DON’T MISS OUT

Get updates on new articles, webinars and other opportunities:

How to Use Upsells, Cross-Sells and Bundle-Sells to Increase Revenues

by George Mathew

The morning after the premiere of MTV’s Jersey Shore, Viacom reported a 37% increase in earnings.

Of this, a 14% increase in worldwide ad revenues was attributed to the aforementioned show.

How did they make this happen?

In case you don’t know, Jersey Shore is a lifestyle show that features the rich and lavish lifestyle of a few young adults from New Jersey. The show’s followers would do anything to get a piece of the action they were seeing on their TV screens.

So the people who ran the show began to sell Jersey Shore merchandise in outlets called Shore stores. When anyone bought something, the cashiers would ask, “Would you like a signature shot glass with your order?”

Nearly everyone bought the signature shot glass.

This simple question resulted in more than 500,000 sales of shot glasses in the third quarter of 2011.

It’s called the art of upselling. Simply put, ask for more and it’s likely you’ll get what you ask for. And by doing so, you’ll optimize the value of every sale.

The book Marketing Metrics says, “The probability of selling to a new prospect is 5%-20%. The probability of selling to an existing customer is 60-70%.”

image002

It makes sense, then, that your best bet for raising profit levels is leveraging offers to your existing customer base.

What are upsells, cross-sells and bundle-sells?

Upsell: An upsell is when you persuade a customer to buy something extra or more expensive. You’ve been up-sold when you visit a car dealership to buy a Toyota and end up buying a Ferrari.

upsell example

The Apple Store is excellent at upselling. They know a bottom of the barrel Mac isn’t going to cut it for your needs.

Cross-sell: A cross-sell is when you sell a different product or service to a customer. When a restaurant waiter asks you if you’d like a Coke with your fries, or fries with your burger, that’s a cross-sell.

Cross-sells work well with lower-priced items. When buying an iPad, you might be tempted to buy a case, too. But it may not work the other way around.

Cross-sells also work well with items that require accessories. For instance, if you just purchased a computer, you might be interested in a printer or touch-screen monitor.

Just remember, when choosing upsell and cross-sell products, don’t pick items that increase the total order cost by more than 25%. The increased cost may make the customer abandon the order altogether.

Keep in mind, the customer may not take action immediately, but he/she will remember the accessory and may take action in the future.

Bundle sell: A bundle sell is when you group different items together and sell them at a lower price than what they would have sold for separately.

Jason Zook decided to sell a few products on his podcast. But he wanted whatever he sold to be either his own creation or his company’s creations (stuff like ebooks, resources for designers, etc.).

The total cost of all these items was around $2500.

When this bundle — called the Bundle of Awesome — went on sale, it launched for just $1 … with a small catch. The price would increase by a dollar each time someone made a purchase.

bundle-of-awesome-1024x574

The bundle went on to generate over $40,000 in revenue.

Which is better, upselling or cross-selling?

Research from Forrester reveals that upsells and cross-sells are responsible for more than 30% of e-commerce revenue, but which is better?

Research indicates that upselling performs 20 times better than cross-selling on product pages.

In the graph below, you can see that upselling drives more than 4% of online sales, while cross-sells earn a mere .2%

upsells more revenue

Stats on upsells and cross-sells

So when is the best time to do upsells and cross-sells online?

Conversion Rates of Cross-sells / Upsells in the Shopping Cart:

  • Less than 1% conversion (8% of retailers)
  • 1%-4% conversion (16% of retailers)
  • 5%-10% conversion (9% of retailers)
  • More than 10% conversion (3% of retailers)

Conversion Rates of Cross-sell / Upsells on Product Pages:

  • Less than 1% conversion (5% of retailers)
  • 1%-2% conversion (15% of retailers)
  • 3%-4% conversion (5% of retailers)
  • 5%-7% conversion (6% of retailers)
  • 8%-10% conversion (2% of retailers)
  • 11%-15% conversion (1% of retailers)
  • More than 15% conversion – 2% of retailers

Source

How do you determine what to upsell?

Make a list

List all your products, or as many as you can, then list corresponding upsell and cross-sell products. Think of cross-category upsells or cross-sells, or new upsells or cross-sells for each product.

Conduct split tests and see which product combinations work best at increasing your sales.

Familiarity

When it comes to upsells and cross-sells, offering customers what they are familiar with offers better prospects of sales. Customers are risk averse and don’t want the hassle of returning a new product if they don’t like it.

The art of upselling is effectively the art of listening.

People have needs, and they need solutions. Upselling works when you offer solutions that are well timed and in context to the customer’s situation.

Offer Value

Chris Yeh, VP of Marketing for PBWiki, shares a great example of an upsell from his own experience, a time when he had to call GEICO support for roadside assistance.

After providing GEICO with my location and arranging to wait for the tow truck, the GEICO dispatcher told me, “From looking at your account, it looks like you’re now eligible for a big discount on our comprehensive coverage. Since you’re going to be waiting for the tow truck anyways, would you like to hear more?”

15 minutes later, I had agreed to add $1 million in additional coverage for my car and home, at a cost of right around $100 per year.

I’ve been a GEICO customer for 16 years already, so it’s not much of a stretch to speculate that I might be a customer for another 20 years. That means GEICO turned a costly customer service call into an incremental $2,000 in lifetime revenue.

The lesson is clear: By providing value you are increasing the lifetime value of your customer.

You can also provide upsells during customer support interactions as Groove does in this example.

upsell-in-cs-interactions

Image Source

Tools you can use to automate the process

Conductrics – Conductrics combines real-time optimization with machine learning to make sense of user behavior. It delivers optimized recommendations for upsells and cross-sells based on behavioral data.

Intelligent Cross-Sell: CNET Content Solutions has created intelligent cross-sell together with its partner RichRelevance. It’s a service that allows merchants to automate and optimize the targeting of cross-sells and upsells.

Adobe Marketing Cloud – It’s a full-featured CRM that enables product upsells and retargeting.

Marketo – Another full-featured CRM that enables personalized upsells, personalized emails and ad spend optimization.

Concluding thoughts

Increasing conversions and adding more to your bottom-line through upsells and cross-sells isn’t a set-and-forget task. It requires continuous tweaking and diversification of your product lines.

Test your offers to know what works best. Just remember that you shouldn’t overdo it.

Anyone who has shopped on GoDaddy knows what I’m talking about. The homepage is cluttered with zillions of options. If you make the mistake of buying something, they throw everything but the kitchen sink at you.

That said, cross-sells and upsells are smart ways to optimize your website and raise the value of every conversion.

Ultimately, it boils down to this: The customer is king. Listen to them and give them what they want. That generally leads to more sales and happier customers too.

Read other Crazy Egg articles by George Mathew.

2 Comments

DON’T MISS OUT

Get updates on new articles, webinars and other opportunities:

George Mathew

George has marketed million dollar startups with his skills and has contributed to ace Conversion Optimization blogs like ConversionXL. You can hire him for your content marketing needs.

2 COMMENTS

Comment Policy

Please join the conversation! We like long and thoughtful communication.
Abrupt comments and gibberish will not be approved. Please, only use your real name, not your business name or keywords. We rarely allow links in your comment.
Finally, please use your favorite personal social media profile for the website field.

SPEAK YOUR MIND

Your email address will not be published.

  1. alex rada says:
    November 7, 2015 at 9:39 am

    I’m disclosing that I’m founder of vibetrace.com, doing product recommendations for lots of online merchants.

    While upsell and cross-sell are a good way to increase conversion rates or average order value, those are not the most used ones. It’s more about merchandising, items that need to be put on shelf, promotions, suppliers offers and so on.

    Another thing, algorithms that provide those recommendations are not the same for all businesses. Fashion has it’s own cross-sell of categories, while IT might need something else (accessories for example).

    What are scenarios do you have?

  2. Matt G. says:
    August 21, 2015 at 9:04 am

    Great article. I advise everyone who asks to keep upsells in mind when designing their products. It’s easy to come up with “extras” or “add ons” if you do so from the very beginning. I started my own business by having 3 related products “Ready to go” right from launch day.

Show Me My Heatmap

Looking for key #Webanalytics tools? Try @CrazyEgg for the best way to track your #digitalmarketing efforts in a simple to read #data form

Brad Chuck

@BradChuck