Cross-Selling vs. Up-Selling: Understanding the Key Differences and Benefits

Both cross-selling and up-selling can effect on your sales output whether it is applied to a B2B or B2C model. It can help you sell underperforming products and increase your average order values (AOV) or lifetime values (LTV) when used effectively.

Cross-selling is the process of inducing customers to purchase more related products or services in addition to the initial item they had purchased. Usually, the products in cross-selling are items that complement one another. For example, if a customer shows interest in buying a product, another product that can be used with the previous one  can also be recommended.

It works best on e-commerce business platforms. It indicates a strong willingness of customers to buy that product when they view a product, or adds it to their cart, or initiate the checkout process. Cross-selling can be introduced in this stage by recommending complementary items. A discount may also be offered in some instances if another item is purchased together with the initial item.

Upselling is a pair of cross-selling in which the customers are encouraged to buy a more expensive product. This can be done by recommending an upgrade or including add-ons to the initial product in which the customer has expressed interest. The main goal of upselling is to increase your overall order value.

Generally, buyers are interested in getting a better product. More expensive products with better features can be introduced to the buyer to increase the order value.

Upselling and cross-selling can be introduced at same stages. Up-selling options can be offered when the customer view a product, add a product to their cart, or move to check out as for cross-selling.

Bundling is another common selling technique same as upsell and cross-sell. The main product is bundled with other auxiliary products or accessories for a higher price than the single product in bundling to increase your average order value. 

Usually, a discount is promoted as one of the benefits of bundling. Customers may become more inclined towards bundling when they realize it will be cheaper to buy the products together than to buy them individually.

Pure bundling and mixed bundling are two types of bundling. Products cannot be sold individually and are available only when bought together in pure bundling whereas both options are offered to customers in mixed bundling. They can either bundle and buy at a discount or buy the individual product they initially intended to buy.

Customers are encouraged to buy products or services similar to the original item they planned to purchase to improve the average order value (AOV) and profitability of wholesalers or retailers in both cross-selling and up-selling. The product page, checkout page, thank-you page, or the transactional email are the hotspots for upselling and cross-selling on e-commerce sites. However, there are some significant differences:

The value of sales can be increased by recommending a more expensive product in upselling whereas selling can be increased by adding more products to the original products that the customer intended to buy.

The value of a sale get increased when you up-sell by recommending a product with better features and more cost whereas you can sell additional products, especially those less performing ones with cross-selling. It also increases the sales value.

Cross-selling is easier to achieve than up-selling as the buyer will be offered the option to buy an entirely different complementary product in cross-selling. However, the buyer may purchase this because it further compliments what they already wanted to buy. The buyer may not be willing to go for the deal even though the product recommended for them has better features or includes add-ons, because it is more expensive and the buyer most likely has a clear idea of what they want to buy, in up-selling.

The model of your business or salesperson will determine whether cross-selling or upselling is more suitable to you as a seller. For example, both upselling and cross-selling models work for you if you sell your products on an e-commerce platform. Your average order value can be maximized because shipping costs will be added to the original cost of the products. The shipping cost will relatively be the same when the order is maximized. The benefits of cross-selling and upselling include:

Your sales and your profits can be increased with an effective cross-sell and upsell tactic. You will be able to sell more products in cross-selling, whereas you can sell more expensive products with the help of upselling.

Personalization is very much important in getting more sales. The customers get better options in relevant suggestions and product recommendations in up-sells and cross-sells. The product suggestions is generally based on user preferences, past purchases, or similar products purchased by other customers.

It is wise to target existing customers when trying to boost sales as the chances of selling a product to an existing customer is 60 to 70% higher than selling to new customers. Value-driven upgrades are provided by upselling, whereas familiar products in which the customer may be interested in buying is offered by cross-selling. The order value in the short term and the lifetime value of a customer in the long run can be increased by both techniques.

Better, similar, or equally required products which the customer may not be aware of are offered by cross-selling or upselling. The customers are offered the option of convenience in cross-selling. The decision-making process of a customer can be made easy while shopping with the help of cross-selling or upselling sales strategy.

A customer is most likely to get another one that is similar or complementary to the one previously bought if he/she likes one of your products. It will help heighten the trust and loyalty they have for your brand if the customers like the products you cross-sold or up-sold to them.

A couple of tips to ensure that your customers fill up their shopping carts with more of your products are as below:

A deep understanding of the needs of your customers is required for a successful upselling and cross-selling campaign which will only come by doing your research well. Both personal and technological tools can be used to help achieve this.

Your upsell or cross-sell offering must be precise in their relevance to the product(s) which the customer has in mind as it could be a big turnoff for sales strategies when a product that is offered is entirely irrelevant or unneeded. Their business relationship with you should increase with the recommendation and also should improve their own needs.

Although, most of the time we know exactly what we want to buy, but we still doesn't stop from looking out for the best deal. The complexities in making buying decisions of your customer should get reduced with your cross-selling and upselling technique. Bundling relevant products together is more convenient to buy the products than buying it individually, which is a typical example of cross-selling.

The purpose of your sell should not only to increase your average order value but also to add value to what the customer is getting. Your upselling or cross-selling strategies will work best when customers are offered more value for making the purchase as there is no point of buying more products if they have no value to the customer.

The customer gets more value and excellent customer experience in an effective upsell or cross-sell and you get better retention rates and more revenue.