Cross-selling: definition, examples & implementation

According to studies, offering your customers additional products or services is 60% to 70% likely to lead to a purchase. With the help of the sales strategy of cross-selling, you can successfully implement this in your online store and boost your sales through additional sales.

In this article, we will first explain what cross-selling is all about. We then provide clear examples of cross-selling products and tell you how you can exploit the potential of this tactic.

Cross Selling Definition: What is Cross Selling? 

Cross-selling is when a customer has already purchased a product or service - or is only interested in it - and is offered related or complementary items or services based on this. In short, cross-selling is the sale of matching products to existing customers. For a better understanding, you will find illustrative cross-selling examples further down in the article.

What are the goals of cross-selling?

The main goal of cross-selling is obvious: to increase the average order value (AOV), customer lifetime value (CLV), and therefore sales. This is done by showing a customer other goods or services that might meet their needs. Often, these products are additions to the items viewed or already purchased (e.g., a smartphone case if a smartphone was previously purchased or viewed). However, products from a completely different category can also be presented. The basis for successful cross-selling is that customers who have already purchased from a company are often willing to buy additional items there. Therefore, it is mainly existing customers who are reactivated, but cross-selling also includes new customers. As a result, this tactic is often also part of customer relationship management (CRM).

Cross-Selling: Advantages and disadvantages

In the following, we will discuss the opportunities of cross-selling. At the same time, of course, we do not want to conceal possible challenges from you.

Cross-Selling advantages

The greatest advantage of selling cross-selling products is that only low acquisition costs are required for this, as customers have usually already purchased the product or service or at least shown interest in it. For existing customers, there is often an additional plus point, namely that close customer loyalty and trust in the company have been generated by purchases already made, so that customers are generally more willing to spend more.

Based on the purchases already made or the customer's purchase intention (based on the shopping cart) and the evaluation of personal data, the likelihood of further purchasing behavior can be derived in advance and the product can be advertised in a targeted manner. Further advantages result from the goals already mentioned, such as increasing profits and sales or selling the peripheral assortment over the main assortment and vice versa. By the way: In some cases, cross-selling can even lead to changes in the assortment structure, so that the marginal assortment becomes the main business, for example.

This is how Latori client Shape Republic successfully implements its cross-selling strategy.

Cross-Selling disadvantages

Cross-selling strategies can also backfire if the suggested products and services have not been adequately researched or strategically positioned. Customers may view the retailer's recommendations as unnecessary or even annoying. With poor planning, companies not only fail to generate additional sales, but at worst lose existing customer relationships.

5 examples of cross-selling from practice

Cross-selling in the shopping cart of Latori customer SHEKO.

Whether in brick-and-mortar retail or online, there are countless cross-selling examples every day, such as:

1. Car dealers also offer, for example, car insurance, additional winter tires or car financing to go with the vehicles.

2. In the supermarket, customers can find changing items every few days from technology, clothing, toys, textiles, furniture and more.

3. Gas stations offer not only the possibility to refuel, but also magazines, sweets, snacks and many items for daily use.

4. Pharmacies sell not only medications but also personal care products.

5. Online retailers recommend additional, similar or complementary products to selected items at various points in the sales funnel.

10 tips: How to successfully implement cross-selling in the store

Cross-selling can be particularly profitable for online retailers, as purchase decisions are often made within seconds on the Internet and purchases are made with just one click.

Cross-selling in online stores is usually implemented with the help of artificial intelligence (AI), which is already integrated into some store systems. Depending on the platform used, there are these basic technical options:

• The online store operators define keywords for the various articles. With the help of these keywords, products are filtered out from the database that are related to each other.

• The web store operators maintain specific products in the master record of other articles that are to be displayed for cross-selling purposes.

• Software filters the products that a customer has already purchased and uses them to calculate the items that are most likely to still interest him.

In practice, cross-selling is usually placed on the frontend of the store below or to the right of the article, with the following or similar headings:

• "We also recommend:"

• "Customers who bought this product often also bought:"

• "Other items from the manufacturer:"

• "Similar products"

So when you read phrases like these in an online store or online marketplaces, you now know that cross-selling is happening. Our 10 tips for your effective cross-selling:

#1 Know your target audience

Understand your customers' needs, preferences and buying habits. This is critical to creating relevant cross-sell offers.

#2 Offer complementary products

Make sure that the suggested products or services actually match the customer's main product and add value.

#3 Personalized recommendations

Use data and customer segmentation to create personalized cross-sell recommendations. Customers respond better to offers that are tailored to their individual interests.

#4 Transparent product descriptions

Clear and concise product descriptions are critical. Customers should understand why the suggested product is relevant to them.

#5 Bundles

Create attractive bundles for your store where customers can save money when buying multiple products.

#6 Compelling product images

High-quality images of the suggested products help customers get a better idea and make it easier for them to make a purchase decision.

#7 Customer reviews

Show positive customer reviews for the suggested products to build trust.

#8 Run A/B tests

Experiment with different cross-selling strategies to find out which ones work best. A/B testing can provide valuable insights.

#9 Mobile optimization

Make sure cross-sell offers are highly visible and user-friendly on mobile devices, as many customers shop on mobile.

#10 After the purchase

Cross-selling doesn't end with the purchase. Use follow-up emails or thank you messages to suggest additional products or services that may interest the customer.

Why cross-selling is an effective lever in SEO

Cross-selling is very important for the SEO of online stores. Since these naturally often have too little search engine relevant content and external linking to all product pages in a large store is difficult to implement, indexing of all sub-pages of the store is difficult to implement. Comprehensive internal linking is helpful here. With an automated cross-selling module, this is possible without much effort.

This means that product pages are linked to each other via internal links, so that sooner or later each article receives several internal links. This allows search engine bots to find subpages faster. In addition, this supports SEO for the entire online store, as balanced internal linking is an important ranking factor for the algorithm of Google & Co. Ideally, each product page should have at least ten internal links.

Opportunities of cross-selling in online marketing

With the reference to "Recommended Products", Latori client Outdoorchef exploits the potential of cross-selling.

Optimized cross-selling, for one, helps improve a personalized customer experience. An excellent customer experience means good customer ratings and these in turn lead to a good reputation for a company.

On the other hand, online retail in particular relies on cross-selling as a marketing strategy. This is because web stores with a large product range can therefore use cross-references to refer to new products, matching or additional items.

With Big Data or data-driven marketing, cross-selling can also be optimized based on valid customer data. For example, a registered user of an online store can be recommended a suitable product based on items they have previously purchased.

Cross-selling can also be integrated into e-mail marketing. Many online retailers send customers personalized e-mails with cross-references to other items after a purchase.

You should avoid these mistakes

Cross-selling can be an effective means of increasing sales, but there are common mistakes that you should avoid when implementing it.

1. Inappropriate product recommendations

Companies often offer products that do not go together with the main item. This can confuse the customer and affect trust in the shop. Only recommend complementary products that have a logical connection to the main product. For example, a matching memory card or lens should be suggested for a camera, but not a completely unrelated product.

2. Too aggressive cross-selling

Too many cross-selling offers or overly intrusive placements can be perceived as annoying and detract from the shopping experience. Therefore, keep the number of offers manageable and present them discreetly. Less is often more - targeted and strategic placement looks more natural and customer-friendly.

3. Wrong timing

Placing cross-selling too early or too late in the customer journey can be ineffective. For example, customers may ignore an additional product before purchase if they are not ready to finalise. Place cross-sell offers in the right places, such as on the checkout page or post-purchase, to generate additional sales. Post-purchase cross-selling is often very successful.

4. Lack of personalisation

If cross-selling offers are not personalised to the customer, they appear impersonal and less attractive. Use customer data and purchase history to make personalised recommendations. This increases the relevance of the offers and therefore the likelihood that the customer will buy additional products.

5. Overestimating customer satisfaction

Customers who are dissatisfied with their main purchase are less inclined to buy additional products. Cross-selling in such cases could exacerbate the problem. Make sure that the customer is satisfied with their purchase before making further offers. It makes sense to focus cross-selling on returning, satisfied customers.

Upselling Definition

Upselling is an e-commerce and retail sales strategy in which a seller or company attempts to persuade customers to buy a more expensive or enhanced product or service than what they were originally considering or have already selected. The main goal is to increase the average transaction value per customer and thus increase revenue through upselling. Upselling is an effective strategy to increase sales while adding value to customers by providing them with products or services that better fit their needs. However, it should be done in a customer-centric manner without overwhelming or pushing customers to buy something they don't want or need. Careful segmentation of customers and personalized upselling offers can help maximize the effectiveness of this strategy.

Cross selling vs. upselling: the differences

Unlike cross selling, upselling does not offer the customer related or complementary products, but is designed to make higher-priced items or services more appealing to him.

The two strategies can also be used together. However, their impact on the business is somewhat different. Upsells often lead customers to choose higher-priced products, while cross-sells increase average order value (AOV) by adding more products. Ultimately, a company's business model determines whether cross-selling or upselling makes more sense.

For example, customer acquisition and shipping are associated with high fixed costs for orders for e-commerce companies, which is why the AOV should rather be increased here (cross-selling). In contrast, it makes more sense for other companies to encourage customers to opt for higher-priced items or add additional products (upselling).

However, the two strategies also have something in common. For example, both cross-selling and upselling are often used in the middle and late stages of the conversion funnel, when customers have already signaled that they are interested in buying. In addition, both sales strategies promote products or services that are similar to the item the customer intends to buy. And ultimately, both cross-selling and upselling pursue the goal of increasing profitability.

Conclusion

Nowadays, cross selling is a common sales strategy that is indispensable for some online stores and marketplaces. As complementary products (usually complementary goods) are presented to the customer in this way, both revenue and the number of items sold increase. This tactic tends to save resources, as customers already acquired in the past are reactivated. This eliminates high acquisition costs for new customers and increases the profit margin.