The best strategy for improving revenue isn’t finding new customers to sell to. It’s selling to customers who already trust and love your brand.
There are two methods: cross-selling and up-selling. Cross-selling is the easiest and most effective. Studies suggest that it’s 6x more likely to convert than up-selling.
Think about it. Would you rather spend more money on an upgraded version of a product or buy a product that pairs well with something you already have or just bought?
It’s all about using sales psychology to your advantage. Read on. This article covers the art of cross-selling, the best strategies for using it, and the tools you need to make it work.
What is Cross-Selling?
Let’s say you’re shopping for puppy toys on Amazon. When you’re about to check out, you see a pop-up that recommends doggie treats with a banner that says, “People also love. . .”
That’s cross-selling. There is an opportunity in almost every situation where a transaction takes place. Say you’re in a local coffee shop, you order a Spanish Latte, and the barista suggests a croissant to go with it. That's their best seller. You buy it because you’re already there, and someone with authority tells you others like it too.
Cross-selling exists in any industry that sells multiple products or services. The best examples of these are eCommerce, B2B, and SaaS.
When Should You Start Cross-Selling
The main requirement for cross-selling is multiple products. In some cases, like in B2B, where you only offer one service, cross-selling would be an add-on to the service.
For example, you can sell content writing as your main service or offer discounted add-ons for services like backlink building or landing page creation.
Cross-selling works best if you already have existing customers. This strategy won’t work as well with cold leads or cold outreach. There’s still no trust, and two offers might be confusing.
Advantages of Cross-Selling
Businesses that leverage cross selling already see a 20% increase in sales compared to those that aren’t. But revenue is just the tip of the iceberg, with cross selling, you can get:
Higher Average Order Value
Getting new leads for your business is always essential. But you can’t solely rely on getting new customers for sustainable revenue. Instead, you should also focus on improving customers' average order value (AOV) through cross-selling.
Higher AOV means more sales from your current customer base. This reduces the need for aggressive, expensive, and unsustainable lead generation strategies like PPC or paid ads.
Higher Customer Lifetime Value
Cross-selling works because you’re giving customers relevant product suggestions. Synapses in their brains make a connection and immediately say, “I actually need that, thanks!”
When existing customers buy more of your products, their AOV increases, and more importantly, their customer lifetime value (CLV) increases as well. It’s the total revenue from each customer throughout their relationship with your brand.
As you meet customer needs and provide tailored suggestions, they’re likely to shift from customer to patron, developing loyalty and trust. This encourages them to buy more over time.
Improved Customer Satisfaction
One of the driving factors in sales psychology is convenience. Not having to hop from one store to another to get an item makes customers want to buy from your store instead.
For example, a person who just bought a new camera would also want a camera bag, tripod, or a memory card. Getting all those products in one go makes for a satisfying experience.
More Product Visibility
The unfortunate truth is not all of our products can be front and center. This happens a lot in brick-and-mortar stores. Products that aren’t that visible don’t often get sold.
But with cross-selling, these products can be strategically placed in front of the customers. These can work well, especially for impulse buys or new customers trying things out.
Disadvantages of Cross-Selling
While cross-selling has its advantages, there are still downsides you should consider, such as the following:
Annoyed Customers
Cross selling can sometimes be invasive if done poorly. Instead of being helpful to your customers, you end up nagging them to buy products.
Some customers might think your brand is about maximizing revenue and not about the customer experience. So, it could damage your brand reputation if you’re not careful.
Less Profitable
Cross-selling can also be less profitable. A common strategy that pairs well with cross-selling is offering discounts. You could attract customers who are only there for the discounts and don’t buy too many regular-priced items.
You have to be strategic about which items to cross sell, which ones to give discounts on, and the overall pricing strategy. Use a CRM to analyze transaction data.
Determine potential customers that could fall into this category and tweak sales strategies accordingly or focus on other customers.
Operational Complexity
Implementing and managing cross-selling strategies adds a level of complexity to sales operations. You need data analysis, the right tools and platforms for personalized recommendations, staff training, and new technologies. Without the proper infrastructure, cross-selling could end up burning resources instead.
Cross-selling can also impact inventory levels. Customers may opt to buy bundles instead. Businesses need to ensure that inventory management systems can handle any potential changes. The last thing you’d want is overstocking or stockouts.
Best Strategies for Effective Cross-Selling
Cross-selling can be implemented in several different ways, depending on your industry, your offer, and your audience. But the fundamentals all involve the following:
Behavioral Segmentation
One of the most effective cross-selling methods is leveraging user data through behavioral segmentation. This allows you to personalize offers based on site activity, purchase history, or the pages they browsed.
For example, if a customer recently purchased kept coming back and forth to your landing page about XYZ products, there’s a good chance they’re already planning on getting that item and just need a little push. You can then recommend your product in real time, making them relevant in the moment, especially for impulse buys.
Map Out Buyer Journeys
Even relevant product offers can backfire if they’re shown at the wrong time. Creating a buyer journey map or email sequence strategy ensures the best touchpoints for a cross sell.
Let’s say you're Adidas and you already have a customer that got a new pair of running shoes. They also downloaded the Adidas mobile app. They also returned to your shop to look at more running products over the week. That means they’re interested. It’s a great time to follow up.
Offer Complementary, But Not Essential Products
Let’s say you’re selling a TV. It wouldn’t make sense if you sold the TV and then sold the remote as a “cross-sell.” That would just irritate any customer.
Instead, your offer should be something complementary—a nice add-on, instead of something essential. For example, something that could complement a TV would be a new sound system, a wall mount, or even LED backlights.
To reiterate, cross-selling won’t work if customers can’t fully use the original product they’re buying without getting another separate product.
Bandwagon Selling
Customers trust other customers. This is something Amazon does well. You’ll always see the “frequently bought together” section on every product page.
Instead of basing things on an algorithm or expert recommendation, bandwagon selling is just selling what the masses are already buying. This gives a sense of FOMO.
Order Thresholds for Discounts
Although this isn’t a direct cross selling strategy, it still incentivizes customers to spend more on other products. Let’s say you’re on a food delivery app. You’re already at the checkout.
Then, the app tells you “Spend $20 more for free delivery.” Although they didn’t get product recommendations, there’s still a big chance that they’ll spend more to get that discount.
By offering this type of discount, you create a win/win scenario for you and your customers. You improve the AOV of each customer and they get great discounts.
How to Implement Cross-Selling Strategies
Now that we know the strategies, let’s look at a step-by-step guide on how we can implement cross-selling, the technologies required, and best practices.
Understand Your Customers
Personalization is key in cross selling. Analyze customer data or purchasing history. Use trends and data to identify customer behavior patterns. This helps give suggestions based on behavior.
Next, segment your audience. You can group them based on demographics, interests, or purchase behavior to tailor your cross-selling efforts.
To top things off, create a buyer persona. While segmentation gives you a broad idea of what customers might want, creating a buyer persona gives you the specifics of what products customers might be interested in, their preferences, and their pain points.
The best way to understand your customers is by leveraging a CRM tool. That’s where Instantly CRM comes in. You get a 360 view of all your leads, prospects, and customers, helping you create detailed buyer personas. Plus, you only need one subscription for your entire team.
Use the Right Tech
If you’re in eCommerce, you need to use platforms that support cross-selling features like product recommendations or bundles. You’d also need a CRM tool to track customer interactions, personalize outreach, and automate follow-ups.
With Instantly CRM you get all that plus a powerful AI tool built for email marketing. You get personalized insights on leads, automated replies, and every repetitive task that’s involved in the cross-selling process.
Offer Relevant and Personalized Recommendations
Group related products together. Try using incentives like discounted prices or order thresholds to make customers buy more. You can also try using social proof like “best sellers” or “frequently bought together” suggestions.
It’s important to show products that other customers look into before purchasing a product. You can leverage customer data and AI to help you make these tailored product suggestions based on browsing history, purchasing history, and preferences.
Cross-Sell During Pivotal Touchpoints
You can’t just cross-sell whenever you want. It has to be strategic. For example, you can cross-sell during the purchasing process and suggest complementary products, when you add items to the shopping cart, or during checkout.
There are also post-purchase cross-selling strategies using automated follow-up emails with personalized product recommendations. This is paired best with segmentation strategies.
Segment customers in your CRM based on demographic or purchasing history, then add them to a cross-selling campaign. You can do this seamlessly with Instantly.ai. No need to switch between apps.
Monitor and Optimize
Track results and monitor cross-selling campaigns to see what’s working and what’s a bust. It’s important to focus on winning strategies instead of spending time and resources trying to make a failing strategy work.
Experiment with different product bundles, messaging, and timing to see what resonates best for each customer or segment.
If you’re doing cross-selling via email marketing, Instantly.ai lets you test multiple variations of your cross-selling emails. You also have the option to auto-optimize A/B testing. Instantly find the best-performing cross-selling email and send that to the rest of your customers.
Key Takeaways
Cross-selling is one of the best strategies for improving AOV and CLV. It works by tailoring product recommendations to existing customers at strategic points in their customer journey. To recap, the best strategies for cross-selling across most industries include:
- Behavioral segmentation: Segment customers based on demographics, site activity, purchasing history, and the pages they viewed on your site.
- Mapping out buyer journey: Strategizing when to push product recommendations. It could be during purchasing or through post-purchase campaigns.
- Offer complementary, not essential products: Customers don’t want products that require ancillary products to use. Always offer complementary, not essential products.
- Using order thresholds: Although not cross-selling, order thresholds incentivize customers to spend more to get discounts on a purchase.
If you’re planning on creating a cross-selling campaign, remember to use the right strategies and tools. That’s where Instantly.ai and Instantly CRM come in. Try them for free today.
