The famous phrase used by McDonald’s employees is the best and most useful example of cross-selling. When they ask you if you want a bigger option, that’s an up-sell. However, many times they are confused: up-sells and cross-sells are complementary, but they are not the same. Up-sell encourages a customer to buy an alternative higher-priced option. Cross-selling recommends an accessory or complementary product and, in some cases, an additional service.
Cross-selling identifies products and services that meet additional needs not considered in the original purchase. Cross-sales are a more effective strategy to generate additional revenue than trying to sell a product for the first time to a new customer. Likewise, cross-sales create opportunities to provide a good experience and build deeper and more solid customer relationships.
The omnichannel strategy in the cross-selling process
For cross-selling recommendations to be relevant, it is necessary to have an omnichannel strategy throughout the client’s journey to obtain a complete picture of the client’s tastes, interests and behaviour. In today’s market, the personalisation platforms, which work with machine learning technology, are responsible for drawing this profile. Today’s customers expect information and personalised offers based on their preferences, recent interactions and latest experiences.
Companies like Amazon use machine learning algorithms that use customer behavioural data, such as a user’s purchase history, items in their shopping cart, and items they have rated and liked previously, to make product recommendations. Also, this data helps to determine when cross-sales should not be used. A Harvard Business Review article identifies four customer profiles that companies should avoid when it comes to cross-sell:
- Service Demanders. This customer segment often abuses customer service channels and tends to call support for every problem it encounters, increasing the support costs disproportionately.
- Revenue Reversers. They are more likely to return items, default on payments or terminate contracts early. The more they buy, the more they show this behaviour, costing the company time and money.
- Promotion Maximizers. This segment gravitates towards significant discounts, which makes them unprofitable for the company in general.
- Spending Limiters. Cost limits have a small and fixed budget that they will not exceed with a company. If they buy additional products, they will not increase their total expense with your company. Therefore, the money that he spent on cross-selling did not recover, as they did not generate any additional revenue.
Promotion Maximizers. This segment gravitates towards significant discounts, which makes them unprofitable for the company in general.
Advantages of cross-selling
It seems evident that cross-sales will generate more sales, but it is more about adding more products with their order, optimising the costs and processes of managing. Another advantage is customer loyalty. The psychological element plays a fundamental role. By anticipating a customer’s needs, you add more value to its experience. This will result in higher loyalty to your brand.
Also, it is a great opportunity to recommend “unknown” products. In summary, cross-selling and up-selling consist in increasing the average exit price. That’s what McDonald’s does, for example. With each order, they offer you French fries or nuggets (cross-sells), and they also ask you if you want to increase the size of your order (up-sells.)
Examples of cross-selling
There are different triggers available in eCommerce personalisation platforms that enable cross-sales to be activated, from automated emails to personalised content during the purchase process:
- Email marketing Days after a customer makes a purchase; it is the right time to send an email in which you may ask them to evaluate the purchase process, and also offer products that complement or improve the first item bought. The more personalised the message and the offer, the better.
- Other products that may interest you The web shows some products according to what the person is looking for and their preferences. These recommendations can be based on browsing history or their wish list.
- Other users bought… Social proof is a crucial factor for online stores. If users can see that other people bought the same product, they will feel that their decision is validated.
- Offer essential related products or additional services Products that the customer needs to buy for the main product to work or additional services when a product requires installation.
- Get the full look This system is popular among online clothing stores or decoration. The product is shown with other products to create your desire to have it all. Lookbooks are a great way to use this option.
Show me the cross-sell offer
- Shopping cart: this is the most common moment. When customers are about to complete the purchase, offer them related products — the indispensable extras or an added service: things that they would rarely buy on their own.
- Thank-you page: if you do not want to distract the customer during the purchase process, wait until the transaction is complete. If you use it well, the thank-you page is very effective. Here, we have the customer’s attention, their trust, and they still have their credit card available.
- Retargeting: the last chance to get customers with cross-sales is through ads. By using the database of people who buy a product and thanks to segmentation, we can use Facebook Ads or any other platform to display them with related products.