How to upsell and cross-sell in retail effectively: 5 points to ponder

February 24, 2022

Selling things your customers are already interested in is easy. They ask you about a product, you confirm its availability, they pay you and the product is dispatched to their preferred location. Is that enough for you or should you be trying to pursue ways to increase their basket size? If you are happy with the former, then you are losing a lot of revenue and should consider ways to boost the average transaction value while also offering more value to your loyal customers. Regardless of industry, upselling and cross-selling will mean an increase in your profit margins. It’s easy, it’s fun and it’s profitable!

Just to get it out of the way, let’s start by explaining these two terms.  

Cross-selling is recommending a product relevant to the one your customer is already buying. For example, you recommend a matching phone case to a wallet your customer is already buying.  

Upselling means offering customers a better version of the product they are already buying. It can be a bit pricier but with better features and more value. It is like asking customers if they want to upgrade their purchase and buy something that would, for example, have a longer lifespan. For example, to a visitor with $20 basic wired earphones in his cart, you offer $35 noise-cancellation, wireless earbuds.  

However, they two share the same goal- increase customer satisfaction and the average value that each customer spends at your store.

A word of caution here. Upselling and cross-selling have a delicate balance that should never be tipped, or you will end up losing the customer. You must use these tactics at the right place and at the right time. The recommended products should be strictly relevant and particularly helpful. And never come off as pushy. Never!

Since we are clear about that, let’s look at some proven upsell/cross-sell pointers that you can incorporate into your strategy to get more sales:  

Tell stories: Let customers visualize the benefits of your offered products

Simply listing out the specifications or the feature of a product rarely gets you to the point where you can close a sale. People are more responsive to images and stories. You need to craft a relevant story or a vivid image to make people “see” the benefit or the value of their purchase.  

For example, you are an apparel retailer, and you intend to cross-sell an item that would go perfectly with an article that your customer is buying. You can simply tell them about the added item, or you can show them a mannequin wearing that combination. Which one do you think will work better?

If you are running an online retail store you can complement your product pages with interactive sections titled, “Complete Your Look.” This area will display a model wearing all the other items that would match the current purchase of your customer.

This was visualizing, so what about telling stories? Stories come when your customer cannot visualize your recommended add-ons in action. For instance, you are running an electronics store and want to cross-sell a smartphone case. You can start by telling your customer a story about a guy who accidentally dropped his phone while unboxing it and had to spend extra money just to use his newly bought phone. This way you can not only sell him a phone case but also an insurance package. Remember, the more vivid your story is, the easier is to cross-sell.

Keep three products in mind for every product to upsell effectively

Some people call it the “Rule of 3” in retail. It is particularly good when you are upselling. Here you give your customer 3 options for a particular purchase. The first one will be the most affordable one. It would meet their needs. The second will be something better than the first one, but it will be a bit pricier. The final one will be the personal favorite of the store. Something high-end and classy that your customers will absolutely love. This will be the product that will be expensive and have the highest profit margin for you.

The key to selling the high-end option is to educate the shopper as much as possible. You need to inform them about the story of the designer, where the product comes from, the experience it will create for your customer, and how proud they would feel with their purchase. Remember, being genuine is the key here. You need to bring your customer to a place they are comfortable in and always be genuine with your approach. Don’t offer the client something they are not interested in.

Offer reasonably priced products during cross-selling

When you are cross-selling a product to your customer, make sure that the item you are offering costs less than the product they are buying. For example, you have a customer who is interested in buying a $1000 jacket. It will make sense if you offer them a matching pair of pants costing $100 or even a $50 tie. Similarly, if a customer is buying a $150 shirt, you can offer them a nice $20 set of brass cufflinks.

Give rewards to customers buying add-ons

In retail, most people like it if they get something for free. You can offer your customers an incentive if they buy an added item or purchase goods amounting to a certain value. It may increase your conversion rate. This is something many eCommerce stores are already doing. Some offer people free shipping if they spend above a particular threshold to encourage customers to buy more.  

Although this works with online stores, it may not work with physical retailers as the customer is already there to buy and there is no point in offering them free shipping. Here you can incentivize your customers with a free gift. For example, you can offer a free tie with the purchase of a blazer or a leather belt if a customer spends $500 at your store.  

Remember: Presentation is key!

You must have heard the phrase, it’s not what you say, it’s how you say it! Presenting an idea, a story or a product is the key to upselling and cross-selling. You must present your products in the most conceivable way and word your sales script intelligently to close more sales.  

For example, you are selling a $500 leather jacket to a customer, and you say, “would you like to buy a $40 leather belt with it?”. It will not be as appealing to the customer as when you say, “the $550 leather jacket comes with your choice of one of these belts. You can choose any of these, or you can give back the belt and get a $40 discount.” Here you are not asking the buyer to make an added purchase, instead you are asking the customer to actively give up on a free belt which they may feel bad about doing. This way, your customer will be more inclined to buy the free belt and even if they return the belt, you will still earn $10 extra.

These were some tactics you can use to increase your revenues by upselling and cross-selling. We hope they work for you.