Great Business Ideas: Cross-selling and up-selling

Great Small Business Ideas to Start: Cross-selling and up-selling

Cross-selling means selling additional products to a customer who has already purchased (or signaled their intention to purchase) a product. Cross-selling helps to increase the customer’s reliance on the company and to decrease the likelihood of the customer switching to a competitor.

The idea

An idea that first gained momentum in the 1980s, cross-selling involves firms offering a variety of products and services to customers, then using an integrated selling process to market this range to existing clients. For example, if customers trust a firm to provide them with health insurance, they may also trust it to provide car insurance. The company can take advantage of this trust by offering both services, and targeting existing customers with marketing schemes.

Internet-based travel agent Expedia offers an impressively seamless and effective example of cross-selling. When customers complete an online order for a hotel or plane ticket, they are presented with a webpage offering them the opportunity to purchase car hire. Low- cost European airline easyJet uses cross-selling on its website, for example, by offering travel insurance to customers in the process of purchasing a ticket.

However, smaller businesses and offline companies needn’t be put off; cross-selling does not need to be a technologically advanced process. Simple integrated sales pitches can be just as effective.

For example, having salespeople mention products when taking an order can encourage customers to make multiple purchases. Cross-selling is similar to up-selling, although there are some key differences. Up-selling is where a salesperson attempts to have the consumer purchase more expensive items, upgrades, or other related add-ons in an attempt to make a better sale. Up-selling usually involves marketing more profitable services or products.

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Examples of up-selling are adding side dishes to a food order, selling an extended service contract for an appliance, and selling luxury finishing on a vehicle.

In practice

  • Ensure the profit from the extra items covers the cost of the time spent selling them.
  • Educate sales staff to ensure they have a full understanding of the products they are offering.
  • Plan which products to offer to which customers. As with any sale, integrity and honesty (even straightforward openness) usually work best.
  • Only attempt to sell products that are clearly linked to a specific purchase the customer has made. This ensures the marketing pitch is more appropriate and less opportunistic.