In ecommerce, establishing a customer relationship based on experience and trust can be a challenge because the shopper loses the ability to experience products before buying. New customers want to know that a brand knows its products and how to get the most out of them, without having to do hours of research and shelling out more money than they anticipated.
Cross-selling is a common and effective method that supports several goals for ecommerce businesses: it communicates credibility to the customer, gives them the biggest bang for their buck, and increases average order value (AOV) and retention rates, which in turn helps to increase revenue and profitability.
In this piece, you’ll learn what cross-selling is, why it’s important in ecommerce, how it differs from similar sales techniques, and how to effectively implement it in your business.
Cross-selling is a sales strategy that encourages customers to purchase additional products or services that complement the product they were initially interested in. This increases the average order value of a sale while making sure the customer gets the most out of each product, creating a win-win for both your ecommerce store and the customer.
Cross-selling is an important ecommerce strategy because it improves the overall customer experience. Products that are cross-sold are specifically curated to complement each other, so the customer gets a better value than if they bought a single product. As a result, cross-selling improves customer retention and increases repeat purchases because customers come to trust your brand and its recommendations.
Cross-selling and upselling are both commonly used sales methods in ecommerce, but there are important distinctions in definitions and in use.
The fundamental difference between cross-selling and upselling is that upselling encourages customers to purchase a higher value product instead of the original product, while cross-selling encourages shoppers to purchase a different product in addition to the original product.
Deciding which strategy to use depends on the nature of the product you sell. For example, a software company with tiered subscriptions for their service will prefer to use an upselling strategy, while an ecommerce business that sells kitchen tools will prefer to use a cross-selling strategy.
Of course, upselling and cross-selling can be used together to optimize sales and order value. If a fashion accessories store upsells a customer to the largest size of a handbag, they can also cross-sell a decorative keychain as a complementary item.
Cell phone retailers are a classic example of cross-selling in ecommerce. When you browse for smartphones on Verizon’s website, you will be offered protective phone cases, car chargers, protection services, data upgrades, screen protectors, and more. These are all accessories that many buyers weren’t going to shop for until later, but Verizon’s real-time offerings personalize the shopping experience in a way that satisfies customers and increases order value.
Skincare is another industry that commonly uses cross-selling in their online stores. For example, Wishtrend, an online retailer for Korean beauty products, sells bundles of products in several capacities. Customers can buy entire skincare routines for specific skin issues, sets of brand bestsellers, and pairs of complementary products that are designed to be used together. Products in any of these options are still sold individually, but the sets come at slight discounts and come with the allure of being more effective when used with the additional products.
Budget airline companies, like Spirit, are known for their inexpensive flight tickets and a la carte services. This is a clever implementation of cross-selling that creates personalized travel experiences for their customers, so they pay only for what they need. The ticket itself is a small base cost, and shoppers add additional perks like luggage, seat selection, and boarding priority as they wish. Frugal travelers can visualize exactly where their dollars are going and save on travel expenses when compared to using conventional airlines.
The fashion industry also utilizes cross-selling techniques for online shoppers. A unique example is Rent the Runway, a company that allows customers to rent designer brands for special occasions so they don’t have to shell out hundreds of dollars for something they may only wear once. To cross-sell, Rent the Runway displays a “Complete the Look” section with every item that includes matching bags and jewelry. As the customer checks out, they will also see helpful products like comfortable shoe inserts, fashion tape, and specialized underwear (like strapless or backless bras) to make their outfit flawless.
Accessories are one of the most common ways to cross-sell in ecommerce, and for good reason: When executed well, offering accessories and supplemental products will increase AOV as well as improve customer satisfaction.
Implementing this technique usually involves having a primary product or type of product and offering supplemental products that enhance the customer’s experience with the primary product, like the examples mentioned above with Verizon and Rent the Runway.
Accessories should still be offered independently so that customers can return to purchase additional items when they’re ready, making your customer experience flexible.
Bundled products are similar to supplemental products but tend to be curated as a single item that includes a slight discount. Additionally, bundled products can be structured with a centered primary product bundled with accessories, or the bundle can be composed of similarly-priced items, as in the above example with Wishtrend.
This strategy not only increases AOV, but also improves trust in your company. Carefully curating items to customer needs in easy-to-purchase sets shows shoppers that your brand knows how its products work best and that you want to make sure customers get the best value for their money.
Order thresholds require customers to meet a certain shopping cart amount to unlock perks like discounts or free shipping at checkout. While order thresholds may not fit the technical definition of cross-selling because you are not actively recommending specific products to your customers, it still incentivizes shoppers to add more to their order and can help direct their attention to active cross-selling like accessory recommendations.
Cross-selling ideally occurs in the same shopping session, but it doesn’t have to. Perhaps the customer was uncertain about the add-ons or needed to stick to a budget for the purchase. To keep all your bases covered, follow up with customers who bought a single product with recommendations for items that would enhance their experience with their initial purchase. Be sure to explain why the recommended products are a great fit and let them know of future discounts for buying them together. This way, you encourage repeat purchases and let the customer know you want them to have the best experience possible.
Applying behavioral segmentation to your marketing strategy and using it to target specific customers will optimize all of your cross-selling efforts. By tracking user behavior, like browsing and purchase history, you’ll better understand your customers so you can cross-sell products that will suit their needs and maximize their experience with your brand and products.
Apteo segments customers into a number of helpful categories that will help you target your shoppers with products they’ll love. Apteo even selects those products automatically based on data from your ecommerce store, so all you have to do is reach out to your customers to let them know you want to give them a great value.
If you’re ready to use Apteo’s powerful segmentation to optimize your cross-selling efforts, start your free 14-day trial today.
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