A former teacher, Matt now specializes in R&D for ecommerce business owners and helps guide merchants in understanding the importance of this digital-first world.
A few months ago, we talked about the importance of implementing upselling tactics as a way to improve customer loyalty into your ever-evolving sales playbook.
In that article, we briefly mentioned another tactic that is often discussed right alongside upselling:
While we didn’t get too deep into discussing cross-selling in our previous post, we promised that we’d get to doing so in the near future.
Well, that time has come. Today, we’re going to focus on the principles and best practices of cross-selling, and explain why using this tactic is vital to your business.
Before we get too far ahead of ourselves, though, let’s go over what cross-selling actually is.
What is Cross-Selling
Cross-selling at it's most basic level is to “sell (a different product or service) to an existing customer.”
But strategic cross-selling is so much more than simply trying to get a customer to purchase other items from your store during a given transaction.
Effective and strategic cross-selling is all about promoting related products or services that complement a customer’s main purchase, in an attempt to provide extra value to these individuals in one fell swoop.
(A quick note on the difference between upselling and cross-selling: While upselling focuses on “upgrading” a customer’s purchase - such as offering an iPhone with more storage - cross-selling focuses on other items that add to the value of the initial product.)
Perhaps the best way to explain effective cross-selling is to provide a few examples:
- A clothing store representative calls a customer’s attention to a pair of pants that look great with the shirt they’re about to purchase
- A customer brings a fishing reel up to the checkout aisle, and the cashier explains the store is currently offering a specific type of lure at half-price
- A customer at McDonald’s orders a Big Mac, and the clerk asks (say it with me, now): “Do you want fries with that?”
Clearly, the items being cross-sold in each of these examples relate in some way to the main items being purchased - with the goal being for the customer to get a more complete and fulfilling experience out of the transaction.
(Think of it like this: Sure, offering the fisherman a hockey stick would technically fit Google’s definition of a cross-sell...but a hockey stick definitely wouldn’t improve the customer’s fishing experience in any way.)
So, now that we have a better idea of exactly what cross-selling is, the question remains:
Why is cross-selling so important?
Let’s get the obvious out of the way, first:
A successful cross-sell means you’ve sold more to a given customer than you would have had you not suggested the complementary product or service in the first place. You don’t need us to tell you that selling more items is good for business.
But successful cross-selling has a number of underlying benefits, as well.
On the quantitative side of things, successful cross-selling:
- Increases your Average Order Value, as (like we said) your customers end up making additional purchases in a single transaction
- Decreases your Cost Per Action (Impression, Click, Order), as your customers end up purchasing additional items without your having to advertise said product elsewhere
- Increases your Customer Lifetime Value, as even first-time customers may end up purchasing more during their initial transaction
Successful cross-selling has a number of qualitative benefits, as well.
As we said, cross-selling complementary items enhances the value customers receive from the initial product - leading to increased satisfaction overall on their end.
Additionally, as proper cross-sells are tailored to your individual customer’s needs, offering such proves to your customers that your priority is helping them achieve their goals - not making more money by pawning any old item off on them.
A few more quick stats before we move on:
- The probability of selling to an existing customer is anywhere from 3-14x higher than selling to a new one. In other words, your chances of cross-selling to an existing customer are better than the chances of making an initial sale to a new prospect.
- The cost of acquiring a new customer is anywhere from 5-25% higher than the cost of retaining an existing customer. Again: if you’re able to successfully implement cross-selling into your overall playbook, you’ll not only end up making more money, but also saving more money in the process.
Now, all of this is, of course, dependent on your ability to successfully and strategically cross-sell your customers. As you can imagine, it’s not as simple as saying “Hey, we also offer this other product; wanna buy it?”
But, as we’ll explain momentarily, cross-selling isn’t difficult, either. As with all other marketing and sales techniques, it’s all about providing the right product to the right person, at the right time.
Before we get into the ins and outs of strategic cross-selling, though, it’s important to discuss the most common types of cross-selling businesses often utilize.
The Most Common Types of Cross-Sells
When we say “types” of cross-sells, here, what we mean is that the optimal product or service to cross-sell in a given situation varies depending on a number of factors.
Let’s take a look at what we mean:
This is probably the most common type of cross-sell, and it’s the one we’ve focused heavily on so far. An offer of an extra controller for a video game system is a prime example of a complementary cross-sell attempt.
This involves taking the time of year into consideration when a customer shows interest in a given product. For example, an adult purchasing a children’s toy in December might also be interested in purchasing gift wrap, as well.
Depending on your customers’ purchasing history (both an individual customer as well as the segment they belong to), you might consider offering them items that you believe would fit their needs. This typically involves utilizing predictive analytics to pinpoint the best product to offer a customer based upon their initial purchase.
This simply involves pointing out items that are currently on sale within your store. While, again, the item should relate in some way to the main product being purchased, you have a bit of leeway here due to the discounted price being offered.
Similar to promotional cross-selling, hot-ticket cross-selling involves pointing customers toward items that have recently proven to be a hit throughout your customer base. Again, if customers from a variety of your segments have shown interest in the same product, you have a bit of leeway here with regard to how much the item relates to the initial purchase.
Here, we’re talking about low-priced, low-risk items that your customers “might as well” buy. The most common example here is the magazines and candy bars staring us down in the checkout lane at our local grocery stores.(A quick note here: While this goes for all cross-selling attempts, don’t be sneaky with impulse cross-sells. Your goal is not to trick your customer into spending more than they wanted to without getting equal value in return.)
For more expensive and/or fragile items, risk-avoidance cross-sells refer to insurance or protection plans, extended warranties, and the like.
Additional Service Cross-Selling
Similar to risk-avoidance cross-selling, service cross-sells refer to offers such as faster shipping or a supplemental subscription service your company may offer.
As we move into the next section, in which we’ll discuss best practices for successful cross-selling, we’ll refer back to a number of these “types” of cross-sells.
Now, without further ado, let’s dive into the main things you need to consider when attempting to cross-sell to your customers.
Best Practices for Implementing Cross-Sells Into Your Sales Playbook
We’ve already alluded to a few of the points we’re about to make throughout this article - but there’s definitely a lot more to get into.
That said, let’s start with the most important factor: the relevance of your offer.
Make Your Cross-Sell Offer Relevant
A quick reminder:
The main goal of your business in the first place isn’t simply to make as much money as you can; it’s to make as much money as you possibly can while optimizing the value you provide your customers at the same time.
We talked about this before, but you “technically” can attempt to cross-sell any of your products to any customer willing to make an initial purchase.
But doing so isn’t going to accomplish much - if anything at all. For one thing, your customer will almost certainly know exactly what you’re trying to do - and may even walk away without purchasing the original item they had planned on. Or, even if they do purchase the additional item, they’ll probably realize they made a mistake in the relatively near future. In either case, the likelihood of them returning to your store will have decreased significantly.
When determining which items to offer as a cross-sell, then, you want to focus on one word: synergy. In other words, you want to figure out which related product will not just add to your customer’s experience, but will multiply the experience exponentially.
Let’s take a look at an example:
At first, this product page from American Eagle seems pretty standard. But, as you scroll to the bottom of the page, you’re greeted with this:
Sure, wearing a brand new shirt always feels pretty good. But wearing a whole new outfit (not to mention new underwear!) can bring you to a whole new level of comfort, confidence, and overall satisfaction.
It’s worth pointing out the difference between this example and the one we used in our article on upselling involving jeans:
In the above example, the goal was to point the customer toward other (read: more expensive) jeans rather than the ones they were currently viewing. While the customer could, of course, have chosen to purchase multiple pairs of jeans, the nature of this offer is more of an upsell than a cross-sell.
Returning to our American Eagle example, each item being cross-sold are meant to be used at the same time in order to provide an enhanced singular experience to the customer - which is the true essence of a proper cross-sell.
Now, we mentioned earlier that, when identifying cross-sell opportunities, you should not only take your “typical” customers’ purchase history into consideration, but also the purchase history of the specific customer in question, as well.
The amount of personalization in the above example is obvious. Apple could have just as easily went the “easy route,” and pointed this customer toward the company’s numerous phone case options. Instead, the ad points to a specific phone case - one that matches the color of the customer’s new iPhone 6s Plus. It’s not about selling a phone case to the customer; it’s about selling the right phone case to them.
(Note: Keep this example in mind; we’ll revisit it in a later section.)
Another common way to sell relevant items via cross-selling is to offer such complementary items in bundles.
Rather than cross-selling complementary products “on the fly,” you might decide to offer items that are often purchased together as a package deal. This essentially makes the transition to cross-selling much smoother, as your customer will already be considering the additional purchase in the first place.
A quick note, though: Studies have shown that forcing customers into purchasing a bundle (i.e., not also offering the bundled items for individual purchase) can be hugely detrimental, and cause even those who were highly likely to purchase the bundle in the first place to walk away empty-handed.
At any rate, in order for a cross-sell to be successful (both immediately and in the long run), the product being cross-sold needs to be highly relevant to the goals of the customer in question. Remember: your customers don’t just want “extra” - they want extra value.
Time Your Cross-Sells Well
Once you’ve determined the right product to be cross-sold, you then need to focus on offering it at the right time in order to maximize the chances of it being effective.
Though we haven’t stated this specifically, cross-selling typically occurs at one (or more) of the following stages of the customer’s journey:
- Right before they make a purchase
- At the point of sale
- Almost immediately after they’ve made a purchase
I can hear you now: “So...that means pretty much any time, right?”
The thing is, there is no “ideal” time to offer a cross-sell. But this is because, as we’ve said before, the whole point of cross-selling is to provide an ultra-personalized experience to each of your individual customers. In other words, just as the actual item you’re attempting to cross-sell depends on the individual customer in question, so does the timing of the offer.
That being said, we’re going to discuss some of the common approaches to timing cross-sells correctly, and explain how you can go about determining when to use each of these approaches.
Pre-Purchase and Point-of-Sale Cross-Selling
Think about everything that a customer does on your page before they actually commit to making a purchase:
- They browse a variety of products
- They add products to their shopping cart
- They reach the checkout page to finalize their purchase
Each of these moments offer you an opportunity to cross-sell relevant items to your customers.
The screenshot from American Eagle’s website above is a perfect example of a product page cross-sell. On the one hand, it promotes complementary products in an effort to increase the customer’s purchase value; on the other, as it appears below the fold of the web page, it’s certainly not pushy by any stretch.
Here’s an example of a cross-sell appearing on the shopping cart page:
Again, the cross-sell isn’t pushy - in fact, it’s rather easy to ignore.
(That isn’t necessarily a bad thing, though, since customers who aren’t interested wouldn’t buy the cross-sold item anyway, but those who would will almost certainly notice the offer.)
Now, we mentioned above that it’s possible to use your actual checkout page as one last opportunity to make a cross-sell...but you should definitely use discretion here. ADD MORE HERE
Now, this sort of teeters on the edge of being considered a cross-sell and an entire new transaction...but if it results in an additional purchase, there’s little point in arguing semantics, right?
Anyway, as we’ve alluded to, you pretty much always want to tie future marketing and sales efforts back to a customer’s purchase history - no matter how recent or far back those previous purchases were.
Take the following screenshot, for example:
Here, Crate and Barrel decides to immediately hit its customers with some cross-selling right after they’ve made a purchase. Naturally, the hope here is that the customer is still in “buying mode,” and still has their credit card at the ready.
(Pro Tip: If you’re going to go this route, make sure you have a process in place to create a single order out of the original purchase and the additional transaction, so as to avoid shipping and other logistical nightmares for you and your customers).
You might also send your customers product recommendations via email, as Amazon famously does after customers make a purchase:
Here’s where timing really comes into play. When sending such “future cross-sells,” you’ll want to consider two factors:
- How long it’s been since your customer made the initial purchase
- When they’re most likely to actually receive the follow-up email
Regarding the first point, let’s say, for example, a customer purchases a six-week beginner’s-level fitness course, and you plan on selling them a follow-up intermediate-level course. It wouldn’t make much sense to send it after one week, right? But you also probably wouldn’t want to wait until the entire six week period is up, either.
As we mentioned earlier, you’ll need to consult past customer data (e.g., purchase history, the success rate of past cross-sell attempts to similar customers, etc.) to determine the optimal time to “make the ask,” so that the value you’re offering through the cross-sell is readily apparent to your customer.
Regarding the second point, you also want to be sure the customer even sees the email in the first place. Much like you would when scheduling newsletters and other mailing list content to be sent out, you’ll want to determine when (in terms of day and time) the customer in question is most likely to check their email and see your offer.
As the old saying goes, timing is everything. If you can manage to get the right product in front of the right customer at the right time, you’ll almost certainly find success in your cross-selling initiatives…
Narrow Your Customers’ Options
Let’s take a break from ecommerce for a second…
Picture the last time you loaded up Netflix without having a specific show or movie in mind.
If you’re anything like me, one of two things ended up happening:
- It took you at least 20 minutes to decide on what to watch
- You ended up not watching anything at all
Even though Netflix offers semi-personalized recommendations for what to watch, it still takes forever for most of us to settle on “just the right show.”
Could it be that the sheer volume of recommendations actually decreases our ability to make a decision?
Well...yes. That’s absolutely the case.
And the same concept applies when we, as consumers, look to make a purchase, as well.
(Yep...back to work!)
The point is, you probably offer a ton of products that would complement a given customer’s initial purchase. But showcasing all of these products (or even more than a few) is simply going to overwhelm them - to the point that they might not even make the initial purchase, let alone buy an additional product.
This all goes back to ensuring your cross-sell attempts are highly relevant. Simply put: the more products you suggest, the less relevant they’re likely to be.
(Again, going back to Netflix...how many of those numerous suggestions actually have anything to do with your taste in TV and movies?)
On the other side of this same coin (assuming you’ve done your homework, here), the fewer suggestions you offer, the more likely it’ll seem to your customer that you truly know them, and are truly focused on catering to their needs.
Best practices dictate that you limit the amount of product suggestions you present your customers to at most five - possibly even three.
Again, just as is the case with Netflix, the less minutiae and irrelevant offers your customers have to wade through to find the product that will definitely help them out, the more likely they are to move forward with the purchase.
Optimize Your Cross-Sell Pricing
As we did when discussing timing, we’re going to be talking about two different aspects of pricing, here.
First, let’s talk about the rule of 25%.
The Rule of 25%
We talked about this in our article on upselling, but it’s a little different when pertaining to cross-selling.
With upselling, the rule of 25% dictates that you generally shouldn’t attempt to increase a customer’s spending by more than 25% of their original budget (e.g., if they wanted to buy a $100 watch, you might try to get them to purchase one that costs $125 - but not much over that).
While the same principle applies to cross-selling, it refers to the total amount your customers spend over what they had originally planned on - no matter how many additional products they purchase.
For example, let’s say a customer purchases a fishing pole for $100. You might suggest they purchase a number of small-ticket items (hooks, sinkers, etc.) that end up adding $25 to their overall purchase. Or, you could point them to a single collection of lures (only one additional item) that costs $25 total.
Once more: You don’t want to come off as if you’re trying to squeeze your customers for all they’re worth. Yes, you want them to spend a little more than they planned on - but you don’t want them to feel as if they have to part with more than they’re comfortable with.
It’s no secret that discounts and similar pricing strategies are a great way to drive sales of any kind.
So it makes sense that you’d want to consider offering discounted prices on the products you’re looking to cross-sell - as well as the initial item that spurred the cross-sell, as well.
If you’ve decided to create bundles including specific products, you might choose to offer a slight discount, as well:
To determine the best pricing and discount strategy for your cross-sold items, you’ll again want to refer back to your customer and product data. While you don’t want to lose sales because you aren’t offering a cross-sold item at the right price for a given customer, you also don’t want to implement a discount policy when customers would have purchased the product at full price, either.
Before we let you go, it’s important to clarify that cross-selling is not nearly as effective at generating additional revenues as upselling is.
But that doesn’t mean it doesn’t belong in your playbook. As you surely know, every bit of extra revenue you earn can make a huge difference in the long run.
On the flip side, if you aren’t implementing cross-selling strategies, you’re potentially missing out on some major gains.