Remember the last time you were asked: ”Do you want fries with that?”
Or “Do you want larger fries?”
Even if you didn’t realize it at the time, you’ve experienced a classic upsell or cross-sell move.
But by now, you’re probably well familiar with the tactic. You recommend either a more expensive but better upgrade; pr a complementary, cheaper product to the order.
And you boost average order value. Easy-peasy.
But it’s 2024. And upsells and cross-sells have been a standard practice for a long time. Did the psychology of upselling wear off?
We’ve delved into some recent data to find out.
🖱️📈 Clicking on each individual chart will take you to its interactive board.
Are upsells as effective as we think?
It’s case-by-case basis and it can vary by industry.
- 44% of SaaS companies say they get 10% extra revenue from upsells and cross-sells
- When upselling, companies report a 20% increase in customer lifetime value
- 72% of sales professionals say upsells and cross-sells are their main revenue driver
- 10-30% of e-commerce average order value is generated through upsells and cross-sells
In practice, here are the results from one recent survey:
Most of respondents claim that more than 20% of all consumers end up purchasing an item they upsell. That’s at least one in every five consumers.
Zoom out a bit and that’s half of all merchants saying that at least 15% of all upsell efforts result in a sale. Pretty good numbers.
There’s also a chunk of sellers (25%) who were more cautious with their percentages, settling for 11-15%.
That’s still a huge chunk of retailers who have seen success with upselling. Not bad.
📈🛒 What is a difference between an upsell and a cross-sell? Although similar and often mixed, there’s a slight difference.
An upsell encourages customers to purchase a more expensive version of a product they are already considering, while a cross-sell suggests they buy complementary or related products.
Upsell could e a customer choosing a basic laptop and you offer them a model with more features and a higher price.
Cross-sell: Your customer is buying a smartphone and you recommend them to also purchase a phone case and screen protector.
This story covers both, sometimes at the same time.
How much additional revenue can you expect from upselling?
Some reports you’ll find online claim up to 30% of additional revenue.
But here’s what retailers say:
Well, it appears that it’s most likely true, but closer to the “middle ground.”
Some sellers claim up to 30% revenue—and more—come from upsells, but the huge majority (almost half) says the strategy amounts for around 6-20% additional income.
A decent return in any case, considering that it doesn’t take much to implement your upselling strategy.
💲The 25% rule when upselling and cross-selling: Don’t overprice your “upsell cart.”
Your customers have a set budget in mind and if your upsell offer goes beyond that budget—your strategy won’t work. When upselling, or cross-selling, offer products that will increase cart value by 25% and not more.
The data above aligns with this.
What strategies and channels work best for upsells and cross-sells?
The magic of upselling is that there’s not just a single way forward.
Some stores use Shopify apps to automate upsells on their website, others build complex email automations, or run specific remarketing ads, among other things.
When it comes to the most effective channels, data tells the story:
It’s obvious that email is the best possible upsell and cross-sell tool, no matter what your average lifetime value is.
It also appears that calls add a layer of personalization and trustworthiness, which is crucial when customers need to spend more. Note that if you’re selling a high-ticket item.
Finally, social media and website upsells work well for lower-ticket items.
And now when it comes to upselling or cross-selling methods:
It appears that building bundles—or suites of products that go with one another and boost value—can help you utilize up and cross-selling.
However, sometimes you can incentivize higher average order value by encouraging customers to buy a more expensive product, or multiple complementary products. And offering extended payments or free shipping in return.
Loyalty programs also work as an upsell for extra perks.
The most intriguing upsell is constructing deals for best-fit customers. You can do this by segmenting your email workflow and offering products based on behavior. Or by leveraging product AI-powered product suggestions, among other things.
And speaking of…
How can AI help you upsell?
AI is slowly creeping into all aspects of marketing. Upsells are no exception.
In fact, what AI brings to the table is exactly what can make upsells even more effective than before:
- It can help suggest products by understanding the behavior of each individual customer, also known as personalization
- It can power your chatbot or customer support, always ready to upsell a product based on customer questions
- Use AI to tailor unique product descriptions and other copy based on what’s already in the cart, for example
These are just some of the things you can already implement with various upsell apps and AI integrations.
The sellers are unanimous:
The majority believes upselling and cross-selling is going to become much easier with the help of artificial intelligence.
What’s interesting is that AI will probably make it super easy to down-sell a product as well.
And here’s what consumers think:
At 18%, upselling and cross-selling doesn’t top the approval list.
However…
Combine it with AI generated product descriptions (49%), content written by AI (43%), and chatbots—which can all be used when you upsell—and you get a full picture.
Automating your upsell process using AI seems to be the future.
🗞️Further reading: It’s not only checkout optimization. AI is changing the marketing landscape everywhere, and we’ve already tackled some of the issues
Check out our Data Story on how users are turning to AI for shopping and search.
Up, Down, Cross… It all sells
All reports and data point out that upsells and cross-sells still remain powerful revenue drivers.
But in 2024, these drivers can now be enhanced by the power of AI personalization.
What can you do? Embrace AI automation and look for effective channels and methods to sell your products or services. There’s many we’ve covered in this Data Story—and probably many that we didn’t.
But in the end, it all boils down to one answer. It’s better to upsell and cross-sell than not.
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