Cross-selling and upselling are key ways to increase revenue. A business intelligence (BI) solution can help you identify and capitalize on cross-selling and upselling opportunities.
The difference between cross-selling and upselling
You just ordered a burger at McDonald’s when the attendant asks, “Would you like fries with that?” The attendant is attempting to cross-sell by offering an item that complements your purchase.
Amazon credits up to 35% of its revenue to cross-selling. Their ultra effective cross-selling comes in the form of the “Frequently Bought Together” and “Customers Who Bought This Item Also Bought” sections during your buying experience. After all, haven’t we all ended up buying five items instead of the one we planned?
On the other hand, consider this scenario: You’re buying a laptop and going through the sales process when a sales rep, or a computer program, mentions upgrading the memory and ram so your laptop can run faster and you won’t worry about running out of storage space. The sales rep or program is looking to upsell you by offering you a better version of what you already want at a higher price.
Cross-selling and upselling helps customer retention
The cost of adding new customers varies depending on the product and the industry. However, many sources say adding a new customer can cost between 4-10 times more than it does to keep an existing one. In other words, it’s important to figure out ways to retain customers. Cross-selling and upselling can help you do that.
Well-executed cross-selling and upselling will strengthen your relationship with customers.
Customers will keep using your products if they receive continual or increased value from those products. Helping customers solve problems with additional or better products increases your value to customers, making it less likely they’ll switch to another brand.
Cross-selling and upselling impact on profits
Cross-selling and upselling can majorly impact your profits. Studies show a five percent increase in customer retention can lead to a 25-95% increase in profits. Here’s how:
Rather than going through the whole sales cycle again with a potential buyer, well-designed cross-selling and upselling occurs at the end of the sales cycle. This translates into an immediate boost in profits without much extra effort.
Finally, the probability of selling to an existing customer is 60-70% compared to a 5-20% probability of selling to a new prospect. Easier sales mean more sales which mean more profits.
Identify cross-selling and upselling opportunities with BI
Some cross-selling opportunities are easier to identify than others. For example, if you sell mobile phones, a fairly obvious item to cross-sell would be a phone case or screen protector.
In other instances, identifying which items to pair for cross-selling opportunities can require digging into your data. A BI tool makes this process significantly easier.
Here are a few things you can easily track with Grow for more profitable cross-selling and upselling efforts:
- Your top selling items, to identify which products you can bundle for promotions
- What time of year specific items sell, to offer seasonal product bundles
- Which offers receive the highest customer response, to refine promotions
- Which is the ideal channel for a customer to receive an offer (email, Facebook, etc.)
When deciding what items to cross-sell and upsell, be simple and direct. Make sure what you offer provides customers with real value.
What potential is your company passing up by not utilizing a BI solution? Download our infographic, How BI Helps Large and Small Companies, to see specific ways companies use BI to help them unlock potential and how Grow can help you get to the next level.