The introduction of eCommerce has made a major impact on how people around the world shop. Since digital shoppers often spend more time with greater frequency in online shopping, smart selling strategies such as product recommendations are a great idea to boost sales, profits, and branding. Nearly 91% of consumers say they are more likely to purchase from brands that provide offers and recommendations that are relevant to them.
Product recommendations account for nearly 10-30% of the revenue of eCommerce websites. Nearly $87.5 billion in sales are influenced by personalised offers, resulting in consumers making a purchase they otherwise did not intend to make. Upselling and cross selling are excellent product recommendation strategies that can increase the amount and value of products sold, and encourage repeat customers.
Initially, the techniques of upselling and cross selling were developed for offline stores, to be used by sales personnel. However, with the advancements of eCommerce platforms, upselling and cross selling can easily be adapted and applied to an online framework. Upselling and Cross Selling have immense success potential since they target customers that already have a purchase intent, winning half the battle already.
What is Upselling?
The strategy of upselling involves recommending a more expensive and upgraded version of whatever product the customer is considering purchasing. For example, if the customer expresses interest in a $20 shirt, you can recommend a $30 shirt in a similar shade and fit. The purpose of upselling is to increase the value of the sale, by replacing the original product with a more expensive alternative.
What is Cross Selling?
The strategy of cross selling is when you recommend products related to the initial product the customer expressed interest in. In contrast to upselling, cross selling focuses on selling extra products, without replacing the initial item. For example, if the customer has chosen a $20 shirt, you can recommend matching pants, and/or shoes. The goal is to increase the sale value by increasing the number of items sold.
Cross selling can be combined with upselling, by first carrying out upselling for the original product, then engaging in cross selling for additional items.
Retail Vs eCommerce Upselling and Cross Selling
The basic premise of upselling and cross selling remains the same in retail and online modes. However, there are considerable differences in its execution. While a retail shop depends heavily on the knowledge, expertise and skills of sales personnel, an eCommerce site does not require sales persons. In contrast, technology does most of the work in eCommerce upselling and cross selling.
With modern eCommerce platforms, the software has inbuilt functionalities to support product recommendation. All that is required is an initial setup phase, where all the products are linked to corresponding product recommendations. The remainder is taken over by the eCommerce platform, in recognising customers, identifying their selected products, and suggesting suitable recommendations. As a result, eCommerce product recommendations are more cost effective in the long-run. Based on the performance, the recommendations can be adjusted. There is no long running dependency on capable sales personnel to carry out personalised product recommendations.
Benefits of Upselling and Cross Selling on eCommerce
Upselling and cross selling on eCommerce platforms has numerous benefits. Due to these benefits, it is worthwhile to invest the time and money in setting up a capable eCommerce platform that can recommend products. Here are some of the top benefits:
Increase Average Order Value
Product recommendations are a great way to increase the average order value of a customer. Depending on the quality of the recommendations and their suitability to the originally intended product, you can easily encourage the customer to purchase more expensive or multiple products. This will increase the overall value of the order. When carried out regularly, the average order value will increase.
There may be products that while being excellent, are not as well known amongst customers. Using product recommendations is an unobtrusive manner of promoting products. Since you are connecting new products with those in which the customer has already expressed interest, the recommendations are more likely to pique interest. These new products can then gain their own traction with customer reviews, and ratings. For example, if a customer expresses interest in a dress, you can discreetly promote handbags from a new brand.
Increase Customer Engagement
Easily and effectively tracking customer relations and past purchases is useful tool of selling on eCommerce platforms. The history and successes of upselling and cross selling can help you identify additional areas of interest for the customer. This data when collated can enable you to formulate campaigns and generate new leads. Based on past interests you can customise deals and promotions. For example, if your customer expressed interest in a dress and purchased a cross selling promoted handbag, in the future you can suggest more handbags to that particular customer.
Enhance Customer Loyalty
Happy customers are loyal customers. If someone searching on your site for a particular product finds a better version (upselling) and suitable accessories (cross selling), they are likely to return. Many times, customers might not know about the additional products you are recommending. With good quality recommendations you gain their trust, and they are likely to return again to your eCommerce site for more purchases and accompanying recommendations. A satisfied customer is also more likely to recommend your site to others.
Increase Overall Revenue
The end goal of any business is to gain revenue. Upselling and cross selling are strategies that have a proven success rate in increasing overall revenue. Whether it is a relatively small eCommerce site new in the market or industry giants such as Amazon and eBay, upselling and cross selling are effective. By increasing the value of each individual order, the overall revenue for the business increases. Implementing upselling and cross selling is affordable for eCommerce platforms, and so there is a significant increase in sales revenue, with minimal setup costs.
How to Maximise Upselling and Cross Selling
There is immense potential of upselling and cross selling in boosting sales and revenue. To maximise its power, keep in mind the following:
Have a fast website
The speed of your website and its overall performance have a major impact on the success of any selling strategies you plan to implement, including upselling and cross selling. Nearly 57% of online shoppers are likely to abandon the website entirely after having to wait for 3 seconds, and 80% will not return. Even after shopping on your eCommerce site, if the checkout process is slow, cumbersome or complicated, 87% of customers are likely to abandon their shopping cart. Check the loading speeds and performance of your eCommerce platform so that a slow site does not discourage customers before you can upsell or cross sell products.
Only recommend good quality items
Once you lose the trust of a customer, it is difficult to regain it. Bad word of mouth through customers can also negatively affect your eCommerce site. Therefore, it is vital to make sure that you are using only the best products in the recommendations, especially for upselling where the costs are higher. Make sure that the recommended projects have suitable visuals as visuals have a bigger impact on customers than regular text. Try to have multiple images for each product, as this will help customers in visualisation.
Keep the suggestions within budget
Most, if not all customers will have some type of budget for their online shopping. When they are interested in buying a specific product, they would have an appropriate budget. Since your goal is to increase that spending amount, there will be a higher chance of success if you recommend affordable items. For upselling, choose products that are a maximum of 25% higher than the original product. Cross selling products should be cheaper than the main product selected.
Limit the number of recommendations
It might be tempting to add any and all applicable products to the recommendations. However, keep product recommendations to a minimum, with a maximum of 4-6 suggestions for any given product. Too many suggestions and options can be confusing and discouraging for customers. An overwhelming number of product recommendations can even result in the customer leaving without completing the initial purchase.
Regularly update the recommendations
Depending upon the product, category and frequency of arrival of fresh stock, it is smart to regularly update product recommendations. Once you have already deployed a set of product recommendations, study the results over a few weeks to judge the performance. Based on success of the current suggestions and the arrival of new products, regularly switch up the recommendations. This ensures that upselling and cross selling always gives customers the latest and best options, increasing the chance of conversion.
Upselling and Cross Selling Strategies for eCommerce
Combining a strategy with the basic premise of upselling and cross selling is a great way to enhance your chances of success. There are a variety of strategies you can use for upselling and cross selling on an eCommerce site, here are some of the top choices:
- Bundling: A common trend for online shopping is to offer bundles of products together at a discounted price. This is an attractive option for customers as they get multiple products that are all compatible without the efforts of checking each product individually. For example, if you are selling a smartphone, you can offer a bundle of a screen protector, phone cover, extra wires, ear phones etc.
- Promote best sellers: Include a few of your best sellers and most highly reviewed products in recommendations. For 4 out of every 5 online shoppers, online reviews have influenced their purchases. While you may already have customers directly searching for the bestseller product, including it in the recommended for a lesser known item can boost the visibility and sale of the new product. For example, suggest a best-selling jewellery set for a relatively new blouse.
- Offer special services: Based on the product category, you can offer additional services such as an extended warranty, free membership, protection plans, training or installation. These add-ons can be either for free or at a small cost. While such add-ons may seem small, they help increase the overall value of the purchase for the customer, and enhance customer satisfaction.
- Subscription purchases: If the item being purchased is a regular use product and likely to run out, you can offer a subscription package for auto-renewal of the purchase at a discount. For example, subscription sale to a particular shampoo or shaving cream.
- Free Shipping: Everyone loves free or discounted shipping, and that is a benefit you can offer at your discretion. Around 80% of consumers have confirmed that free shipping is a major attraction for making purchases on a particular eCommerce site. Use free shipping as an attraction by specifying a minimum order amount to qualify for it. If a customer is already planning a purchase and realises there is free shipping upon spending a little bit more, they are more likely to spend.
- Direct Comparisons: For upselling, a useful tool is to have direct side-by-side comparisons of shortlisted products. The initial product can be easily compared with the recommended more expensive versions with the differences visible for the customers in a glance. Seeing the major differentiating points between the initial product and upselling suggestions is more likely to convince customers to purchase the expensive models.
- Experiment with Discounts: Try out an experiment with a variety of different discount formats, to encourage customers to buy multiple items. Approximately 57% of online shoppers have said that discounts have motivated their purchases on an eCommerce site. For example, buy one get one for free, buy one get one for a discount, holiday offers, loyalty program offers, membership offers. There is immense potential to customise the offers as per the situation, products, niche and customer.
Giving customers personalised recommendations can seem like a daunting task. Afterall, with the innumerable customers you expect to receive, how would it be possible to personalise each recommendation? The good news is that by using advanced software and artificial intelligence, you can practically and easily offer customers a personalised shopping experience, with personalised recommendations.
Apart from the direct benefits, personalisation of recommendations kicks off an excellent cycle. It leads to greater engagement, a better customer experience overall, giving access to more data, helping you gain more insights into the customer. These insights enable you to refine and improve further personalisation.
Around 84% of online shoppers have said that being treated individually in a personalised manner is key for them wanting to shop on an eCommerce site. Nearly 80% of customers believe that the overall experience that an eCommerce company provides is as important as the products and services. Personalised recommendations, upselling, and cross selling all contribute towards an overall better experience for customers, encouraging them to return and recommend the site to others.
How to offer personalised recommendations?
Personalisation can be categorised as reactive, responsive and predictive, with predictive having the highest personalisation maturity and revenue potential from a customer experience perspective. Reactive personalisation involves single message mailing, field insertion, and segmentation while responsive involves behavioural recommendations. Predictive personalisation includes omnichannel optimisation and predictive personalisation. The ideal personalisation is a healthy mix of all the different categories; reactive, responsive and predictive.
Magento Commerce, for example, supports multiple types of automated recommendations, through the Adobe Sensei artificial intelligence tool.
- Item-Based: The item-based recommendations are straightforward. They analyse the products that a customer has viewed consecutively, the product they viewed and then purchased, and the products they purchased consecutively. The viewing and purchasing patten is examined, and automatic recommendations are given. For example, if a customer frequently buys jewellery, similar types of jewellery could be recommended.
- Shopper-Based: The shopper-based recommendations study the overall history of the specific shopper, including searches, views, and purchases. Buyer habits are considered and products are recommended. For example, if the shopper tends to purchase heavily discounted items, similar discounted items would be suggested.
- Content Similarity-Based: The content similarity-based recommendations identify similar products that serve a similar purpose. For example, if a shopper is looking for a laptop sleeve, a laptop carrying case or bag can be recommended.
Contextual Popularity-Based: Other recommendations are based on the viewing and shopping behaviour of the customer. However, contextual popularity-based recommendations consider the purchasing behaviour of other visitors to the eCommerce site. Products that are trending, the most viewed, most added to cart, and most purchased are recommended. This is a great way to offer dynamic product recommendations as it capitalises on products that are already well-like by other customers.
Implementing Upselling and Cross Selling in eCommerce
The process of setting up a product recommendation system for upselling and cross selling on your eCommerce platform is straightforward. However, you might need the aid of developers to put the system in place. Based on the platform, for example, Magento, BigCommerce, or Shopify, an app, plugin or code may need to be installed. For personalised recommendations, you would need to have the required AI tools set up.
Once the technical aspect is ready to go, for manually setting up the product recommendations, you need to identify and list out all the recommended products for upselling and cross selling. If there are a vast number of products in your catalogue and finding recommendations for each individual item seems daunting, choose suggestions for top selling items. Another option is to identify common recommendations for certain items, for example, similar accessories for different sizes of pants.
Continue with the upselling and cross selling recommendations for few weeks and analyse the performance. Guided by the results, make suitable changes in the recommended products and repeat. While the technical changes and installation take place once, the recommendations can be changed as often as required, and should ideally be changed every month at the least.
Upselling and cross selling are time-tested methods of increasing sales. Once restricted to offline shops, with modern eCommerce platforms, it is now easy to support upselling and cross selling online. To garner the most benefits from these selling techniques, it is important to choose suitable products to recommend to customers. Since the customer already has an interest in purchasing a product, they are more likely to purchase an upgraded version of the item, and/or accessories for the item.
Take the aid of a developer to setup cross selling and up selling functionalities for your eCommerce website. An expert can help bring to life your vision for the product recommendations, and supply plenty of inspiration if you need it. A visually appealing, fast and dynamic product recommendation feature is the best way to support your upselling and cross selling efforts.