The declining state of the economy has left many online retailers scrambling to find more effective ways to increase their sales volume and their average order size without having to increase their marketing budgets. With revenues declining and consumers tightening their spending, how could you possibly increase your sales revenue and average order size without spending more money on advertising? Many experts agree that cross-selling and up-selling are a great place to start as these concepts represent one of the most significant unrealized opportunities for so many online retailers, from the biggest to the very smallest.
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 site's sales volume. It's a win, win. If used incorrectly, however, they can damage your credibility and sabotage your marketing efforts.
Many of the most recognizable websites, such as Amazon.com and Expedia.com, have pioneered the use of cross-selling and up-selling. Amazon.com was an early pioneer of cross-selling complementary products - "if you bought product A, you might also like products B and C." Expedia.com, a leader in the online travel category, has led the industry in "bundling" travel packages, which has led to substantial revenue and profit gains since they first implemented the concept.
McDonald's is a perfect offline example. Asking you if you'd like the "Meal Deal" with your Quarter Pounder is a cross-sell; asking if you'd like to "SuperSize" the meal is an up-sell.
When thinking about enhancing the shopping experience for your own customers, a website that suggests complimentary or related purchase items is both logical and intuitive. Just think about the shopping that you do online:
If you were buying a pair of shoes 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?
How often do you buy related products in this manner?
The evidence is clear that cross selling and upselling really works (see the McDonald's example above and then ask Jenny Craig). Most small websites, however, employ weak or totally unproductive cross-selling tactics, if they do at all. If used properly, cross-selling represents an enormous, cost-effective opportunity for all online retailers.
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 but, above all, don't use cross-selling carelessly as a forum to simply push more products or services.
One of the most common up-selling techniques is either discounted or free shipping on a specified purchase amount. Encouraging customers to purchase additional items with free shipping or discounts on orders over a specific sales threshold - free shipping for a minimum of $100 in purchases, for example - is a pretty easy way to improve your sales volume incrementally.
If a customer's order totals $90 and shipping is free on orders over $100, they'll have much more incentive to find an additional item to purchase to take advantage of your free shipping offer.
Be sure, however, that you're not shooting yourself in the foot with this strategy. A free shipping promotion should help to improve your sales volume, but more importantly, it should add to your bottom line - increasing your total profit per order. So, be sure to calculate these promotional offers very carefully.
How Should I Implement Cross-Selling?
The most ideal solution is to employ suggestions or recommendations for related products dynamically utilizing a shopping cart platform, if at all possible. Using a shopping cart is, hands down, the easiest way to effectively automate the cross-selling and upselling process. For those site owners who don't have enough products to justify a shopping cart solution or who simply can't afford one, cross-selling can be as simple as having links to similar products on your products pages with some copy such as "Customers who bought X also purchased Y." While this alternative might sound decidedly low-tech, it's better than not cross-selling at all.
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