, the alternate item may be just what the buyer is looking for, and your display should look very much like an effort to show the buyer what you have in stock that he otherwise might not find.

The buyer must see the added value in the more expensive item. In fact, you should be quite explicit about the added value, and you may have to create the value yourself. For example, suppose a customer is perusing dress shirts and has clicked on a thumbnail for a $30 shirt. You might present a $50 shirt that comes with free cufflinks or a free tie. If the customer sees the free item as having a value close to the $20 difference, he'll choose the more expensive item.

Upselling Rules
You'll have to identify some guidelines for upselling, just as you should for cross-selling. Here are some suggestions:

• Offer the alternate before the customer has added the item to his shopping cart.
• Use text that's brief but makes it clear exactly what features the upsell item has that are lacking in the main item.
• List more expensive items with the same brand name, or higher quality but similar items in other brands.
• The upsell item should always be more expensive than the main item.
• Decide whether you'll offer sale items when upselling. If so, select items whose sale price is higher than the main item. (Note: You can decide to use upselling to move older inventory, but beware of bargain basement sales that reduce your income.)
• Use the opportunity to offer new releases or new inventory. Clearly label the photograph of the upsell item with "Just released!" or "New Item."
• When the buyer clicks on the picture of the upsell item, display the item's catalog page rather than adding the item to the shopping cart right away.

This advice by experts bears repeating: make sure your customer is clear about the advantages of buying the upsell item. The offer should be seen as good customer care rather than a hard sell.

Other Online Selling Strategies
Variations on the upsell and cross-sell are numerous. Consider having a few small items for sale in the checkout area, much as grocery stores and department stores do. This is how they sell magazines, gum and candy-keeping customers in shopping mode while they're waiting to check out.

Seasonal items can tempt many customers. Offer gift items before the winter holidays or pastel-colored clothing before Easter.

You might identify a few "loss leaders." These are sale items that you sell at a slight loss, just to get buyers to your web site. When the buyer comes in for a visit, have cross-selling and upselling items ready to display.

Many buyers are attracted to free shipping offers, for good reason. They'll look for items to buy to make up the difference. For example, if you offer free shipping for orders over $100 and your customer's purchase amounts to $95, you can bet he'll keep shopping for a $5 or $6 item to save $15 or more on shipping. How can you direct your buyer to a $20 item that he won't be able to resist?

Whatever you decide to do, scan your sales data often to see how the cross-sellers and upsellers are doing. Don't be discouraged if the strategy seems weak at first. As you build your customer base, serious buyers will come to trust your suggestions.