Upselling and cross-selling

What it means

Upselling and cross-selling are two related sales techniques aimed at existing customers. Upselling means offering a customer a higher, better-equipped or larger version of what they already buy, such as a higher service tier. Cross-selling means offering a complementary product or service related to the original purchase, for example payroll processing alongside bookkeeping.

Both rest on the fact that selling to an existing customer is much cheaper than winning a new one. The customer already knows and trusts the company. Successful upselling and cross-selling raise average order value and customer lifetime value and, when done well, satisfaction too, because the customer gets a solution that better fits their needs.

The key is relevance. Upselling should not mean pushing a more expensive product the customer does not need, but offering something of real benefit. Poorly designed selling leads to dissatisfaction, returns or the customer leaving, that is higher churn.

How it works in practice

In online stores, cross-selling takes the form of customers also bought recommendations, add-ons in the basket or discounted product bundles, and upselling the offer of a higher model on the product page. Effectiveness is measured by the recommendations' conversion rate and the change in average order value.

In services such as accounting, the basis is knowing the client well in the CRM. When a company grows, hires staff or enters foreign markets, its needs change. A timely offer of payroll, tax advice or bank reporting is useful to the client and profitable for the provider.

The best moment to offer is when the customer is dealing with a problem the add-on will solve, or when they are satisfied. Tracking satisfaction, for example through NPS, and feedback helps. A happy customer accepts recommendations more readily than one currently dealing with a complaint.

What to watch out for

Beware of aggressive practices. Pre-ticked add-ons in the basket, hidden fees or misleading version comparisons can be unfair commercial practices when selling to consumers. The customer must always see clearly what they are ordering and at what price, and must actively choose any add-on.

Incentivising salespeople solely on add-on sales volume can lead to selling things customers do not need. It lifts revenue in the short term and erodes trust in the long term. We recommend tracking retention and return rates too, not just revenue from upselling and cross-selling.