One of the most effective techniques for increasing sales on online stores is cross-selling. In this article you’ll learn what cross-selling is, how it works, the benefits it will bring to your eCommerce store and what the best practices are. Read on!
What Is Cross-Selling?
Cross-selling is a sales technique used to convince a customer to spend more by purchasing a product that is related to what he or she has already bought. This could be a popular related product (e.g. socks for jogging shoes) or a required accessory that is not included with the product being purchased (e.g. a memory card for a digital camera). On online stores, cross-selling is typically achieved by displaying a ‘Customers who bought this item also bought’ or ‘Frequently bought together’ section on every product page.
Very often, cross-selling suggests products to users that they would have purchased anyway – but they would have done it elsewhere and at a later time.
The business objective of this technique is to increase per-order value while also increasing customer satisfaction, as they may not have known about the additional products.
The following three practices are commonly used to make cross-selling more effective:
- Offering related products as bundles (e.g. memory card, case and protective glass for a smartphone) to save the customer’s time spent searching for them.
- Offering a discounted price on bundled products to encourage their immediate purchase.
- Demonstrating how additional products work with the main product (e.g. including a video of using a gimbal that is necessary for the smooth operation of a GoPro sport camera).
What Is the Difference Between Cross-Selling and Upselling?
It may be easy to confuse cross-selling with upselling. The latter typically involves trading up to a higher version of the product that is being purchased (e.g. more advanced model of a smartphone by a particular maker). In other words, upselling aims at convincing customers to buy a more expensive product instead of the cheaper one.
Combining upselling and cross-selling provides maximum value to customers while increasing the revenue of an e-store without the additional marketing cost.
Why Is Cross-Selling Worth Your While?
Cross-selling brings a number of advantages to eCommerce stores. Here are the four most important takeaways:
1. Cross-Selling Improves Sales and Profitability
Offering a popular related product or a required accessory at the right time positively impacts your sales. You motivate your existing customers to spend a little more – and it doesn’t require much effort on your part.
2. Cross-Selling Builds Customer Loyalty
Offering an additional product usually helps your customers solve a problem – very often it is a problem they’re not aware of yet (e.g. they do need screen protection for that new pricey smartphone). And every time this happens, it strengthens customer relationships which in the long run helps you with retaining your customers.
3. Cross-Selling Helps to Promote Products
Your customers may not be aware of different products offered by your brand or an online store. Cross-selling to them is a very efficient way of promoting your products at a very low cost, but it also encourages your customers to stay with your brand or online store because you fulfilled their entire demands and needs, by shopping at one place.
4. Cross-Selling Reduces Sales Cost
Attracting customers to products costs money, so making use of existing customer engagement and offering them a related product or a required accessory at the time of checkout will help you greatly reduce your marketing costs.
How to Increase Online Sales Using Cross-Selling?
Here are five effective cross-selling techniques that will help you increase sales:
1. Use Behavioral Segmentation
There are patterns to your website visitors and existing customers behaviors. Group them based on the products they browse and the purchases they make. Then create different cross-selling recommendations to offer them in real-time.
2. Map Out Your Customer Journeys
Identify the best touchpoints for showing cross-selling recommendations. These may be when a customer adds a product to their cart or proceeds to checkout. You can also add a cross-selling message to their order confirmation or to the follow up survey. Make sure you deliver your cross-selling recommendations at the right time to increase the chances of your customers acting on them.
3. Focus More on Offering Add-Ons Rather Than Must-Haves
Sure, suggesting a required accessory is very likely to bring you additional sale, but you shouldn’t use this as a default. Some clients may be annoyed with the fact that they always need to spend a little more than planned to be actually able to use the original product. So, offer them products that may increase their enjoyment but are not necessary (e.g. sound system for their new TV set).
4. Use the Social Approach
People tend to care about what decisions other buyers made. That’s why the ‘Customers who bought this item also bought’ or ‘Frequently bought together’ section on product pages work so well for driving cross-sales. Just make sure you have an algorithm in place that uses the browsing and purchasing behavior of your wider customer base to offer dynamic product recommendations. You’ll be surprised by the unorthodox product combinations people make!
5. Use Order Thresholds
Order thresholds are used to encourage customers to spend a little more – once they reach a certain value, a discount will be applied. In other words, they can buy whatever just to reach the threshold and thus save on the product they initially intended to buy.
Good Practices When Cross-Selling
Here are the 5 key good practices to take into consideration when designing your cross-selling strategy:
1. Make Sure Your Suggestions Are Relevant
Make sure you don’t suggest random items. If the customer is buying a smartphone, you should suggest related items (e.g. memory card, case, protective glass) and not just some other random electronics (e.g. monitor). Make sure that whatever you suggest to them, that it complements the original item and adds value to the initial purchase.
2. Get to Know Your Customers Before Suggesting Anything
You can improve your suggestions by basing them on what you already know about your customers. This is where behavioral and purchase data are priceless. Do you know what they bought or browsed? Use this knowledge to personalize your cross-selling offers more (and revisit the paragraph about customer segmentation above).
3. Don’t Force Your Suggestions on Them
Make your cross-selling look natural and inspire confidence. Address customers directly (Hey Joe, need a memory card?) and use the social approach (the ‘Customers who bought this item also bought’ section).
4. Don’t Frustrate Them by Giving Them Too Many Options
People who have just made a decision about buying this or that particular item are not willing to make further decisions. So, make sure you don’t confuse or frustrate them with too many options to choose from – or risk them abandoning their initial purchase. Suggesting 2-3 products is enough.
5. Don’t Cross-Sell for More Than They Originally Intended to Spend
If they’ve decided to spend a specific amount on a particular item, they aren’t likely to suddenly decide to spend twice as much. So, the prices of your cross-selling products should be relatively low compared to the original product. There’s no messing with human psychology!
If you aren’t using cross-selling in your online store already, I hope that after reading this article you’ll start using it straight away.
And if you are: do you have any additional strategies for cross-selling? How has it worked for your customer loyalty? Please leave your answers in the comments section below!