Maximize Customer Profits
“Cross-selling and up-selling”
Cross-selling refers to the practice of promoting complimentary items related to the item being sold while up-selling is the practice of offering customers an upgraded or premium version of a product. These techniques are pretty simple concepts to understand and can provide lots of value to your customers, enhancing their shopping experience while increasing your shop’s sales volume.
Cross-selling and up-selling offer your business the chance to continue to increase revenue and profit from current customers, since it has been shown that customers who cross-buy, are more profitable than customers who do not. When thinking about enhancing the shopping experience for your own customers, suggesting a related purchase item is both logical and intuitive.
How often do you personally, buy related products when suggested?
- If you were buying a pair of sneakers would you be open to a suggestion to buy socks at the same time?
- While purchasing a new cell phone, would you appreciate being shown recommendations for related accessories like a hands-free kit and extended charge battery?
Keys to Effective Cross-Selling and Up-Selling
The key to effective cross-selling and up-selling is putting your customers’ needs first by adding value to the customer experience with your related-item suggestions. Cross-selling helps to educate your customers on the depth and variety of what your business has to offer.
Shoppers, will buy “impulse” items at the point of purchase when presented. Showcasing related products help remind people of other things they were not actively looking for but still might need or want.
How can you relate products effectively to generate additional sales?
The most common type of product relation is referred to as natural relation, or ontological relation. It essentially means that products being marketed together naturally go together.
For instance, a new dog leash has a natural relation to a new dog collar, so it makes sense to display them side by side. They came in for a new leash, but when they saw a matching collar they purchased it also.
Staff members should know correlating items to suggest to the customer. If the same customer came to the counter with a leash logical and intuitive response should be “Would you like the matching collar to go with your leash?”
Start by looking at your inventory and come up with natural matches for related items to encourage customers to cross-buy.
Guidelines for Using a Recommendation or Suggestion Effectively:
Personalize: Personalized your related suggestion with words such as “you” rather than “we” – “You Might Also Like These” instead of “We Recommend”.
Get Emotional: Use emotionally connected words in your related suggestion such as “need” and “want” – “Do you Need dog Food?” or “Do you Want some dog treats?”
Communicate Value: Use “offer words” for your product suggestions that will properly communicate the value you are offering such as “Special Discounts On, or Great Deal on”.
Six tips for the effective use of cross-selling and up-selling
Stay Relevant:
Attempting to cross-sell unrelated items should be considered one of the cardinal sins of cross-selling. For starters, unrelated product suggestions are simply not helpful for your customers and only serve to distract them with additional noise and clutter while they’re in the buying path. Unrelated suggestions can also damage the credibility of more relevant recommendations. Do not undermine the legitimacy of your recommendations with; keep them on target and as relevant as possible.
Exercise Restraint:
Resist the temptation to cross-sell a large number of products all at the same time. Too many product suggestions will only serve to confuse and dilute your customers’ attention. Keep your related item suggestions tight and focused. Exercising restraint and limiting the number of items that you recommend will keep the customer’s attention focused.
Build Credibility:
One way to cross sell and up-sell successfully is to cite specific recommendations or “top rated” suggestions from customers, professionals, or experts. Displaying review content and recommendations from actual customers, in particular, goes a long way to build credibility and trust for those items.
Location, Location, Location:
Where you display your related items is critical for success. You can employ cross-selling and up-selling anywhere in your shop. You should experiment, however, with different locations to see what works most effectively for your customers.
Low Involvement vs. High Involvement Products:
You need to separate your low involvement related-item recommendations from your high involvement recommendations. Low involvement items are your “no brainer” sales items that are typically low margin, easy sellers that don’t require much explanation or information for the customer to understand to make a buying decision.
You should display your low involvement related-item closer to the point of purchase. High involvement products typically require deeper examination by a customer who might want to read the label or get product specifications or ask you more details of the product and can be displayed further from the point of purchase.
Provide Excellent Customer Service:
This is one of the best ways to encourage repeat sales. Cross-selling and up-selling will be much easier with repeat customers after providing an initially positive customer experience.
Failure to cross-sell and up-sell represents a significant lost opportunity and the prospect of leaving a substantial amount of revenue and profit per customer on the table.