Cross-selling has multiple benefits for e-commerce merchants—if you do it right. The key cross-selling benefits for an online store are the ability to:
- Increase sales
- Increase customer satisfaction and customer loyalty
- Increase your customer lifetime value
- Encourage customers to complete their purchase
If you are considering offering complementary products to your existing customers—either before, during, or after they make a purchase—understanding the benefits of cross-selling and how to take full advantage of this technique will help you develop a successful cross-selling strategy.
Using cross-selling as a sales technique boosts your revenue immediately by increasing the average ticket size. Consider a customer who regularly buys hemp T-shirts in your online store. If you then offer that customer a hemp skirt or pair of pants to match the T-shirt she has already bought and she chooses to buy it, you have just doubled the ticket size of that customer.
In other cases, a single customer will buy several related products at once, and this is where the cross-selling strategy of bundling comes in. Imagine that you sell cameras online and you know that your typical new customer is an amateur photographer. To increase your sales instantly, offer each new customer a bundle that includes the camera they are viewing plus:
- A compatible camera bag
- A compatible tripod
- Compatible filters
- An extended warranty
- An online course explaining how to take amazing photos with that camera
If even only some of your new customers choose to purchase the bundle, you will have increased your average order value and possibly made yourself the go-to store for those same customers in the future. Average order value can often be determined using the analytics included in your payment processor’s merchant services.
Increase Customer Satisfaction and Loyalty
As hinted at in the first benefit, customers whose needs are met are happy customers. When an online sales team offers highly relevant products that meet a customer’s needs, customers feel understood and their trust and loyalty to the brand grows. Customer loyalty, in turn, increases retention and reduces the number of new customers you will need to acquire.
Customers also appreciate the convenience of buying everything they need in one place rather than having to shop around. As an existing customer might not be aware of your full product range, cross-sell suggestions could bring related products to their attention that they didn’t even know you had.
Increase Customer Lifetime Value
Customer lifetime value—the amount a single customer is likely to spend over their lifetime—increases with carefully planned cross-selling strategies as a result of an increased order value and increased customer loyalty. If an existing customer places larger orders and continues to order from your brand rather than switching to a competitor, the customer’s lifetime value will be higher.
For B2B (business-to-business) stores, cross-selling related products and services that meet your customers’ needs can lead to deeper overall integration in the customer’s business. Deeper integration means a higher ticket size, increased loyalty and a higher lifetime value for each client. With a reduced need for marketing to new customers, you can limit spending on customer acquisition and focus on offering a quality service.
Encourage Customers to Complete their Purchase
It’s a known fact that purchase decisions take time. Customers weigh up how much they really need an item, compare several options and might wait for the item to go on sale before they buy. However, a strategic cross-sale could give the customer the motivation they need to complete the purchase.
Imagine, for example, a parent shopping for Cars rollerskates online. If he or she is cross-sold matching elbow and knee pads and a matching helmet (especially with a bundle discount) before completing the purchase through your payment gateway, that might provide the motivation the parent needs to go ahead and complete the purchase.
Tips for Cross-Selling Effectively
Making cross-sells work for both you and the customer takes insight and strategic action. When done correctly, cross-selling has many benefits. However, when done incorrectly, it can put people off and lead to you losing customers. The most important factors when implementing cross-selling as a sales technique are:
- Know your customers
- Time cross-sales strategically
- Use each customer’s preferred contact method
Get to Know Each Customer
Customer relationships lie at the heart of successful cross-selling. It’s only by really knowing your customers that you can offer helpful solutions for their current and future needs. When you try to cross-sell items that are irrelevant, it can put customers off from purchasing.
To make the most relevant cross-sell offers:
- Gather detailed customer data.
- Compile information about customer interactions on all of the store’s channels.
- Ask about the customer’s preferred contact method(s).
- Use artificial intelligence (AI) to group related items together and exclude unrelated items.
Place the Cross-Sell at the Right Moment in the Customer Journey
Getting each stage of the customer journey right is a key to helping customers complete the purchase. You could offer a cross-sell:
- On the product page
- Between the product page and the checkout (the interstitial pages)
- At the checkout
- After the purchase, on your website
- In a later marketing email
To make the cross-sell approachable, the suggested item(s) must:
- Be relevant to the product and add value or efficiency to the customer’s use of the product
- Not exceed 25% of the value of the product purchased
- Be easy to understand, that is, needing no further explanation
If not done well, cross-selling indiscriminately can result in returns, credit card chargebacks and calls from customers who wish to cancel their order. Keeping the cost of suggested items low can help to prevent these kinds of problems.
Use the Customer’s Preferred Contact Method
Lastly, it’s important to approach each customer with product suggestions using their preferred contact method. If a customer prefers to be contacted by email, sending them a text message or calling them on their phone could be construed as annoying.
In France in 2018, for example, two-thirds of customers surveyed preferred to contact customer service via email or web contact form. A good way to find out customers’ preferred contact method—in Europe or elsewhere—is to include a field at the checkout or during account sign-up for the customer to indicate whether they prefer to receive communication via email, phone or SMS.
Enjoy the Benefits of Cross-Selling
Cross-selling can be a highly effective strategy when you have the mechanisms to track your customer base and add real value to your new and existing customers. When done right, cross-selling can build customer satisfaction, trust and loyalty and increase revenue in the short-term as well as the long run.
To cross-sell successfully, be selective, make sure that offers are relevant and helpful and get the timing of cross-sales right. With judicious use, you should see the cross-sales technique result in happy customers and an improved bottom line.