Cross-Selling: Definition and Types
Sometimes customers are ready to buy more than they plan. It is important to offer them complementary products that can be used with the main one at the right time. For this reason, companies introduce cross-selling, which increases profits by 30% on average. This happens without wasting time or budget, often automatically and almost always unobtrusively.
In this post, you will learn what cross-selling is, why companies need it, how it differs from upselling and downselling, as well as what types and techniques exist to increase the average order value.
What is cross-selling
Cross-selling is the process of recommending supplementary items to customers when they have already chosen the original product they intended to purchase. For example, if customers add a smartphone to their carts, you can offer them a case for this model or a screen protector.
It is important to understand that cross-selling is not about forcing a product on a customer, but about a profitable deal. Additional products should not be random, but useful for using the main one.
Cross-selling is often confused with upselling and downselling. Let's find out the difference between these types of sales.
|Cross-selling||Offer customers products that complement the items they originally intended to purchase.|
|Upselling||Offer customers a similar but more expensive product. Motivating a customer to buy another unit of a product is also upselling.|
|Downselling||Offer the customer a similar but cheaper product (in case the budget is limited).|
Here are the benefits of cross selling:
- An increase in the average order value and, as a result, the company's income.
- You don't need a budget to promote related products because their offering is usually automated.
- Less effort to sell. The cost of supplementary products is much lower than that of the main product. A person who is already willing to pay for the purchase of a product is likely to spend a small amount for related categories. This technique is one of the classic sales secrets. If the customer really needs the product, it is easy to sell it. For example, in an online store toy cars are sold without a battery, so customers have to buy them as well.
- Increasing customer satisfaction. It is more convenient for customers to immediately buy the bundle they need to fully use the product, even if they have to spend more money than they intended. Let's go back to the toy example. If you remind customers about batteries at the time of placing an order, they will be satisfied. They do not have to look for the right product elsewhere and waste their time. Therefore, the cross-sale is also a tool to increase loyalty.
Types of cross-selling
|Necessary||Without these items it is impossible to use the main product.||The company stopped putting the charger in the iPhone package, so buyers have to buy it anyway.|
|Related||With these items, the use of the main product is easier or more convenient.||Phone case|
|Impulsive||Not the most necessary, but inexpensive and interesting items that are bought for nothing.||Designer phone stand|
|«Might like it»||Items related to the purchase.||Smart watch of the same brand|
|Seasonal||Related to the main product, but only needed at certain times of the year.||Touchscreen winter gloves|
What sales techniques are used for cross-selling
- Offer supplementary products when the customer has already added the main one to the cart or is about to check out.
- Selling a bundle that includes everything customers need to fully enjoy the original product. For example, this sales method is found in BackMarket. On the page with the MacBook, they immediately show a set of items that will come in handy.
- Confidential sales to regular customers. The brand offers new products to those who have been buying from them for a long time. Items are not always directly related to the main one, but the client will purchase them because of the trust in the brand.
- Identification of additional purchase needs. Usually at this stage there is a manager who asks questions to the customer. Another way to recommend products is to use data from previous purchases and customer activity on the site.
- Recommendations by interest. This is what online cinemas do. They show which movies the user might like. The algorithms select movies similar to the ones the user has already watched.
- Bonuses for a certain order amount. Customers are offered a discount, free shipping, or credit option only if they spend a certain amount of money. In this case, the buyer has to pick up a basket of add-ons. Although such a sales technique is manipulative, it is effective.
- Social proof. You can show products that other users buy with the one the customer has added to the cart.
- Cross-selling through advertising and email campaigns. Remarketing will catch up with customers on other sites with banners after they complete the target action on your ecommerce site. Another way is to offer additional items via email after the first purchase. For example, Altcraft Platform has scenarios and triggers for email cross-selling. After the purchase, the user will receive an email with products that match the main one.
You should not stop at one technique. Mix and try sales techniques.
Important! Offer products that match with the main one and enhance the effect of its use. Don't sell too expensive products and don't offer too many options — sometimes the customer does not want to spend time choosing. Successful add-on purchases are quick and do not require extra actions so that the user does not have time to change his mind.
How to set up cross-selling
- Study what the audience is already buying with your products. You can get insights by using the collected data or conducting a survey.
- Make a cross-selling matrix. Compare products by compatibility and choose those that complement each other. Indicate in which case the goods are used together. It is convenient to make the matrix in the form of a table.
Cross-selling matrix example
The size of the matrix depends on the assortment. Include in the table products that are essential to use the basic one, as well as impulsive, seasonal and “might like” products.
- Determine if there will be discounts to encourage sales. If so, in what categories?
- Decide when to offer additional products. At the moment when customers view the product they came for, or when they add the product to the cart? Maybe after purchase or through remarketing? You can also recommend other products in the product description.
- Think over the text for the offer of related products. For example, ‘people buy with this product’ (social proof) or ‘do not forget to buy’ if these are products that are useful for the effective use of the main one.
- Set up supplementary product offers on your site or in the system you use to manage your online store.
Cross-selling is a process of encouraging customers to purchase a product that is related to what's being bought already. This sales tactic is used to increase the average order value. The customer is offered the items that are needed for the functioning of the selected product. These are useful sales because customers only buy what they need.
It is important to choose the right moment for the presentation of supplementary products. The recommendation block can be shown when the customer has already chosen the main product or after the purchase. Also, sellers sometimes give a discount on a bundle or give bonuses (such as free shipping) starting from a certain order amount in the cart.
Get started with cross-selling by looking at your customers' purchase history. Then make a matrix of goods by compatibility, choose ways to offer specials. And finally, automate processes in the online store management system or on your website.