Cross-selling and upselling are techniques designed to add value to a sale. In particular, these techniques have value when dealing with existing clients. This is because they add value and strengthen client ties to your goods or services, without the need to spend additional money required to reach new clients. This article explores these techniques and some of the things to avoid.
What is cross-selling?
‘Do you want to make it a combo?’
Many of us experience cross-selling on a day-to-day basis. Cross-selling is the act of selling different products or services to an existing customer. By cross-selling, you are looking to entice your customer into purchasing closely related or complementary goods or services to enhance their experience with your business. Whilst it is widely used by fast-food chains, cross-selling is a technique employed by a wide range of industries. For example;
- A ‘bricks-and-mortar’ business that owns a computer store may look to encourage their customer to purchase not only a computer but also studio headphones, computer cleaning equipment, and various pieces of software.
- For online businesses, cross-selling can be built into the user experience. Using a feature such as recommendations below products and at the checkout is a valuable tool to entice the customer to purchase related goods and services.
In essence, the benefit of cross-selling is that you make the most out of any sale and maximise the value of your client relationships.
What is upselling?
Upselling is a technique that looks to increase the amount customers spend with your business. While cross-selling looks to entice customers to purchase different products/services, the aim of upselling is to encourage customers to purchase more premium versions or add-ons of the same product or service. Some examples of up-selling include;
- Encouraging customers to ‘go premium’ for online platforms and applications.
- Enticing customers to purchase a higher-performance computer.
- Encouraging customers to purchase a more expensive brand of clothing.
Upselling can be effective in boosting your margins because the premium products or services offered are generally more profitable. However, there is a fine line when upselling between tailoring a higher-range product or service to customer needs and appearing as if you are trying to ‘rip off’ the customer. It is therefore very important to listen to the customer and get to know their needs when looking to upsell. This will avoid causing offence.
Practices to avoid
It is important when trying to maximise sales revenue for your business to stay within the boundaries of the law. The Australian Consumer Law regulates sales activities in Australia. This law states businesses must avoid engaging in conduct/making representations that are misleading, deceptive, or likely to mislead or deceive. When up-selling and cross-selling, this means it is important not to falsely represent the characteristics or associations of what you are selling to the customer. In essence, honesty and transparency will remedy the majority of concerns under the Australian Consumer Law.
If you have questions, comments, queries or concerns relating to the legality of your sales techniques, contact a consumer lawyer.
Key takeaways
- Cross-selling involves selling different (often associated) products to a customer.
- Up-selling involves selling a more premium product to a customer.
- Both sales techniques are effective in leveraging client relationships to maximise revenue, without the need to make contact with new customers.
- Businesses must stay within the grounds of the Australian Consumer Law when cross-selling and up-selling. In general, this is achieved through honesty and transparency when selling goods and services.
