Cross-sell vs. Upsell: What’s the Difference?

For many organizations, upselling or cross-selling are effective marketing strategies that aim to increase customer value. Rather than trying to get new customers to commit to a larger purchase, both strategies encourage existing customers to buy other products, procure additional services or purchase an updated version of a product.

Although upselling and cross-selling share similarities, there are distinct differences to keep in mind. This article will dive into the differences between upselling and cross-selling, as well as how each strategy drives sales and increases average order values during the implementation process.

What is Cross-selling?

Cross-selling is a marketing strategy that companies use to increase sales and generate additional revenue from existing customers. With this strategy, existing customers are offered complementary products or services based on their interest or purchase of specific products. When cross-selling is done correctly, the customers benefit because they receive value from the recommended products.

To make a successful cross-sell, sellers must have a deep understanding of their customers’ needs and goals. Sellers can effectively do this by building and fostering customer relationships based on trust. By building this type of relationship with customers, sellers can identify what needs may not have been met by the original purchase. That way, sellers can then suggest the most relevant products or services to complement what the customer has already purchased.

Organizations can employ various techniques when looking to engage in cross-selling. These may include providing recommendations, bundling products together or offering discounts on complementary products. Cross-selling’s primary goal is to increase average order values and secure additional business from existing customers.

Cross-selling Example

Opportunities for cross-selling may present themselves in a variety of ways, and there are many industries that can leverage this marketing strategy to their advantage. Let’s dive into a few ways that organizations may engage in cross-selling:

Example 1: Display products that clients have already bought. This is a common tactic used by a vast majority of e-commerce companies and can inspire clients to purchase additional products that complement the item they already planned to buy.

Example 2: Suggest products and services that pair well with a potential purchase. A software company that provides website domain registration to organizations may also provide website building or email hosting services to help those organizations get the most out of their new web domain.

Example 3: Provide services that complement the original product purchase. A software company that provides clients with a project management platform may look to increase sales by offering customers consulting or training services to improve team productivity.

The Advantages of Cross-selling

While the primary aim of cross-selling is to maximize sales during the customer journey, the strategy also provides many other significant benefits to companies and customers alike.

First, companies can show customers that they deeply understand their needs and preferences. By providing recommendations that effectively solve a particular problem for the client, the strategy helps build trust and loyalty between the company and customer. As a result of this increased loyalty, customers are more likely to stick around for a long time and recommend the company’s products and services to their peers.

On the seller side, cross-selling can help people move through the customer journey and reduce the time it takes to make purchasing decisions. Instead of shopping around for the best price, cross-selling can enable customers to get everything they need from one seller, reducing the complexity of their decision. This also enables sellers to be more effective at beating the competition.

Lastly, successful cross-selling leads to increased revenue. Since customers who buy more than one product or service have higher average order sales than those who only buy one, the company’s earnings are positively affected. At the same time, this also decreases customer acquisition costs and the time spent on customer acquisition.

What is Upselling?

Similar to cross-selling, upselling is a strategy used by companies to maximize customer value. When engaging in upselling, companies will recommend that customers purchase a more expensive item, an add-on item or an item upgrade to make the sale more profitable. Upselling is typically more effective when the strategy is applied to existing customers who may be looking to make another purchase due to the previously established relationship with a seller. Because the customer is making a repeat purchase, this also indicates that the customer had a positive experience with the seller.

While companies benefit from the increased revenue from an upsell, the customer also benefits from upselling. The upgraded version of a customer’s purchase will likely deliver more value in the long run. Like cross-selling, upselling requires a deeper understanding of the customer’s needs and preferences. Otherwise, companies risk making recommendations that strain the relationship due to those recommendations being misaligned with the customer’s needs or wants.

Upselling Example

There are many different strategies companies can use to upsell their products or services to increase revenue. Here are some common ways that organizations may approach upselling:

Example 1: Offering an item upgrade from a free product to a paid product. To increase revenue from customers, a software company may recommend that customers upgrade their free subscription to a more expensive plan. This upgrade will include more features and capabilities that can make the customer’s life easier.

Example 2: Suggesting add-ons and upgrades during the checkout process. When a client is booking airfare, an airline company may suggest add-ons or upgrades to the ticket, such as prepaying for checked luggage, selecting a seat with extra legroom or near the window or paying extra to upgrade from economy to business class.

Example 3: Proposing an item upgrade from an older product to a new one. An electronics company that sells computers may advise customers to upgrade to a newer model. This new computer would contribute to higher customer satisfaction by offering superior technology specifications and improved performance, like higher screen resolution, computer memory or battery life.

The Advantages of Upselling

When done correctly, upselling can increase average order values and help companies realize additional revenue growth. Customers also enjoy significant benefits from upselling.

For example, upselling can deliver a more personalized experience during the customer journey. By providing customers with relevant recommendations during key stages of their buying journey, companies can improve loyalty and satisfaction. Upselling can also provide customers with a complete solution, which enhances retention. Since upselling can enable a customer’s decision-making process, identifying upselling opportunities can offer greater value and make the customer journey more convenient.

For sellers, upselling is a useful tool that can increase the value of each sale. Because existing customers are more likely to make additional purchases, upselling to this group of buyers can increase average order values while decreasing customer acquisition costs. Upselling can also help sellers and companies increase their value proposition, allowing them to better compete in the marketplace.

So, What’s the Difference Between Upselling and Cross-selling?

While upselling and cross-selling are both effective marketing strategies to increase customer value, there are distinct differences between these approaches.

With cross-selling, customers are recommended additional, related products or services that address remaining needs or wants. Cross-selling also helps alert customers to products or services they might not have already been aware of.

In contrast, upselling offers more expensive versions of a particular product or service that have add-ons, additional features or other characteristics that would warrant a higher price tag. With upselling, companies must be skilled at helping customers visualize the value they’ll receive by opting for a more expensive product.

The primary difference between the two is that cross-selling is focused on providing the customer with complementary products and services that will enable them to extract more value from their purchase. Upselling, on the other hand, is about getting the customer to see how an upgraded product will more effectively meet their needs and solve their challenges.