You have experienced cross-selling strategies at various times in your life. If you are looking to buy an item, on Amazon, for example, you’ll see a list below of products that “Customers also bought”- this is cross-selling. And when a McDonald’s cashier asks you if you’d like to add a coke with your order of burger and fries, that’s cross-selling.
Here’s cross-selling may seem like enticing your customers to buy higher profit-margin items and boost your revenue. But it is more than that in the manner that it is about offering a piece of valuable customer service and helping your shoppers discover items that they would want or need, and providing them that positive customer experience.
Thus, cross-selling in e-commerce is an effective tool that helps online sellers in increasing profits as well as ensuring satisfying customer service.
In this guide, we’ll walk through what is cross-selling, its benefits, and when and where to cross-sell. We’ll also look through some examples of cross-selling.
What is E-Commerce Cross-Selling?
Cross-selling is a strategy that encourages potential customers and buyers to purchase similar or complimentary products- these products are related to the product they are interested in or are purchasing or have already purchased. These recommendations and suggestions are relevant and useful, powered by data analytics and advanced AI.
For instance, when a customer buys an expensive phone, they are likely to purchase a cover or a screen protector for it. So, to generate more sales, you’ll have to suggest these items to them at the right place and time.
Cross-Selling vs. Upselling
Cross-selling is often confused with upselling. Cross-selling offers the customer a related product while upselling as a strategy involves trading up to a better version of the product your customers are interested in purchase.
Here are the key differences between cross-selling and upselling that make them different strategies in the application.
The purpose of cross-selling is to increase overall sales value by providing relevant suggestions for other products that add to the usefulness of the original offering.
Whereas, the purpose of upselling is essentially to boost the average order value and net value by having the customer purchase top models i.e costlier models of the products they are interested in.
- Activity Involved
Cross-selling has a broader scope where it encourages people to buy additional products similar to the ones they like or ones that complement those products.
On the other hand, upselling motivates people to buy the higher-end version of the product they are interested in purchasing and haven’t bought it yet.
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In cross-selling, the recommended product can be very similar to the original product or could be different from it, but when the customer uses the additional product with their originally desired product, it should yield the best results.
And in upselling, the suggested product should be similar but an improved version of the originally desired product.
For instance, when purchasing an iPhone, Apple would place upselling strategies in the base model iPhone and entice the customers with the features of the better version. For example, if the customer is browsing through the product page of iPhone 13, they will mention how better iPhone 13 Pro is and how it is cost-effective.
These are the major key differences between upselling and cross-selling, and depending on your business goals, you can apply these strategies. Often these are coupled and used together as well.
The Benefits of E-Commerce Cross-Selling
There are various benefits of e-commerce cross-selling and while the main focus is increasing revenue by boosting sales, there are other benefits as well, such as:
- Increased AOV
You can expect an increase in the average order value (AOV). When you offer customers complementary products or add-ons to the existing products, a good percentage of the shopper with making those additional purchases that wouldn’t have been made otherwise.
Do keep in mind that when they are in their purchasing mindset, it wouldn’t take much to encourage them to add another item to their order. Business2Community states that shoppers when visiting an e-commerce store are 4.5 times more likely to click on product recommendations that add extra features to the products that they originally desired.
This highlights that customers are receptive to cross-selling strategies and it can have a significant impact on your average order value. So much so that some brands, according to core dna, have cranked up their conversion rates by 800% using the cross-selling strategy.
- Higher Long-Term Profits
Cross-selling is beneficial as it can significantly boost your profits. Since it helps in raising your AOV, your long-term profits will increase by default.
And it is a bonus. You are doing this and achieving these results without funneling a ton of money into the e-commerce marketing efforts. You are capitalizing on the existing traffic without taking any extra measures.
Often, tiny to medium-sized e-commerce businesses typically spend around $10,000 (USD) per month on Pay-Per-Click advertisement efforts. Here, cross-selling can help you improve your margins tremendously.
You will be getting more out of each customer while spending nominally on your overall marketing efforts for the results, making it the ultimate win-win situation.
- A Better Customer Experience
Another benefit of cross-selling is that it provides your customer with more value.
By offering additional products, relevant to what they already want to purchase, you make the entire shopping experience convenient and easy for them. They wouldn’t have to browse through the entire website and then lose interest. Thus, cross-selling enhances the customer experience.
A great example of this is Amazon. Again, when you purchase a sci-fi novel that is part of a trilogy, Amazon will streamline the entire shopping experience by suggesting the other parts in the trilogy on the product page itself. It could be done in two ways- in the above-mentioned “Customers also bought” or the algorithm will simply add the parts together and present a combo offer.
Amazon provides them with genuine value and presents them with the products they need, thus raising their customer experience to a level of satisfaction or even borderline delight.
This is best summarized by Jordi Ordonez, “of all the ways to increase the average sale, a cross-sale makes the most sense and is the least pressured because the user actually sees it as something interesting or a cool accessory instead of the hassle of a sale”
Therefore, your business benefits as well as your customer, making it again a win-win situation.
What kind of products to cross-sell
When suggesting additional items to the customer for them to purchase, it is vital to suggest relevant items. And these relevant items can be categorized as follows:
- Related products:
These items are related to the originally desired product that the customer is already set on purchasing. For instance, if a customer has added sleeping pillows to their cart, the company could suggest purchasing duvet covers or blankets. While blankets and duvet covers aren’t a part of the pillows and can not be used in conjunction with it, these products are related because the customer may be interested in purchasing additional bedding products.
- Complementary products:
These are the items that directly correlate with the product the shopper is purchasing. For instance, if the customer wants to purchase a body wash, then you could suggest a loofah they can purchase. Loofah goes with the liquid body wash as it will help with the application, thus the product is complimentary.
Another way to cross-sell is by offering services that customers can purchase in addition to the products. A business doesn’t need to have a service for cross-selling but they are some of the popular options.
An example of this is the warranty and protection plans suggested as an additional service to the purchase of an electronic device, like a television or an induction stove. When the customers add a high-price android tablet to their cart, you can automatically offer them to sign up for an extended warranty.
When to cross-sell
When attempting to cross-sell at any point during the purchasing process, the timing matters. Thus, it is vital to be strategic when suggesting items to your customer. Inappropriate cross-selling or frequently shoving it in their faces can frustrate your customer, leading them to abandon their carts and negatively affect your e-commerce store’s reputation through negative word-of-mouth.
Thus, it is a good practice to attempt cross-selling to the customer at two points during their purchase experience- on the product page or during the checkout.
Cross-selling on product pages
When a customer is on a product page of an item they are already interested in, this is a good opportunity to suggest them related or complementary product. A good rule for them- pitch them products that cost 10-505 of the main product’s cost.
For instance, if your customer is interested in a pair of jeans that costs $50, pitch them a product like a shirt or a t-shirt for, say, $20.
Do not attempt to cross-sell items that cost more than the product itself. For instance, don’t pitch $100 boots on the $50 jeans product page. They are less likely to purchase the cross-sell item.
Buyers are looking at a particular product page for a reason and price, here, is a key factor.
Cross-selling at checkout
Once the customer is at the checkout, it is the point in their shopping experience where you can target cross-selling lower-cost items. This is similar to the items presented at the cashier counter of a brick-and-mortar store. Like hair accessories or socks being placed in transparent bins at the cash counter of H&M retail stores, or candy bars and mints being placed on the small shelves at the cashier of a grocery store.
Essentially, the idea is to present small add-ones like accessories for the product being purchased or a specific-size item that the customer may require of the original item.
For example, if a customer is checking out a clock for the home, at the checkout page you can suggest they purchase the relevant size of batteries.
Examples of E-Commerce Cross-Selling in Action
Now that we have looked at the basics of cross-selling and its benefits, let’s go through some examples of how brands use this effective strategy.
There are three main stages in which companies can use e-commerce cross-selling strategies:
- During checkout
H&M is one of the brands that cross-sell at the pre-checkout stage where the shoppers are still browsing.
It is a standard fashion-industry template product page where they show the product through images, mentions the price, the reviews, and sortings.
Now, when you scroll down, you see them cross-selling in two ways- they present complementary “Style with” products and relevant “others also bought” products.
- During Checkout
Now, Mcdonald’s is an example of a brand using cross-selling strategy during checkout where shoppers have already added items to their cart and are about the go through the payment process.
On the product page, you add an item to your cart:
And when you add the item to your cart and go to checkout, they’ll cross-sell recommended products you can add to your cart before your payment:
And if you check the pricing of the recommended products, all of them are lesser in price than the original product.
There are e-commerce businesses that cross-sell after the completion of the checkout process. This is to help promote the customer’s focus on the relevant products based on what they’ve already purchased.
Skillshare is a great example of this- it is an online course platform that provides special courses on skills that people can learn. It applies the on-site suggestions after the purchase of a course plan. They even send emails with recommendations of relevant courses that the customer can check out. This encourages the customer to continue purchasing courses related to their interest.
Here, the customer doesn’t even have to go to the e-commerce site. The recommendations come to them.
Once you show an interest in one of the classes, they’ll send a personalized recommendation as a cross-selling strategy.
It is vital to have a cross-selling strategy in place to ensure good lead generation. It will help you grow your business by retaining your current customers as well as engaging with new ones that come your way.
Using cross-selling can help you capitalize on the customers and shoppers you already have and the new potential customer will also be intrigued and enticed by it.
And when done correctly, knowing when and where to place your cross-selling strategy, can help you increase your sales and profits dramatically, and get the absolute most of out your customers. Furthermore, it can help improve the shopping experience of your customer and provide them with more value.
It is simply just a matter of implementing the right cross-selling strategy for your business and the goals you have for your business, and continuously refining them.
We hope that this guide has helped in clarifying cross-selling as a sales and marketing strategy, its benefits, and the ways to implement it. Now apply this to your business and see the positive change in your numbers.