Up and cross-selling
Higher sales volumes through up-selling and cross-selling
Up-selling and cross-selling are two e-commerce strategies with one goal: more turnover. However, they are not equally suitable for every product or customer. Both strategies are particularly suitable for existing customers. There are three ways to use them:
- Before purchase, for example by presenting further products from the category
- During the purchase or checkout process
- After the purchase by follow-up e-mails
Up-selling is a sales method that encourages customers to purchase higher-priced items or services instead of the product they are looking for, so that they spend more money than planned. This strategy is quite successful because many customers – particularly online shop visitors – often have only a rather abstract idea of their desired product and therefore have not yet chosen a specific article. Users of this selling strategy argue, among other things, with additional functions, a higher quality or a longer service life compared to the cheaper product. This increases expectations of the product and the consumer has the feeling that the cheaper option does not meet all his requirements. For example, if a customer wants to buy a radio that costs between $35 and $60, the seller would first show a cheap model for $35 and then demonstrate the advantages of another, higher-priced radio (for example a better sound). After a sound test, the customer wants to buy the more expensive radio.
Since such practices are well-known and can scare off at least some of the customers, this method involves a risk. The risk is particularly high in the domain of online businesses, because the exit is only a mouse click away. Moreover, for technical reasons up-selling is possible only to a limited extent. Usually, there is a price range filter or price sorting.
The term cross-selling refers to a seller’s efforts to sell products or services in addition to a customer’s desired item in order to increase the sales volume. The method is as follows: The retailer presents the customer with other goods that also match his or her current needs or complement the desired item, such as a case or headphones for a smartphone. Some of these articles are offered at just above cost price.
Cross-selling works especially well with existing customers, as they have a certain amount of trust and are thus likely to buy more items from the company. The low acquisition costs are the main advantage of this method. Other examples of cross-selling are the weekly changing products on offer in discount stores or the product recommendations of a hairdresser after a haircut.
Since the decision to buy a product online is often made within a few seconds, the retailers integrate certain tools which are supposed to enhance the sales volume. For example, the retailer defines keywords related to the product which the customer searches in the database, or tags a product by adding keywords to it. Sometimes cross-selling methods even lead to a change in product range. CRM systems can support the strategies in that, for example, they prepare the obtained data for usage. This includes, for example, writing to all customers in autumn about the range of winter tyres on offer.