Introduction to Upselling and Cross-selling
Have you ever wondered what the difference between upselling and cross-selling is? Upselling drives more value for customers, while cross-selling enables customers to achieve new value.
Let’s take a look at a few examples.
Example 1: Buying or Leasing a Car
If you recently purchased or leased a new car, you participated in a well-designed and perfectly implemented upselling and cross-selling process.
Step 1: The Upsell Opportunities
When you select your car, there is ample opportunity for the upsell. The automobile manufacturer presents the prospect with a family of vehicles, and within each family is a hierarchy of models. For example, BMW offers three car families and one motorbike: Rolls Royce, BMW, Cooper, and BMW Motorrad.
Inside each brand is a hierarchy of models. BMW offers numerous models, a wide variety of body styles, and feature combinations. Within the latter, there are different options and packages.
Of course, the options and package boost the cost of the car. The least expensive of the 83 basic vehicles cost about $36,000, and the most costly is well over $100,000 without the cross-sell.
Step 2: The Cross-Selling Opportunities
Cross-selling occurs when financing or leasing is involved. Each dealer has a cross-selling specialist. The first pitch is for financing.
Whether you finance with BMW or not, the specialist offers dealer-installed options. These include wheel and tire damage insurance, lost remote key fob insurance, and a clear coating on the front of the hood to prevent dings and scratches.
When you leave their office, you will receive a list of all the branded clothing and accessories the dealer can provide. Sometimes, they will gift the new BMW customer a BMW baseball cap.
Why These 2 Steps Work
These two steps are desirable benefits for some customers. The customers may have never heard of some, but when a good salesperson explains why they should consider purchasing the line item, the customer receives value. And when the customer leaves the store after providing a deposit for their new car, they feel like the sales team always has their best interest at the top of their minds.
Example 2: John Deere Releases a New Product
Unless you own a farm, are in the farm equipment business, or follow an agriculture equipment manufacturer’s stock, you probably do not know that John Deere constantly adds high-value technology to its products. On August 29, 2023, Deere announced new 1 Series round balers.
Some of the benefits of this new design are:
- Instruments to show the bale weight and moisture to help farmers increase efficiency and return on investment. (Upselling)
- An optional pre-cutter that cuts stems to about 2.5 inches, a manageable size for cattle. (Cross-selling)
- A new mechanical lift feature decreases the effort it takes to move bale; previously, customers had to pick up rolls up to 120 pounds each from off the back of their trucks or off the ground. (Up-selling)
- An optional preservation system uses sensors, a controller, a tank, and a distribution system to add preservatives to each bale. (Cross-selling)
Upselling and Cross-Selling Your Commodities
If your products and services are commodities, upselling is easy (buy three, get one free), while cross-selling is difficult but not impossible.
Amazon is the master of cross-selling and upselling. For one book about cross-selling, Amazon showed several more “products related to this item” to encourage the shopper to buy additional books.
Meanwhile, for a box of machine screws, Amazon showed several items that were “frequently bought together,” including hex nuts and flat washers.
The advantage of upselling and-cross-selling is that you make the offers when the prospect makes a purchase decision or shows interest in buying. Their decision to spend the extra money is much easier than the decision to spend or not spend for the initial purchase. And if you have an e-commerce system, you can and should always follow Amazon’s example.
Remember, always try to offer your customers both upselling and cross-selling opportunities. You never know which one will strike their fancy when they receive your offer.
Related reading:
- Is Your Company’s Brand Under Attack Because Customers Are Changing Their Expectations?
- The Power of Customer-Centric Solutions
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals whose primary goal is to help capital equipment companies create more value for their clients and stakeholders. We continue to provide superior solutions to meet our clients’ needs by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create more value through customer-centric solutions, please contact us or check out some of our free articles and white papers here.