Tell me if you relate with me. Every time I walk into Starbucks for a coffee, I end up walking out with a muffin, a croissant and one of their fancy reusable water bottles. Originally, it was never my plan, but the cashier tempts me into ordering them at a discount, suggesting a good combo.

He got his sales and I got more products at a lower price. That’s a win. Do you have any such stories? 

While you think of one, here’s a blog for you that dives into cross-selling: how it works, its benefits & challenges, and if you’re a salesperson, also pick up a few techniques on how to increase your cross-sale revenue.

What is a cross sale?

Let’s take a simple example. When you order a burger at McDonalds, the cashier will always ask, “Would you like some fries to go with it?". This is cross-selling.

How does a cross-sale work?

We know what a cross sale is. The goal is to enhance the customer’s experience while also increasing sales. Let’s look into how it works.

Cross-selling works best when the suggested items are relevant, offered at the right time, and add value to the customer’s purchase. Many companies use AI and purchase history to personalize recommendations and the best example to understand this is Amazon. 

Amazon has perfected the art of cross-selling through its “Frequently Bought Together” and “Customers Who Bought This Also Bought” sections on product pages. These recommendations are driven by AI algorithms that analyze customer purchasing behavior, browsing history, and preferences.

If you're buying a laptop, Amazon might recommend accessories like a laptop sleeve, mouse, or external hard drive.

According to a study by McKinsey, 35% of Amazon’s revenue comes from cross-selling and upselling through personalized recommendations.

When done correctly, it benefits both the customer and the business by improving convenience, satisfaction, and revenue.

However, don’t confuse this with upselling. Let’s have a look at what their differences are and clear that out of the way.

What are some effective cross-selling techniques?

Cross-selling can lead to long term business relationships when executed the right way. Let’s look at a few techniques that work well.

📦 Bundling the products

Product bundling refers to a business combining two or more related products together and selling them as a package deal. This makes it easy for the customer to buy everything they need at once, and at a discounted price.

The idea of bundling is to encourage customers to buy more by offering convenience and savings.

A face moisturizer from Dot & Key costs ₹599. Instead of selling just the moisturizer, they curate a skincare bundle that includes a face moisturizer, face wash, sunscreen and serum. The total price rounds up to ₹1,700; however, if bought separately, they cost around ₹2,200.

This way customers get a whole skincare routine at a discounted price while the brand also increases its sales by selling more at once.

💡 Placing cross sell products near the main product

This is a simple yet effective strategy where the additional products are placed close to the main product. The idea is to place it in the eye range of customers so no extra effort is needed to look for them before buying. 

You walk into a Nike store to buy a pair of shoes, and right next to the sneaker section, you also see some socks. Since these products go well with sneakers, placing them nearby makes it easy for customers to grab them without searching. If someone is buying new shoes, they might realize they need new socks, leading to extra sales for the store.

⏰ Cross selling products made available for limited time

Businesses usually make cross-sale products available for a limited time to create urgency, in turn encouraging customers to buy the items quickly. From a customer point of view, they experience a sense of loss aversion if they’re unable to grab the deal.

Imagine you sign up for a CRM software to manage your business contacts and sales. After subscribing to the basic plan, you see this offer:

“Exclusive Offer! Upgrade to our AI-powered Analytics Tool for just $10 a month – only available for the next 7 days!”

Since the AI analytics tool can provide deeper insights and help improve sales strategies, you might decide to add it before the limited-time offer expires.

Tools and technology to enhance cross-selling

In today’s digital age, leveraging the right tools and technology can significantly boost your cross-selling efforts. Here are some popular tools businesses can use:

• CRM software with cross-selling features: Tools like Superleap, help businesses track customer preferences, purchase history, and interactions. By analyzing this data, businesses can recommend relevant products and increase sales.

• E-Commerce platform plugins: Shopify, WooCommerce, and Magento offer cross-selling plugins like Bold Upsell and Frequently Bought Together, which automatically suggest complementary items during checkout. For example, "Customers who bought this also bought..." is a common feature implemented with these tools.

• Recommendation engines: AI-powered tools like Amazon Personalize, Dynamic Yield, and Algolia analyze customer behavior to provide personalized product recommendations. These engines ensure customers see relevant suggestions, increasing the likelihood of additional purchases.

• Email marketing tools: Platforms like Mailchimp and Klaviyo enable businesses to send personalized cross-sell recommendations via email based on past purchases. For example, an email saying, “You bought a camera, now get 20% off on tripods and lenses!” can drive sales.

Now that we have the techniques, let’s see how we benefit from them.

What are the benefits of a cross-sale?

💰 Increased sales revenue

Businesses earn more money by encouraging customers to buy additional products along with what they already have in their cart, leading to an increased sales revenue. 

This way, businesses sell not one but multiple items, which adds up to a higher total sales. 

🤗 Improved customer satisfaction

When customers get everything they need in one place, at a discounted price, they feel satisfied and happy, and in the long run, become loyal customers. 

In a cross sale, businesses provide useful and relevant recommendations, benefiting the customer and also improving their overall experience. 

📉 Improved customer retention/reduces churn

When businesses execute cross selling effectively, i.e., offering valuable and relevant products to customers based on their needs, it makes customers happier, more loyal, and less likely to leave - reducing churn. 

What are the challenges of a cross sale?

👎🏻 Perception of aggressive selling

When a cross sale is done forcefully, customers get uncomfortable and feel pressured to pick up something they don’t require. This translates into a negative experience, making them less likely to return for another purchase.

For example, think about the times you have walked into a cosmetic store and the staff followed you around, pushing you to pick up items you are not interested in. Haven't you felt annoyed and sometimes even walked out without buying anything? That’s exactly what aggressive selling is.

The solution is to push for products subtly, and make it seem helpful.

🤷 Product sometimes being irrelevant

In a cross sale, product suggestions work only if it is relevant. If you suggest a product that doesn’t match the customer’s needs, they might find it unnecessary or even get frustrated. 

😵‍💫 Overwhelming with too many products

If you are a business trying to increase your cross sales, then bombarding your customers with too many options can backfire. Why? Think about it. Every time you shop, if there are endless options in front of you, it causes indecision, possibly making you abandon your purchase altogether.

When you are shopping for shoes on Myntra for under $30, if there are similar styles and patterns in different colours, you will probably be overwhelmed and close the app altogether.

How to measure success in a cross-sale?

📈 Cross sell rate

Cross-sale rate measures how many customers actually buy an additional product along with their main purchase. The higher the number, it means your efforts and strategies are performing well.

🛒 Average order value

This measure tells us how much a customer, on average, spends per order. With the right strategies in place, this number should progressively increase.

💰 Cross sell revenue contribution

This is a measure of the percentage of your total revenue from cross-selling.

💸 ROI

A high ROI is an indication that your cross-selling strategies are working and bringing in more revenue than they cost.

⏳ Customer lifetime value (CLV)

This measures how much money a customer spends at your business over their entire relationship with you. A higher CLV means customers are spending more with you over time, which leads to long-term business growth.

Example: A retail electronics store started suggesting accessories like screen protectors and cases with every phone sale. In three months, their cross-sell rate increased from 12% to 28%, and the average order value went up from ₹5,000 to ₹6,400. This also boosted their sales returns by 30% and made customers happier since they got everything they needed in one visit.

Let’s end with some practical tips on how you can excel at cross-selling using data. See you next week!