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Cross selling and up selling are sales and marketing strategies that allow for increased benefits for both customers and sellers in the context of a sales negotiation; in the first case, the implementation is possible because these strategies make it easier to evaluate the various offers proposed by companies. In the case of sellers, they can more easily present all the products and services they intend to sell: in this way, it is more likely that the sale will be successful. The peculiarity of these strategies is that they can be sustainable in nature and usually contribute to improving the mutual relationships between sellers and customers, in an environment characterized by transparency and trust.
Upselling: definition
Up selling, literally above or increase, is a sales technique known in the marketing world also by the name up-sell and/or upsell, which occurs when a seller decides to offer the customer a more elaborate service compared to the standard one they initially opted for. In this way, an increase in revenue is achieved, ensuring that the profit expected by the seller is not compromised.
A practical example of up selling occurs in the restaurant field when, with a slight price increase, one can have an extra portion or a drink added to the basic menu. This strategy implies that the customer is convinced they have saved money, while on the other hand, the company has certainly made a greater profit than initially expected or than it would have obtained if the consumer had limited themselves to choosing a single item.
The up selling strategy can also be applied to business services where it takes the form of membership, which consists of a more substantial investment that has the capacity to provide the user with more functions; it also presents a level that is certainly better than the programs available to those who rely on standardized formulas or functions.
Therefore, the up selling strategy can be used with a greater chance of success in various fields when:
- The customer is about to purchase the product or service they desire;
- The customer is known in great detail by the seller, certainly to the advantage of the latter;
- The customer is undecided, so they do not yet know exactly what type of product or service they are specifically looking for, while the seller knows what could help or facilitate them and has a wide range of products to present to their attention. In this way, through up selling, the seller guides the customer's choice towards a more elaborate product or service than the one they were initially oriented towards. This, in essence, reveals the possibility of greater profit for the seller.
These measures can therefore easily lead to a more certain success of negotiations, benefiting both the customer and the seller, in a shorter time than usual.
Cross selling: definition
Cross selling, which literally means cross-selling, may seem like a sales technique similar to upselling, but in reality, there is a rather substantial difference: it is a marketing strategy that involves offering the purchase of an additional product to a customer who has already purchased another product or service in the immediate past. In simple terms, the goal of this technique is to sell a greater number of related products, even within the same purchasing process. By doing so, a closer relationship is established between the customer and the seller, based on the former's trust in the latter, which is certainly useful for any potential future relationship.
An example can be found in service stations, where often, once the customer reaches the checkout after paying for their chosen product, they are asked if they would like to purchase an additional item, of a different type, compared to what they just bought, but at a discounted price.
The marketing technique of cross selling is often used in the market for electronic products; in that context, both in physical stores and online, when the user reaches the checkout to pay or clicks on the cart, they are asked if they would like to purchase a product related to the one just bought, at a discounted price compared to the normal one. For example, if the user buys a smartphone online, it is almost certain that the e-commerce site will offer the sale of a tempered glass screen protector or a silicone protective case; furthermore, it is also plausible that a discount will be offered for the potential purchase of the entire set.
The marketing strategy of cross selling is therefore useful in different cases compared to that of upselling:
- It has a better chance of success in the case of direct sales, at the exact moment when the transaction is about to be completed;
- In the context of online purchases, when the user who is buying the product opens the section dedicated to the cart to pay;
- In cases where the seller has products or services that, combined with the product chosen by the buyer, can improve the functionality of the product itself or can meet additional related needs.
Upselling and cross-selling: practical examples
Up selling and cross selling strategies are used not only by small or medium-sized companies but also by large retailers; in particular, e-commerce platforms fully exploit these marketing techniques to increase their online sales.
A simple yet effective example, given its fame, is Amazon. The online sales platform, in fact, daily and constantly adopts the cross selling strategy: when a user decides to purchase a product available on Amazon, they already have the opportunity to see which other products the chosen item is often sold with during the selection phase; it is no coincidence that the complementary product is most often discounted. In this way, the customer may be encouraged to purchase an additional product at a visibly reduced price. When the user goes to the section dedicated to the cart and payment, the discounted complementary products reappear, thus influencing the customer.
Another example of cross selling comes from low-cost airlines: when purchasing a plane ticket online, they offer the buyer a whole series of ancillary services such as accommodation options, rental car services, and the possibility to pre-purchase food and drinks to consume on board. These are ancillary services to the air travel itself.
For the same airlines, an example of up selling can also be mentioned: when booking, whether through an app or a browser, the user is given the option to purchase a higher-value service for a small additional fee: this is the case, for example, of seat selection. The up selling technique occurs precisely when it is asked whether one wants to choose the seat they prefer, perhaps at the front or back of the plane, near the aisle or window, for a modest amount added to the standard ticket price.
A further example that is easy to understand to explain up selling is that of large fast food chains such as McDonald’s or Burger King. Often within these establishments, one can find the standard menu of individual items for sale and the combo version menus, characterized by the presence of a main item priced almost normally and the addition of a side, such as a portion of fries or a drink, priced at a discount. It is obvious that the customer prefers to save by choosing the combo menu, so their choice will easily fall on that type of product; at the same time, the fast food restaurant will have earned a greater amount per capita. This technique is adopted not only on-site but also on food delivery platforms: in this case, there is also a play with minimum prices for orders in order to obtain free delivery. In that case, the customer prefers to spend a few extra euros to reach the minimum price for free delivery, thus obtaining an additional product added to their order, rather than paying for delivery without getting anything else in return.
Upselling and cross-selling: why use them
In light of what has been explained previously and the cases provided as examples, it is easy to understand why cross-selling and up-selling techniques are advantageous for both the customer and the seller.
Cross-selling is more suitable than up-selling in cases of direct sales and online sales, specifically at the moment immediately before redirecting to the virtual cart. Regarding the possibility of using cross-selling, it is versatile, thus it can also be used by companies: thanks to this strategy, they can offer buyers a greater and more diverse range of services at more affordable prices; in this case, there will be a clear advantage for both the customer, who can have a better ancillary service at reasonable additional prices, and for the seller, who will have achieved a greater profit while also satisfying the customer, who will be more likely to return for new purchases in the future.
As for the use of up-selling, its management is a bit more delicate, so one must know the strategy well and master it correctly. This technique, as mentioned earlier, is useful at an advanced stage of a business negotiation. It is essential for the seller to have a good understanding of the customer; the buyer must feel reassured and involved in the negotiation and must be made aware that by spending just a little more than the basic solution, they are receiving a significantly better product or service.
Further solutions: down selling
However, there may be moments and situations where a product has a price that is too high compared to the budget available to the customer, and thus they may be filled with doubts or hesitate due to specific conditions related to the purchase of the product. In fact, there could be a case where the buyer wants to interrupt the transaction. In all these cases, up selling and cross selling techniques may not be effective; for this reason, it is possible to adopt an additional strategy known as down selling. This involves the seller proposing a product that falls within a lower price range than that requested by the customer. This specifically occurs when the seller understands that the customer does not have the financial means necessary to purchase highly accessorized products. In e-commerce, this technique is certainly more difficult to adopt compared to the previous ones, but the impasse is often resolved with the purchase of products in bulk; this sales method allows for a significant turnover of customers and products that greatly benefit the seller in the long term.
The two marketing techniques, up selling and cross selling, are therefore more successful because they have a deep psychological character: particularly if the customer has already decided to buy, they will purchase, but at the moment they are about to pay, they will be more inclined to spend a larger amount if offered a better product or service at a more convenient price.
However, it is important to thoroughly and consciously understand these strategies before diving into their use, in order to fully grasp all the advantages that arise from them.
Author: Stefania Tamberlani
CHIEF EXECUTIVE OFFICER
Stefania Tamberlani, the commercial, organizational, and administrative hub of Arte e Informatica, handles relationships with clients and suppliers. She has extensive knowledge in configuring and managing Joomla and PrestaShop platforms, from setting up payment methods to couriers, as well as managing the catalog and orders.