Cross-selling and upselling: methods, benefits and tips

Cross-selling and upselling boost revenue through supplementary sales, but understanding when and how to cross-sell or upsell is key.

In this article, you’ll learn the key differences between cross-selling and upselling and where these methods are predominantly applied in both B2B and B2C sectors.

Cross-selling: Definition and examples

A prime cross-selling example can be seen at gas stations: customers who come to fill up their tanks, the initial purchase, often buy snacks, drinks, magazines or other additional items at the register.

But precisely what is cross-selling? Typically, cross-selling involves personalized product recommendations that complement a previous original purchase. For example, a customer who has bought a smartphone might be interested in other relevant products, such as a phone case, a screen protector or mobile insurance. Cross-selling includes offering additional products or services that complement the customer’s initial purchase.

However, cross-selling isn’t a sales technique limited to complementary products, it can also include items from different categories. One advantage of successful cross-selling is that satisfied customers will likely purchase from the same provider again, especially if the quality is good.

Repeat purchases help build customer loyalty. In fact, an Invesp report states that existing customers are 50% more likely to try new products and spend 31% more than new customers. This demonstrates the significant value of nurturing existing customer relationships, as loyal customers bring consistent revenue and are more willing to invest in additional offerings.

For instance, if a customer has bought a new car from a dealer and is happy with their purchase, they’re likely to be receptive to buying additional products from the same dealer, such as a set of winter tires.

How complementary goods boost cross-selling

Complementary goods are products that enhance the use of each other, such as game consoles and games or content management systems and hosting services. These items are often sold together to provide complete solutions, like laptops with external peripherals or vacuum cleaners with bags.

When considering whether to cross-sell vs. upsell, it’s important to identify the right opportunities for each strategy.

Compelling upsell offers should be tailored to the customer’s specific needs and preferences. By analyzing customer base data, businesses can identify opportunities to present higher-value options that align with the customer’s interests and previous purchases.

This approach increases the likelihood of acceptance and helps build stronger relationships with customers, as they feel understood and valued.

An aggressive sales tactic can sometimes be counterproductive in both cross-selling and upselling. Customers appreciate subtlety and value. Therefore, it’s crucial to strike a balance and create a sense of urgency without overwhelming the customer.

Implementing upselling techniques such as limited-time offers on a premium version or a discount on a higher-priced version can encourage customers to make a decision faster. This strategy not only increases sales but also enhances the overall customer experience.

What does “upsell” mean in practice? It’s recognizing the opportunity to offer a more expensive, feature-rich product that better meets the customer’s needs.

What’s the difference between upselling and cross-selling strategies?

Both cross-selling and upselling are proven powerful strategies.

A customer might choose a more expensive version because it offers more features, for example.

Effective upselling tactics are commonly employed in the technology and software industry. Initially, low-priced offers attract new customers. However, a skilled sales professional quickly recognizes the opportunity for upselling and tries to sell customers the more expensive and feature-rich tool if a need is identified.

Here’s an example: a Basic project management tool version costs $15 monthly and includes access for up to five users. The Pro subscription, however, provides access for 20 users, premium support and advanced features. A satisfied user of the Basic version, whose team grows as business success increases, would be a suitable candidate for upselling. They have grown to trust the provider and enjoy the product, and their needs have expanded. The software company can then make a timely offer for the Pro version.

Upselling is also possible in brick-and-mortar retail. For example, perfumes in larger bottles are initially more expensive. However, calculating the price per milliliter, the larger size is a more economical purchase, benefitting both the provider and the customer.

It’s clear that upselling (like cross-selling measures) targets not just new customers but also existing ones.

Cross-selling’s potential in B2B, B2C and e-commerce

A car dealer offers insurance for a new car, Amazon recommends similar products during the checkout process and a spa hotel promotes an additional treatment at check-in: cross-selling has vast potential and is omnipresent.

Below, you’ll get an overview of the possibilities of this crucial sales tactic.

Cross-selling’s potential for e-commerce

In e-commerce businesses, cross-selling is widely applied by suggesting additional products or services related to items in the shopping cart or already purchased products. There are good reasons for this: a study by Forrester found that 10 to 30% of e-commerce revenue comes solely from personalized recommendations.

Amazon is a pioneer in this area – its algorithm suggests suitable additional products related to the main product that will likely interest the buyer, such as matching shoelaces for the shoes they just selected or colorful balloons that go with the birthday candles already in the cart.

Online purchase decisions are often made quickly and impulse buys are more likely. In fact, 36% of UK consumers are likely to make impulse buys online, compared to 33% in-store.

When cross-selling occurs, the provider benefits from two main factors: not only does it drive revenue increase, but it can also improve customer relationships. New customers benefit from getting multiple useful products from a single source and existing customers, due to their positive experiences, may directly approach the same provider when they have a new need.

To maximize sales efficiency, online stores use algorithmic processes for cross-selling. Larger companies like Zalando or Amazon develop their own recommendation algorithms that can calculate probabilities for cross-selling based on existing customer behaviors.

To ensure the effectiveness of these strategies, it’s crucial to have a well-defined cross-selling process. This involves training your sales team to recognize upsell opportunities and to make personalized product recommendations that align with the customer’s needs.

This increases conversion rates and fosters long-term engagement with customers. Additionally, monitoring the sales cycle and adjusting your business model to reflect the insights gained from customer feedback can significantly enhance your marketing efforts.

Cross-selling’s potential in B2B

According to Harvard Business Review, acquiring a new customer is 5 to 25 times more expensive than retaining an existing one.

Effective cross-selling through good customer relationship management (CRM) can significantly increase Customer Lifetime Value (CLV). Implementing effective cross-selling techniques like bundling products, providing tailored recommendations and leveraging customer data are crucial for maximizing revenue.

Offering a complimentary product or service during a customer interaction can lead to increased satisfaction and higher sales. By aligning cross-selling efforts with the company’s business goals, businesses can ensure that these techniques boost sales and contribute to long-term success.

For example, a software provider that maintains high customer satisfaction and loyalty by offering regular updates, advancements and related tools achieves high levels of customer satisfaction and customer loyalty.

Effective communication is another critical component of a successful cross-sell. By clearly articulating the numerous benefits of additional products or services, sales teams can better persuade customers to consider these options. This communication should be consistent across all touchpoints, ensuring that customers receive the same message whether they’re interacting with a sales representative, viewing an email or just browsing the company’s website.

There are many opportunities for cross-selling here and the possibilities are not limited to the sales process. Customer service teams can also proactively seek additional solutions with customers.

Every interaction about the main product range provides chances for cross-selling. Even in technical service or during complaints, cross-selling opportunities can be found. The key is that customers always feel seen, understood and valued.

Cross-selling is prevalent in B2C

Supermarkets analyze their customers’ purchasing behavior, just like online shops. They strategically place products in the physical store (offline) and on their websites (online) to maximize customer benefits and stimulate impulse purchases.

Cross-selling examples are not only used in the low-price segment. For instance, a furniture store might offer delivery and assembly services along with your new kitchen. Similarly, a car dealer might sell the appropriate car insurance along with the vehicle.

As in the B2B sector, cross-selling and customer retention are interdependent. Customers who receive sound advice in a local store and are satisfied with the product quality are more likely to return to purchase another product.

However, it’s important to note that in many regions the email marketing in your B2C online marketing strategy must be sent with the customers’ explicit consent. There are also privacy regulations and data protection rules in the B2B sector to remember.

Successful cross-selling and upselling strategies also depend on well-executed marketing campaigns. These campaigns should highlight the benefits of additional products and services, using targeted messaging that resonates with the audience.

By integrating cross-selling and upselling into broader marketing efforts, businesses can reach more customers and increase the effectiveness of their sales tactics.

The benefits of cross-selling

Revenue can be increased through skillful cross-selling, but this doesn’t always have to be direct. Products can be sold at cost or below to cross-sell higher-margin items or services with higher profit margins, while less popular products can be highlighted as complements to bestsellers.

Cross-selling can strengthen customer relationships and enhance customer satisfaction in both B2B and B2C. However, the products must be offered at the right time in the customer journey. A good analysis of the target group and a well-thought-out CRM strategy are indispensable for this.

Moreover, cross-selling offers additional benefits in search engine optimization (SEO). Online shops with many products benefit from the ability to set numerous internal links for cross-selling purposes. These ranking factors for Google’s algorithm can help bring more traffic to the website or individual product pages.

For cross-selling to be successful, it’s important to avoid offering irrelevant products, which can lead to customer frustration and a decrease in conversion rates.

Instead, focus on personalized product recommendations closely related to the original purchase.

This approach ensures a higher likelihood of acceptance and improves the customer’s overall buying experience.

The disadvantages and risks of cross-selling

Cross-selling is not a surefire success but requires intensive research and careful planning. If customers continually get unsuitable offers at the wrong time, sales are lost and people may even feel harassed. In the worst-case scenario, they’ll turn to the competition, where they might feel better off.

Even if cross-selling is successful, customers may invest less money elsewhere, even though they would have been interested. Therefore, cross-selling and upselling are not automatically profitable but must be continually evaluated using specific customer data.

7 tips to exploit the cross-selling potential

The better you know your customers’ needs, the more effectively you can offer complementary items and other cross-selling products at the right time.

This is about identifying the customer’s needs and determining the right time to make the offer. These tips will help you use cross-selling as effectively as possible:

1. Don’t make too many offers. Many people feel overwhelmed by many options (paradox of choice), which can lead to them abandoning the purchase altogether. Ideally, choose two to three suitable cross-selling offers.

2. Create purchase incentives. Small purchase incentives, such as free delivery for orders over a certain value, can increase the likelihood of successful cross-selling.

3. Place cross-selling products correctly. Cheap products are often purchased during the checkout process. On the other hand, more expensive products should be presented to the buyer earlier in the purchase process so that the person can consider their overall budget.

4. Be honest. Always focus on customer benefits, not short-term sales. A quick cross-sell may have a positive effect initially, but intensive customer relationship management with real insights into the target group always wins in the long term.

5. Test opt-outs. Offer the main product in combination with cross-selling products that can be optionally selected, as this often leads to better sales rates than if the buyer has to actively put a product in the shopping cart.

6. Consider the communication channel. Those who have ordered online via a website may be more receptive to follow-up email marketing over other channels. On the other hand, customers who have received personal advice might be more likely to get enthusiastic about other products over the phone or in a personal conversation.

7. Collect data. A reliable marketing strategy for cross-selling campaigns can only be determined based on concrete data (KPIs). A reliable CRM system helps you keep track of this and target customers in all phases of the customer journey.

Selling complementary goods and other products: How to proceed

There are many different marketing measures for cross-selling, such as a follow-up newsletter, targeted social media ads or suggested products in the shop that are selected algorithmically.

Modern marketing methods, such as product recommendations within a community, social selling or influencer marketing, also open up cross-selling opportunities. In any case, a good customer experience is critical. Always keep in mind that upselling may be more advantageous.

Here are four steps to take to start developing your cross-selling strategy.

1. Cluster products and complementary goods

The more data you have at your disposal, the more precisely you can identify which cross-selling products can complement the main product. If you have little to no data, the following questions can help provide initial guidance:

• What is the main product?

• Which cheaper products can complement the main product?

• Are there more expensive products that could still be a good addition?

• Which complementary good does the product need to be usable?

• What related products do people buy on other platforms?

• Upon closer inspection, which products are not suitable for cross-selling even though they belong to a similar category (e.g., winter clothing when buying a swimsuit)?

2. Analyze customer data

If you already have customer data, you can analyze where the greatest cross-selling potential lies. Include factors such as prices, quality requirements and other customer preferences.

Using lookalike audiences, you can also use this data to target customers who have only bought once or have never bought anything. Consider exchanges and cancellations so that these don’t slant the results.

3. Consider the customer journey

Use the customer journey to determine the right time for each offer. For example, someone who has just bought a new smartphone is unlikely to be interested in a new model shortly afterward.

On the other hand, a partner tariff, technical accessories or insurance offers could be of interest.

4. Plan and evaluate campaigns

Based on the previous considerations and data, you can now decide where the cross-selling products are best placed. In e-commerce, this is typically the case on the shopping cart page or during the payment process.

However, retail giants like Amazon present cross-selling offers almost constantly – even long after the purchase. Continuous evaluation and optimization of the campaigns are crucial for long-term success.

Cross-selling and upselling are worthwhile with the right strategy

Both cross-selling and upselling are common sales strategies for a reason. They’re resource-efficient as they mainly target existing customers, avoiding high acquisition costs for new customers and increasing profit margins.

Both strategies pursue the same goals, including increasing revenue and improving customer satisfaction and retention. The difference is that cross-selling offers customers complementary products (often complementary goods), whereas upselling offers a more expensive product that provides greater value than the previously chosen one.

However, neither cross-selling nor upselling automatically guarantees success. They require a well-thought-out strategy and a good understanding of customer needs to make the right offer at the right time.

Reliable and accurate data is the foundation for effective cross-selling and upselling strategies. Such data can be neatly captured and made readily available to all stakeholders in the company – from the product department through the marketing efforts to the sales process – using a CRM system like Pipedrive.

Based on this foundation, you can develop profitable and sustainable cross-selling strategies.

Using CRM tools like Pipedrive, you can track customer feedback and behavior, essential for identifying when and what to cross-sell vs. upsell. Integrating customer data and feedback into your strategy ensures that your offers are relevant and timely, increasing the likelihood of acceptance.

For instance, if a customer has recently purchased a new software, you might follow up with an offer for a training session or advanced features that enhance the product’s value. This boosts sales revenue and contributes to customer satisfaction and loyalty because you’re providing solutions that meet their needs and expectations.

Final thoughts: Maximizing sales with strategic cross-selling and upselling

Cross-selling and upselling are essential to an effective sales strategy, especially in competitive markets. By focusing on the customer’s needs and journey, businesses can strategically position their products to maximize their sales potential while enhancing the overall customer experience.

Ultimately, the success of these strategies hinges on a deep understanding of your customer base, an effective use of technology and data analytics and the ability to deliver timely and relevant offers.