If you own an eCommerce website, you’ll want to know how to increase your average order value, improve customer retention, and basically generate more money online. In this interactive guide, we will explain the basics of cross-selling as an effective sales tactic and explain how it’s different from upselling. So, get ready to learn everything you need to know about cross-selling, customer retention, and boosting your online profits by recommending additional products for customers to add to their shopping cart.
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Cross-selling is a powerful sales technique that involves encouraging customers to spend more money online by adding more products related to what they have already shown interest in their cart. ¹ Suppose a customer clicks on an online store selling pet supplies. The user clicks through to the dog treat category page and starts to browse through the online selection of items. When they find a product they’d like to buy, they add it to their shopping cart. This is when cross-selling kicks in. The customer has shown interest in a specific item, but the retailer now has an opportunity to increase the average order value.
Since the customer is obviously looking for dog treats, and more than likely has a pet dog, they might also be interested in other complementary products such as dog toys, dog beds, or dog coats. Cross-selling, using plugins and sales software, can now recommend relevant products to the customer, encouraging them to add more items to the cart before checking out.
Taking this a step further, cross-selling could also tell the user that other customers have bought the following items when buying the dog treats they have added to their shopping cart. This particular sales tactic helps to build trust, as the customer considers adding additional items to their order, following the behavior of other buyers.
Put simply, cross-selling aims to increase the average order value of each customer who visits an eCommerce website by highlighting complimentary items that the customer will probably be interested in buying. Since they’re relevant, there is a higher chance of conversion. You can also increase customer loyalty, deepen customer relationships, and improve customer retention rates by helping users find items they want, need, or are interested in. This makes cross-selling an effective growth strategy for B2B and B2C businesses. ²
While cross-selling can take place as a customer is actively browsing a website, it can also happen in the days following an online purchase via an email campaign or paid ad strategy. Businesses can target customers who have bought a particular item from their eCommerce store and recommend additional products that would complement their previous orders. Let’s say a customer has purchased a red dress from an independent designer online. The next day, the customer could be sent an email recommending a pair of stiletto heels and a purse that would complete the look, based on the designer’s personal recommendations. This technique demonstrates how the retailer values the buyer and invests time into considering what might make their outfit look even better.
If we consider a B2B business model, suppose a retailer has bought eco-friendly packaging supplies online. A week later, they might see an ad campaign promoting additional sustainable packaging items such as shipping labels, biodegradable boxes, plastic-free protective packaging, etc. The next time they order packaging, these items will be again recommended as add-ons, increasing the buyer’s average order value.
If you’re still not sure how powerful cross-selling is, Amazon estimates that 35 percent of its revenue comes from cross-selling activity. Both their ‘frequently bought together’ and ‘customers who bought this item also bought’ sections promote products related to the item you are currently viewing on Amazon. McDonald’s is another classic example of how cross-selling can also be applied in person, by asking customers ‘would you like fries with that?’. ³
Unlike upselling, which aims to increase the number of items in the shopping cart or order value regardless of relevancy, cross-selling in the eCommerce environment involves identifying related products and creating appropriate offers. In both cases, though, the goal is to increase the average order value. ⁴
To understand how cross-selling works in practice, let’s take a look at the best practices for cross-selling success:
Here are four effective cross-selling sales tactics you can apply as an eCommerce retailer today:
1: Offer additional services to new customers
A great way to cross-sell as a B2B retailer is to offer additional services to new clients. This could be a five working day guarantee delivery, a sample or mock-up service (ideal for manufacturers), or if they are purchasing one product from you, make sure they’re aware of what else you can offer that would complement their order.
2: Use bundles to increase average order value
Bundles can double your average order value so encourage buyers to buy in bulk. Before finalizing their order, you can offer new customers a discount if they were to choose a bundle order of relevant products. This might apply to the price of the products or the cost of delivery.
3: Use data to make better decisions
Analyzing a client’s previous orders can help you uncover cross-sell opportunities as a retailer. The next time the customer contacts you or visits your online store, you will have an idea about what they might be interested in buying next, based on the data you have captured.
4: Improve product descriptions
Educate new customers by creating professional, keyword-rich product descriptions and illustrate the benefits of each product or service you offer online. By informing customers about your products, their unique selling points, and the benefits of adding additional products to their shopping cart, you can position yourself as an industry expert and build customer retention and trust.
To learn how to write professional product descriptions as a B2B retailer, read our article on: How to optimize a B2B product page that converts.
So, what’s the difference between cross-selling and upselling? Well, as we’ve just discussed, effective cross-selling is based on recommendations, depending on a customer’s purchases or current interest. While cross-selling and upselling are both typically performed at the mid-to-late stages of the conversion funnel, upselling persuades the buyer to buy something more expensive. This usually means an add-on that is not necessary but helps to significantly increase the average order value. Upselling can also mean upgrading to a higher value item that might have additional benefits, features, or unique selling points, but will cost more than what the buyer had initially intended to spend online.
Cross-selling and upselling can be used together to form a highly targeted sales tactic online. You can use one or both techniques, depending on your unique business model. But if a retailer wants to increase profit margins, it is recommended to implement at least one of these sales techniques online to optimize business performance.3
Cross-sells are considered one of the most effective and easiest methods of generating additional revenue as a business. It can strengthen customer relationships, generate more income and add value to buyers. However, if the cross-sold product or service doesn’t enhance the value of the customer’s primary purchase, it can be damaging to your business’s reputation online.5
So, before you move forward with cross-selling as a business, let’s review the advantages and disadvantages of this particular approach.
Advantages of cross-selling:
Disadvantages of cross-selling:
Both cross-selling and upselling are invaluable online sales strategies and can help you increase your average order value, improve customer retention rates, and expand your profit margins. But, to implement such techniques, you’ll need a modern, user-friendly eCommerce platform with the functionality to offer retailers upsell and cross-sell strategies.
Alibaba.com empowers sellers by helping them to promote relevant items, highlight key benefits and boost their sales performance online. For more sales techniques to optimize your B2B business, read our article on: 10 digital marketing strategies for manufacturers.
Create an account on Alibaba.com to start selling today!