Many businesses continuously compete for a top spot in their respective markets, like Amazon in the e-commerce market, an online casino within the entertainment industry, and Apple in mobile manufacturing, just to name a few. Businesses offering a product or service need to master the art of selling, both online and offline. This ranges from the recommendations one sees at checkout to add to their shopping cart on e-commerce websites, all the way to the buy 1 get 1 free sales promotions used by a grocery store.
Terms are used to describe specific selling practices, with up-selling and cross-selling being two of the most commonly used. Continue reading below as we take a closer look at up-selling and cross-selling to explain the difference between them.
What is Up-selling?
Up-selling is offering a customer the opportunity to upgrade an item or service they are about to purchase. When up-selling a product or service, the new product or service being offered is usually of higher value and will ultimately make the company selling the product more money. So, the main advantage from the merchant’s point of view when up-selling is making a higher profit, while the customer receives a higher-end product for the extra money spent. However, up-selling can put customers off buying anything at all if they feel pressured into spending more than they can afford.
Example of Up-Selling
A customer is interested in buying a new television and they have come to the counter wanting to purchase a 43” television. Up-selling in this instance could be one of two things. It could be offering a bigger television, such as a 54” television that presents better value for money, even though it costs more to purchase. Another example of up-selling in this instance would be to present the customer with another 43” television but of a higher-quality brand such as Samsung, which comes with additional Smart TV features. This would obviously be more expensive for the customer; however, the customer might conclude that the more expensive television is more worth purchasing.
What is Cross-selling?
Cross-selling involves offering a customer the opportunity to purchase an item that is in some way related to the item they have already committed to buying. The additional item could be something that compliments the item they are buying, or it could be something that would enhance the experience of using the item they are first purchasing. As the customer is already spending money, it means they may be tempted to spend more on additional products. Cross-selling is beneficial to a company because it means selling more products in one transaction, while also enhancing the customer’s experience. Cross-selling also brings products to the attention of the customer they might not have previously known were available.
Examples of Cross-selling
Cross-selling regularly happens, especially when buying smartphones, for example when purchasing a new Apple iPhone, a customer can be offered a phone case, earphones, and a screen protector. The customer does not necessarily need these additional items, but they are all linked to the product they are buying.
The major difference between up-selling and cross-selling is that the former is aiming to make the customer upgrade the original item, and the latter is aiming to enhance their purchase with add-ons. Cross-selling also involves making the customer aware of the company’s catalogue of products, whereas up-selling adds value to the original purchase without offering additional items.
So, although they both generate more money for the business, they are different. Which method a company will use will depend on the customer in question and the type of product or service being purchased.