Upsell / Cross Sell
Rather than relying on a sales or services representative to decide what and whether to cross-sell and which item to offer, modern cross-selling utilizes Predictive Analytical tools to study the customer's past behaviour, correlate this information with similar customers, and then identify potential service product opportunities at each contact with the customer.
Selling to existing customers is the most cost-effective way to achieve sustainable growth.
Cross Sell involves the sales of additional items related (or sometimes unrelated) to a previously purchased item, while Upsell involves the increase of order volume either by the sales of more units of the same purchased item, or the upgrading into a more expensive version of the purchased item. Within the context of customer relationship management, increasing penetration of products and services with customers has become a valuable strategy for customer development, for several reasons.
- There is a belief that it costs five times less to serve an existing customer than to acquire a new one.
- Reported response rates from Cross Sell and Upsell efforts are 2 to 5 times greater than cold sales.
- Cross Sell leads to broader scope for the customer relationship, increasing not only share of wallet but also the firm's "share of mind" with the customer.
- By broadening the scope of relationship, Cross Sell increases the actual and psychological costs of switching, improving retention.
- As the customer buys more products and services from you and broadens the relationship, the organization learns more about the customer's needs and preferences, improving your ability to target marketing efforts.
In practice, large businesses usually combine Upselling and Cross-Selling techniques to enhance the value that the client or clients get from the organization in addition to maximizing the profit that the business gets from the client.
When talking of Upsell and Cross Sell it's important to understand that Predictive Analytics is not about absolutes; it doesn't guarantee an outcome. Rather, it's about probabilities. For example, there is a 76% chance that this person will click on this display ad or that this customer will buy this product versus another. Or there is a 63% chance that this customer will buy at a certain price. It's all about Propensity to buy or not. Targeting your efforts so you can maximize your Marketing spend.