Upselling and Cross-Selling Techniques To Increase Average Order Value

Your business’s average order value is determined by how good your products and services are, but it is not the only thing that increases it. Marketing techniques like product bundling, upselling, cross-selling, and downselling are important strategies for your business. It’s about creating value for customers rather than trying to sell products.

In this blog, we’ll learn two marketing techniques: upselling and cross-selling to increase your average order value. Let’s take a look at their importance, how to use them, and what to avoid.

The Art of Upselling and Cross-Selling

Upselling and cross-selling are two different marketing strategies businesses use to increase revenue. Both strategies aim to make a higher sale than the initial one, but they’re not just about pushing extra products. They help create value for customers by offering better or complementary items.

Mastering upselling and cross-selling techniques increases customer satisfaction along with profits. Upselling techniques encourage customers to choose better or upgrade the products they are considering. Cross-selling includes offers related to products that complete their purchase. Let’s understand them in detail.

What is the Difference Between Upselling and Cross-Selling?

Both upselling and cross-selling techniques aim to increase your sales by improving customer shopping experiences. They have the potential to build customer loyalty and trust while increasing average order value.

Here’s what each one of them means and what they can achieve:

• What is Upselling?

When you upsell, you encourage customers to buy a higher-priced or upgraded product version. For example, you can recommend a better version of a TV, one with surround sound, for a slightly higher price.

This technique works well when customers see the value of spending a bit more for extra features or quality. So, it is important to convey technical information with clarity.

• What is Cross-Selling?

When you cross-sell, you suggest related or complementary products for those they are purchasing. For example, if a customer buys an iPhone, you can cross-sell AirPods with it.

This strategy increases the value of the purchase by showing products that improve the customer's experience. So remember to show them how another product can increase their user experience along with the one they’ve bought.

Why Are Upselling and Cross-Selling Important?

Both strategies are equally important for your business and the customers. Since increasing your profit and revenue partly depends on good customer service, let’s see how they mix these factors.

• Increased Average Order Value

Statistics show that 88% of sales professionals^[1] prefer upselling to their customers. This strategy is tried and tested, and the reason is simple. Upselling and cross-selling encourage customers to add more items or switch to higher-priced options in a single purchase journey. This generates more revenue from each transaction in one go.

• Better Customer Service

Did you know that 84% of companies^[2] that worked to improve their customer experience reported increased revenue? Customer service truly is one of the most important things.

This is the customer’s experience when your service is good:

1. Satisfaction: When you offer personalised recommendations, it makes customers feel understood and cared for.

2. Relationships: Cross-selling and upselling strategies help build customer relationships by suggesting products that genuinely fit the customer’s needs.

3. Loyalty: Customers start connecting with your business and choosing your service because of their prior good experiences.

4. Retention: Instead of focusing only on finding new customers, you can increase profits through existing clients.

6 Proven Upselling and Cross-Selling Techniques

For businesses, these techniques are cost-effective ways to maximise profits without new customers. Here is a list of upselling and cross-selling techniques that work:

1. Entice with Premium Options

Show your customers a range of options, from basic to premium. Make them aware that there is something more exclusive than what they’re buying, and the bandwagon effect^[3] will take over.

The additional benefits of higher-priced choices make them appealing. For instance, a software company can offer a free version and market a premium version with advanced features that customers can purchase.

2. Bundle Products with Discounts

Create product bundles that offer discounts when certain items are bought together. For example, if a customer buys a coffee maker, offer a set of filters and coffee beans for a lesser price as a bundle. Bundling makes customers feel they are getting a better deal and increases your average order value.

3. Use Data Analytics in Marketing

Use data analytics to suggest items customers are likely to want. For example, “Customers who bought this also bought…” messages will increase revenue for popular combinations. Even the “Bestseller” tag builds trust in the product. This approach uses social proof^[4] to encourage more purchases.

4. Time it Right

Upselling and cross-selling should be introduced at the right time. Show these options during checkout or when a customer shows interest in a product. For example, online shopping sites suggest product accessories just before finalising the purchase.

5. Learn the Right Product Value

Focus on the benefits of your product while upselling and cross-selling. Instead of pushing a product, explain how it solves a problem or improves quality of life. Your persuasion should have a proper reason for customers to consider it. For example, explain how an orthopaedic mattress can improve spine health over a foam mattress.

6. Create Limited-Time Offers

Adding a sense of urgency can increase demand and, hence, conversions. Making your customers aware that they might miss out on discounts if they don’t act now is a proven marketing strategy. Offer seasonal discounts and use action words that suggest a “now or never” feeling to the customer.

5 Best Practices for Implementing Upselling and Cross-Selling

To successfully upsell and cross-sell your products and services, you should follow these tips and practices:

1. Right After the Purchase

Thank-you pages are ideal for post-purchase offers. Suggest complementary products after checkout, such as accessories for an item they bought. This way, the customers do not feel forced to do so.

2. Right Before the Purchase

The checkout stage is another space where you can offer product upgrades. Include options like “You might also like…” or “Upgrade to premium for just ₹10 more”. These suggestions will feel natural at this point in the customer journey.

3. Relevant Suggestions

Always personalise suggestions to the customer’s interests or purchase history. Irrelevant offers can feel pushy and reduce their trust. For example, you cannot recommend dog food to customers purchasing cat toys.

4. Clear Communication

Be transparent about pricing, benefits, and reasons for recommending a product. Being too pushy can make your customers feel pressured. Clearly show how the added product or upgrade would benefit them without directly asking them to buy.

5. Team Training

For in-person sales, train your staff to identify opportunities for upselling and cross-selling. Also, they should be trained thoroughly about the product’s technical knowledge and benefits. They should be confident enough to answer any follow-up questions from the customer.

Real-Life Examples of Upselling and Cross-Selling

You may have experienced upselling and cross-selling as a customer. Here are some industries that use these strategies successfully:

• Streaming Services

Netflix and Amazon Prime suggest upgrading to multiple-screen plans when more people try to stream at once. This suggestion, made at the right time, seems more convincing and not forced.

• Fast-Food Chains

These chains offer combo items at cheaper prices than single ones. For example, McDonald’s offers meal combos instead of single items. Customers can add fries and a drink with the burger for a little more than a burger.

• E-Commerce Stores

Swiggy, Licious, and Souled Store add their premium membership to your cart by default during checkout with a pop-up about how it would benefit you.

• Travel Companies

Airlines cross-sell by offering seat upgrades, travel insurance, or car rentals during ticket purchases. These add-ons improve convenience and comfort for travellers.

• Retail Stores

Clothing store employees cross-sell accessories, like belts or shoes, to complete an outfit. A makeup store employee may offer different lipstick shades, so you can mix them to make more shades.

Potential Pitfalls to Avoid

Cross-selling and upselling strategies are sensitive tactics. You can lose a customer if you don’t do it right. Here’s what you need to avoid:

• Being too pushy: Avoid overwhelming your customers with too many offers. Excessive suggestions can feel aggressive and push them away.

• Irrelevant suggestions: Make sure your recommendations make sense based on the customer’s preferences. Irrelevant products can affect their trust in your brand.

• Overcomplicating choices: Too many options can lead to decision fatigue and reduced sales. Keep your suggestions few and simple.

• Ignoring timing: Badly timed suggestions can disrupt the customer journey. For example, recommending additional items too early might distract from their initial purchase.

Final Thoughts

Cross-selling and upselling strategies are excellent for increasing revenue and improving customer satisfaction. When used carefully, they can improve the shopping experience while increasing sales.

GrowthJockey can help your business with more such marketing and sales strategies. We understand how important customer satisfaction is for business growth and recommend strategies that will best suit your industry.

FAQs

1. What are upselling and cross-selling techniques?

Upselling is encouraging your customers to buy or upgrade to a higher-priced product. Cross-selling is suggesting complementary products to add to the main purchase. Both strategies aim to increase order value while improving the customer experience. When you use them effectively, these techniques strengthen customer relationships and increase sales.

2. What are the 4 stages of upselling?

The four stages of upselling are:

1. Understanding the customer’s needs and preferences

2. Suggesting options that fit those needs

3. Highlighting the benefits and value the upgrade adds

4. Closing the sale by making the decision simple and appealing

Following these stages helps guide the customer toward a more satisfying purchase.

3. What is the 25% rule of thumb for cross-selling?

The 25% rule of thumb in cross-selling advises that you keep the price of cross-sold items below 25% of the main product’s cost. This ensures the additional items are still in the affordable range. Customers are more likely to accept complementary suggestions when they don’t increase the total price by a lot.

4. What is a cross-selling example?

Cross-selling is suggesting more products that are relevant to your customer’s main purchase. For example, a customer buys icing sugar, flour, and eggs. You would then take an interest and ask whether they’re baking something and suggest more items that would improve their experience.

1. 88% of sales professionals - Link ↑
2. 84% of companies - Link ↑
3. the bandwagon effect - Link ↑
4. social proof - Link ↑