Boosting Ecommerce Sales With Upsells & Cross-sells in 2024

“Would you like fries with that?”

If you’ve ever been to a restaurant or drive-thru, you may have heard this phrase. It’s so commonplace that it’s become a popular punchline. But did you know this phrase also accounts for 15-40 per cent of McDonald’s annual revenue? When it comes to sales, the effectiveness of this simple phrase is far from a joke.

Upselling and cross-selling in ecommerce are sales strategies that retailers can use to achieve higher average order value, increase lifetime customer value, raise conversion rates and boost revenue. These techniques can lead to revenue increases of up to 30 per cent, making them highly effective strategies for your ecommerce business. 

In this blog, we’ll discuss the benefits of upselling and cross-selling strategies in ecommerce, identify opportunities, and show you how to upsell and cross-sell products that will keep customers coming back to your dropshipping store.

What is upselling and cross-selling?

Upselling is a sales technique where a retailer encourages customers to upgrade a product, add features to a product, or buy an alternative at a higher price point. 

Upsell techniques involve selling customers a higher-priced item, or a premium version of the product they have already agreed to purchase. For example, when you buy a pair of glasses at Specsavers, you may be asked at checkout if you want standard scratch-resistant lenses, or if you’d like to pay an additional $70 for an UltraClear, smudge-resistant coating. Many retailers that sell high-ticket items (such as furniture, appliances, cars or electronics) also offer extended warranties, protection or other relevant upgrades to give customers peace of mind with their purchase.

Cross-selling is a sales technique where a retailer encourages customers to add related or complementary products to their orders. 

Cross-selling techniques involve offering additional products that a customer might not have intended to purchase, but will enhance the initial product. For example, a customer looking to buy a Giselle mattress is probably also interested in purchasing related items like bedding, bed frames or other bedroom furniture. By offering these complementary products at checkout, customers can make all these purchases in one convenient transaction instead of buying from multiple retailers across multiple sites.

Both upselling and cross-selling seek to enhance individual sales by offering more or better purchasing options. They can happen at any point during the customer journey and can be used separately or in combination.

How does this benefit your ecommerce and dropshipping store?

The primary purpose of implementing cross-selling and upselling strategies in your dropshipping store is to maximise revenue. These strategies increase your profits by encouraging customers to spend more. However, that is not the only benefit to implementing these strategies in ecommerce. By identifying where customer needs aren't being met in their original purchase, you’ll gain a host of other benefits that will enhance the customer experience and bring more loyal customers to your website.

Increase your average order value (AOV)

Customer acquisition is often more expensive than customer retention, which is why strategies that boost total revenue without necessarily attracting new customers can be incredibly valuable to a business. Using cross-selling and upselling techniques, businesses can increase AOV, which, in turn, can increase customer lifetime value (CLTV), meaning each customer will spend more money with your business across their lifetime.

Enhance the customer experience

One of the goals of upselling is to identify the customers’ needs and offer solutions. By providing everything a customer needs in a single sale, you make shopping with your business more convenient, streamlined and flexible. Instead of shopping with several retailers, customers can keep their purchases in one place and get a great deal while doing it, increasing customer satisfaction. It’s also a great way to educate customers on new and existing products they may not have been aware of. For example, Apple gives customers multiple options at checkout when it comes to phone storage. If a customer is unsure how much storage they need, Apple has provided a short instructional video showing them how to view their current storage use and explaining the benefits of a larger capacity. By showing customers how this upgrade benefits them in the long term, customers come away more educated and satisfied with their purchase.  

Foster customer loyalty

With the right upsells and cross-sells, your business can foster customer loyalty and increase the likelihood of multiple purchases. This is best achieved through personalisation, where your upselling recommendations are based on browsing history, past purchases, and segmented targeting. 78 per cent of consumers are likely to make repeat purchases from brands that offer personalisation, while 71 per cent of customers feel frustrated with a lack of personalisation when shopping.

Gain valuable customer insights

Successful upselling and cross-selling leverages customer data to identify potential opportunities, and these campaigns can also produce valuable data. By analysing customer purchases and understanding what customers are purchasing alongside your products, businesses can identify new product opportunities and use cases. 83 per cent of customers are willing to share data to create a more personalised experience, making it easier for businesses to collect first-party data in a convenient and beneficial way.

Offer a competitive advantage

Upselling and cross-selling strategies give ecommerce businesses a chance to show off their unique value propositions. Whether you’re highlighting additional benefits, offering unique promotions or solving specific customer pain points, successful upselling and cross-selling strategies will set your business apart in terms of value.

Reduce cart abandonment

According to research from the Baymard Institute, 70.19 per cent of online shopping carts are abandoned. Common reasons for cart abandonment include unanticipated additional costs (48 per cent), long delivery times (23 per cent), price comparison and lack of purchase intent. Upselling and cross-selling strategies can mitigate cart abandonment rates by removing price barriers, keeping customers on your website, and offering more value with their purchases. Upselling and cross-selling at the checkout page also captures website visitors while they are in a buying mindset. This increases the likelihood that your customer completes their initial purchase, rather than losing interest or comparing products with other retailers.  

Upselling strategies and examples

Promote your best-selling products 

By promoting your best-selling products, you’re directing attention to items that have already been popular among your customers. Customers are more likely to purchase items that are highly regarded and in demand. Best-selling products signal to potential buyers that your brand offers high-quality products that are valued by others, which can strengthen your brand reputation and encourage repeat business. It offers social proof and can be used to induce the fear of missing out (FOMO). Use tags such as “selling fast” to further encourage the FOMO mindset. 

Loyalty programs - Upselling examples

Loyalty programs help to drive retention, but they can also be leveraged for upselling and cross-selling. Here are some ways that loyalty programs can be used in conjunction with upselling.

Targeted promotions

Reward your customers based on the data they gave you when signing up for your loyalty program, including past purchases. For example, if your customer regularly purchases a specific product, you might offer them a discount on that same product or category as a reward for repeat purchases.

Point-based upselling

Many loyalty programs use point-based systems, where customers accumulate points for their purchases. These points can be redeemed for rewards, upgrades or other benefits. You can make your premium products more appealing to loyalty program members by giving them higher point values or allowing program members to upgrade their products using points.

Referral programs

Referral programs are an effective growth hacking strategy that encourages existing customers to refer friends, family, or acquaintances to a business in exchange for incentives or rewards. Using a referral program as part of your upselling strategy will help you generate quality leads and create social proof, while also lowering the barrier for entry for customers to try your premium products. For example, Dropbox’s infamous referral program gives new customers 500MB of additional free storage for every referral, up to 16GB (32 referrals). Additionally, users who sign up for Dropbox Plus can earn up to 32GB. With this strategy, Dropbox was able to achieve 3900 per cent growth within mere months, and the strategy remains in place today.

Free samples

Free samples are an excellent, generally low-cost way for businesses to upsell premium products. Providing free samples allows potential customers to experience your products firsthand, increasing awareness and exposure for your brand. It can demonstrate confidence in the quality of your products, helping to build trust and credibility. It also gives customers a chance to test the quality and functionality of your products, potentially leading to future purchases. For dropshipping businesses, this can take many forms. For furniture or clothing brands, you might offer to send fabric swatches to potential customers. For jewellery suppliers, you could offer a ring sizing kit or chain samples. If you’re worried about free samples eating into your profits, you can even try offering these items at a low cost - although they may not affect your profits individually, they still provide a lot of value for customers and may encourage future purchases.

Limited time offers

When used correctly, discounting strategies can be a powerful tool to boost your average order value. Upselling can be a hard sell for customers on a tight budget if there is a large price gap between products or if the premium product’s benefits are unclear. Offering a discount alleviates some of these concerns and can make customers feel good for getting a bargain. Additionally, a limited-time discount can also induce FOMO, making customers more likely to purchase on impulse. Some ideal times to offer discounts include:

• Seasonal sales: Black Friday, Cyber Monday, End of Financial Year or end-of-season sales are a great way to promote your premium products and drive traffic to your store with discounts.

• Product launches: Promotional discounts can be an effective strategy to generate buzz and incentivise early adoption, as well as encourage customers to keep up to date with your product offerings.

• New subscribers: Offering discounts to first-time customers or new subscribers can be an effective strategy for acquiring new customers and expanding your customer base. 

• Off-peak season: In slow sale periods, a discount on premium products can help stimulate demand and generate revenue during periods of lower activity.

Cross-selling strategies and examples

Bundles

Bundling involves grouping two or more products together and selling them at a discounted price. This incentivises customers to purchase more items in a single transaction, leading to a higher AOV compared to individual product purchases. Bundling can also streamline the shopping experience by presenting customers with pre-selected, complementary product options. This convenience and value-add can lead to higher levels of customer satisfaction. 

The first step to creating the perfect product bundle is knowing your target segment and what they look for and need with your products. You can find this information using data from first-party data collection, customer reviews and feedback, surveys, and purchase history. Bundled products should logically connect and enhance each other. For example, offering a phone charger, stand, and screen protector alongside a new phone. Finally, make the bundle an attractive offering by setting the right price. 

Personalised product recommendations

Personalised product recommendations leverage data about each customer's preferences, browsing history, and purchase behaviour to suggest relevant products. By presenting customers with items that align with their interests and needs, dropshipping businesses can increase the likelihood of conversion as customers are more likely to respond positively to personalised offers. Customers are also more likely to return to a store that consistently provides relevant and valuable product suggestions, leading to repeat purchases and long-term relationships. 

Product recommendations can also help to reduce decision fatigue while shopping, making the experience more efficient and enjoyable for shoppers. Amazon is a perfect example of this method. They offer product recommendations on their homepage, on product pages, during checkout and after checkout, with recommendations ranging from bestsellers to recommendations based on previously viewed items. Each product page also includes ‘Buy it With’ recommendations, which gives consumers two related products that they can add to their carts with a single button. 

Show what other customers bought/viewed

Showing what other customers bought from your store is another way you can leverage social proof to make sales. Customers are more likely to trust the opinions and actions of their peers than promotional messaging from your business. When customers see that others have purchased the same or similar products as them, they feel reassured that they are making a popular choice, which reduces uncertainty and increases confidence in their purchase decision. It can even inspire customers to discover new products they may not have otherwise considered. This encourages users to stay and explore your website, leading to higher levels of engagement. 

Buy X, Get Y

With a ‘Buy X, Get Y’ strategy, customers are encouraged to purchase a specified product or quantity of products (X) to receive a free item, a discount or other incentives (Y). This strategy encourages customers to make larger purchases to qualify for the incentive, leading to increased AOV. Here are some ways to apply this strategy:

• Free shipping: Offer customers free shipping in exchange for spending a certain dollar amount or buying a specific product or category. For example: “Buy one of our featured books and get free shipping on your order”.

• Discounted products: Customers receive a discount on a product or order when they buy a specified product or quantity. For example: “Buy one of our coffee machines and get 20% off accessories”.

• Tiered discounts: Customers receive increasing discounts as they purchase higher quantities of products. For example: "Buy one shirt, get 10% off; buy two shirts, get 20% off; buy three shirts, get 30% off."

• Buy one get one (BOGO): Customers get a discount or free product when they purchase another product at full price. For example: “Buy one bag of coffee beans, get a second one free”.

Loyalty programs - Cross-selling examples

As with upselling, there are many ways that loyalty programs can be leveraged for cross-selling. Here are some examples of cross-selling in conjunction with loyalty programs.

Buy X Get Y

Use ‘Buy X Get Y’ strategies in conjunction with loyalty programs to encourage customers to buy products and unlock rewards. For example: “Buy our featured products and get 2x loyalty points” or “Get 1000 bonus points when you buy our featured products today”. 

Exclusive offers and previews

Offer members-only discounts, product previews, pre-orders or other deals for customers who sign up for your loyalty program. These offers can evoke a sense of exclusivity and privilege in customers, making them feel special and uniquely appreciated and increasing the perceived value of your products. You can use these opportunities to raise engagement, generate buzz and incentivise customers to explore your other product offerings. 

How to measure the success of your strategies

Set clear goals

Before you begin upselling and cross-selling, you need a clear understanding of your business goals. What do you hope to achieve? Are you trying to move stock, make more sales, increase conversions, increase retention rates, or drive traffic to your website? At this stage, you may need to perform market research, develop buyer personas, and map out your customer journey to understand your target audience and their needs before and after buying your products. 

Choose relevant metrics 

Once you have determined your goals, you’ll need to choose the right metrics to measure their success. Here are some common metrics associated with upselling and cross-selling. 

• Revenue: Your total revenue generated. This is easy to measure and can give you a basic idea of whether your upselling or cross-selling strategy is effective.

• Average order value (AOV): The average amount spent by customers in each transaction. This is calculated by dividing your total revenue by the number of orders. Successful upselling and cross-selling should increase your AOV.

• Customer lifetime value (CLTV): The estimated total revenue generated from a single customer throughout your business relationship. This is calculated by multiplying the customer value (average purchase value x frequency rate) by the average customer lifespan (sum of customer lifespans/number of customers). An effective strategy should also increase your CLTV.

• Return on investment (ROI): A calculation of the value of an investment vs the cost. This is calculated by dividing the profit - cost by the total cost of investment. This can indicate whether a strategy is profitable for your company or whether you need to find a more cost-effective solution. 

• Conversion rate: The percentage of customers who complete a desired action, such as making a purchase or accepting an upsell or cross-sell offer. This is calculated by dividing the number of conversions by the total number of visitors or eligible transactions and multiplying by 100. This measures the overall effectiveness of your upselling and cross-selling strategies. 

• Retention rate: The percentage of customers who continue to make purchases from the business over time. It is calculated by identifying the number of new customers (N) and total customers at the start (S) and the end (E) of a specific time frame, then using the formula [E-N/S] x 100. This tells you if your products or offers are continually providing value; if they remain the same or drop, it may indicate that your new strategy excites new customers, but your business is not delivering on post-purchase satisfaction.

You can keep track of these metrics using a variety of analytics tools. You can even use these tools to spy on your competitors and see how your sales compare before and after implementation. 

Listen to your customers

Numbers and figures (your quantitative data) can only get your business so far. You also need qualitative data, which you can collect by listening to your customers. While quantitative data can identify where consumers experience issues or successfully convert, qualitative data will help you understand why. Here are some ways you can collect customer insights to inform your marketing efforts and measure the success of your upselling and cross-selling campaigns:

• Reviews and testimonials: Encourage customers to leave reviews for your products and website. Look for trends in these reviews.

• Social media: Search your brand on social media to see how your customers talk about you in their daily interactions. You can also see what they’re using your products for, which can reveal new cross-selling opportunities. 

• Surveys and polls: Send surveys using email marketing or conduct social media polls to collect customer experiences. You can even provide incentives, such as vouchers or free products, in exchange for responses. Try to keep your questions short and straightforward.

Summary

The potential of upselling and cross-selling strategies to boost your ecommerce business cannot be overstated. By implementing these techniques effectively, you not only boost your revenue streams but also cultivate strong customer relationships, fostering customer loyalty and satisfaction. By continually monitoring and adapting your strategies based on customer feedback and analytics, you can unlock new opportunities for growth and set your online store apart in the competitive landscape. So, next time someone asks, "Would you like fries with that?" remember the power behind the question and the endless possibilities it holds for your business success.