Cross-selling vs. upselling: what's the difference?

Boosting sales and maximizing profit is the common goal of every business. If you ask any newbie business owner, wholesaler, or retailer, they’ll tell you the only way to improve sales is by acquiring more customers and driving new sales. But, this is not the only ideal way.

The main objective of sales is to increase your average transaction and revenue. The major trick to doing this is by combining cross-selling and up-selling techniques. Whether you run a B2B or B2C model, both cross-selling and up-selling can have a dramatic effect on your sales output. When used effectively, it can help you sell underperforming products and increase your average order values (AOV) or lifetime values (LTV).

What is cross-selling?

Cross-selling is what you do to get your customers to buy more related products from you. Cross-selling is the process of inducing customers to purchase more products or services in addition to the initial item(s) they intended to purchase.

Products in cross-selling are usually items that complement one another. For instance, if a customer signifies interest in buying a product, you can also recommend another product that can be used with the one that interests the customer.

Cross-selling works best on e-commerce business platforms. When a customer views a product, or adds it to their cart, or initiates the checkout process, they’re implicitly indicating a willingness to buy that product. It is at this stage that cross-selling can be introduced through the recommendation of complementary items. In some instances, you may also provide a discount if another item is purchased together with the initial item.

What is upselling?

Upselling is the other pair of cross-selling. Upselling is the process of encouraging customers to buy a “more expensive” product. You can do this by recommending an upgrade or including add-ons to the initial product the customer expressed interest in. The goal is to boost your overall order value.

Buyers are generally interested in getting a “better” product. A buyer may be leaning towards a product because they’re not aware that they can get a better one within their budget. Therefore, you could increase the order value if you introduce the customer to more expensive products that have better features.

You can introduce upselling and cross-selling at similar stages. For example, you may offer them up-selling options when they view a product, add a product to their cart, or move to check out.

Bundling: the offshoot of cross-selling and upselling

Another common selling technique similar to upsell and cross-sell is termed "bundling.” In bundling, you bundle the main product with other auxiliary products or accessories for a higher price than the single product.

For instance, when you pack a jacket together with a tie and cufflinks, you have bundled the product specifications together and induced the customer to buy more products. This will, in turn, increase your average order value.

A discount is usually promoted as one of the benefits of bundling. When customers realize it'll be cheaper to buy the products together than to buy them individually, they may become more inclined towards bundling.

There are two types of bundling: pure bundling and mixed bundling. Pure bundling is when products are available only when bought together; they cannot be sold individually. Mixed bundling offers both options to customers. They may choose to bundle and buy at a discount or buy the individual product they initially intended to buy.

Differences between cross-selling and upselling

Both cross-selling and up-selling are sales tactics used to encourage customers to buy products or services similar to the original item the customer planned to purchase. The two techniques work towards improving the average order value (AOV) and profitability of wholesalers or retailers.

The hotspots for upselling and cross-selling on e-commerce sites are the product page, checkout page, thank-you page, or the transactional email. But this is as far as the similarities end. Here are some significant differences:

• Product relationship:

Upselling is used to increase the value of sales by recommending a more expensive product. The genre of the product is the same, but the recommended one costs more. On the other hand, cross-selling is channeled towards selling more by adding to the products the customer intended to buy.

• Purpose:

When you up-sell, you increase the value of a sale. Where the customer intends to buy a $20 item, you can upsell by recommending a product with better features at, say, $25. There’s a slight difference in how cross-selling works. Even though it also increases the sales value, cross-selling also helps you sell additional products, especially those less performing ones.

• Difficulty:

Cross-selling is easier to achieve than up-selling. In cross-selling, the buyer will be offered the option to buy an entirely different complementary product. However, the buyer may be inclined to make this purchase because it further compliments what they already wanted to buy.

This is unlike up-selling. The buyer most likely has a fair idea of what they want to buy. Even though the product recommended for them has better features or includes add-ons, the buyer may not be willing to go for the deal because it is more expensive.

Benefits of cross-selling and upselling

Your business or salesperson model will determine whether cross-selling or upselling is more adaptable to you as a seller. If you sell your products on an e-commerce platform, Alibaba.com, for instance, both upselling and cross-selling models work for you. For example, it will be beneficial to maximize your average order value because shipping costs will be added to the original cost of the products.

When the order is maximized, the shipping cost will relatively be the same. Here’s why upselling and cross-selling helps both buyers and sellers:

• It boosts revenues: An effective cross-sell and upsell tactic will increase your sales and your profits. While cross-selling will help you sell more products, upselling will help you sell more expensive products.
• It personalizes the customer’s experience: Personalization is critical in getting more sales. Up-sells and cross-sells offer the customers better options in relevant suggestions and product recommendations. For instance, product suggestions may be made based on past purchases, user preferences, or similar products purchased by other customers.
• It enhances the value of every sale: The chances of selling a product to an existing customer is 60-70% higher than selling to new customers.¹ It is more business-wise to target existing customers when trying to boost sales. Upselling provides value-driven upgrades, while cross-selling provides familiar products the customer may be interested in buying. Both techniques will help increase the order value in the short term and the lifetime value of a customer in the long run.
• It offers more options and convenience to customers: Cross-selling or upselling opens the customer’s eyes to better, similar, or equally required products they may not be aware of. For instance, in cross-selling, the customers are offered the option of convenience. A successful cross-selling or upselling sales strategy will help ease the customer's decision-making process while shopping.
• It enhances trust and customer loyalty: If a customer likes one of your products, they’ll most likely get another one that is similar or complementary to the one previously bought. If the customers like the products you cross-sold or up-sold to them, it’ll heighten the trust and loyalty they have for your brand.

Tips for successful cross-selling and upselling

How do you make sure that your customers fill up their shopping carts with more of your products? Here are a couple of tips to note.

• Understand your products and customer’s needs

A successful upselling and cross-selling campaign requires a deep understanding of your customers’ needs. This will only come when you do your research well. You can use both personal and technological tools to give you insights into this.

• Focus on relevance

It's a big turnoff for sales strategies when you’re offered a product that is entirely irrelevant or unneeded. Your upsell or cross-sell tactics must be precise in their relevance to the product(s) the customer has in mind. The recommendation should augment or improve their own needs, and at the same time, increase their business relationship with you.

• Offer bundles to reduce decision complexity

A lot of times, we think we know exactly what we want to buy. But even if we do, it still doesn’t stop us from looking out for the best deal. Your cross-selling and upselling technique should look to reduce complexities in making buying decisions.

For instance, bundling relevant products together is more convenient than having to decide to buy the products individually. This is a typical example of cross-selling.

• Add Value

The bottom line is not just about you increasing your average order value. Cross-selling or upselling isn’t about you winning and the customer losing. It is equally vital that you add value to what the customer is getting. There has to be a win-win.

Upselling or cross-selling will work best when customers are offered more value for making the purchase. What's the point of buying more products if they have no value to the customer?

In an effective upsell or cross-sell, the customer gets more value and excellent customer experience; you get more revenue and better retention rates.

Examples of cross-selling and upselling strategies

Selling on e-commerce platforms will help you maximize cross-selling and upselling tactics. Here are a couple of examples you can make use of:

Hypothetical case #1:

A customer is interested in a pair of shoes. They are on the product page, have added the product to their cart, or are about to check out.

• Cross-selling example

Recommend complementary items like socks, shoelaces, or shoe care products.

• Upselling example

Recommend another or similar shoe that are more expensive but are newer or have more grade or quality.

Hypothetical case #2:

A customer is interested in buying a smartphone.

• Cross-selling example

Suggest a screen protector, phone case, headphones, or other phone accessories.

• Upselling example

Recommend a phone with a bigger screen, better camera, faster processor, upgraded features, etc., at a higher price.

Sell on Alibaba.com

Upselling and cross-selling are invaluable tactics for making your customers buy more; for boosting your revenue.

However, for a more significant advantage in using both selling techniques, you'll need an e-commerce platform with the functionality to include those features. Alibaba.com provides you with excellent tools to upsell, cross-sell, and bundle your products. What’s more? Alibaba is an international platform that offers you access to millions of international buyers.

The e-commerce platform provides you with the largest B2B platform where you can sell to millions of consumers and retailers worldwide. Sell your products here today.