Cross-selling vs. Upselling: What is the Difference?

ByNikolina Cveticanin
March 01,2022

If you’re into sales or run a small-business company, you already know how difficult it might be to keep track of everything. Most small-business companies are using some form of CRM to help them keep on top of things and increase sales, but there are also some tactics that you can start implementing on your own. Cross-selling and upselling are the key strategies that can help grow your revenue by boosting the average order value. We will start this article by explaining what each of these terms actually means before discussing how cross-selling vs. upselling works. 

Cross-selling definition and purpose

Cross-selling is the strategy of offering customers additional items related to their initial purchase. By implementing this strategy, companies encourage customers to spend more money by purchasing additional items that complement their original purchase. In most cases, cross-selling includes products that users would buy anyway. As people sometimes tend to forget those items, it is beneficial for both sides to point them in the right direction. They will get all they need, and you will get your sales boosted.

What is upselling?

Upselling encourages customers to spend more money by purchasing a more expensive or upgraded version of their initial purchase. To apply the upsell, a salesperson needs to suggest an upgrade or persuade a customer to purchase add-ons. Upselling increases the average order value and helps customers get even more satisfied with their purchase. 

The difference between cross-selling and upselling

Now that we know what both of these terms stand for let's summarize their differences. Here is one of the upselling vs. cross-selling examples we have all experienced. When you’re at your local fast food buying a cheeseburger, the salesperson will always offer to add some fries with that. That is a clear example of a cross-sell, and it’s a win-win situation cause who would say no to fries? If they offer to supersize your meal instead, and you agree, you have just become a “victim” of an upsell. 

How to successfully cross-sell and upsell

There are a few things you should know if you wish to master the art of cross-selling and upselling.

Learn all about your product.

The most important thing to do before you start implementing cross-selling and upselling strategies is to get familiar with the product you’re offering. Make sure to look into all of your products and all of their features well to know how those products fit together. By combining two wrong products, you can turn the customer off instead of convincing them to purchase more. 

Get to know your audience.

Try to collect as much information about your customers as you can. Real estate companies use CRM to easily keep track of amenities a property might have to ensure they’re presenting the customer with the best option possible. Collecting demographic and psychographic information about your customers and paying close attention to their feedback will make place for the new cross-selling and upselling opportunities. In the long run, these tactics can help you enhance customer satisfaction, which is crucial for running any successful business.

Keep things simple.

Offering too many products might be overwhelming for the customers, and it can create unnecessary confusion. You should always strive to build a long-term relationship with the customers and target a few items that would provide a clear benefit for them.

Offer loyalty perks.

Based on your business model, you should try to establish a loyalty scheme for regular customers. Customers who buy more should enjoy some loyalty offerings and get rewarded for their commitment to your store.

Do follow-ups.

Although there is a clear distinction between upselling vs. cross-selling, you can find the opportunity to implement both of these selling techniques after the customer has already made their purchase. You can achieve this by doing a follow-up after each successful sale to ensure they are happy with the purchase, and if they are, you can easily suggest appropriate upsell or cross-sell products.

Cross-selling and upselling in eCommerce

eCommerce is probably the best environment for cross-selling and upselling. According to eCommerce stats, online retail shops generated 14.34 billion visits in March 2020. These numbers show how the shopping trends have changed over the years. Learning how to make the best out of the new trends is vital, as there are multiple benefits of cross-selling and upselling to consider.

eCommerce gives you a great opportunity for cross-selling and upselling because you have access to customer data and their shopping history, which can help you come up with the targeted offers. It’s also great as you can insert different cross-sell and upsell products throughout the shopping process or in the post-purchase confirmation email.

FAQ
What is an example of cross-selling?

There are many examples of cross-selling. We have all been experiencing some on a daily basis without even being aware. If you’re buying a new smartphone and you have been offered some fancy earphones, it is a clear case of a cross-sell. Cross-selling strategies may vary depending on the type of product someone is trying to sell, but the overall goal is to satisfy both the buyer and the seller. 

What companies use cross-selling?

Cross-selling is a strategy every serious company uses to boost their revenue and achieve their business goals. McDonald’s does it with every order by offering fries or juice to complement your initial order. IKEA does it by selling their pieces as collections, making it easier for the customers to furnish living spaces quicker. Apple does it with every sale by suggesting a few additional accessories to improve your experience with the product. 

How does cross-selling of products help in customer retention?

Although there are differences between cross-selling vs. upselling, both of these tactics have the same goal, to help increase revenue and boost customer retention. Various studies have shown that it is much easier and cheaper to retain an existing customer, as getting a new one can cost five times as much. That is why it’s essential to nurture your existing customers and present them with well-thought-out cross-selling opportunities. Based on the latest CRM statistics, by using customer relationship management tools, customer retention and satisfaction rates increase by 47%, which is an impressive figure. Cross-selling does a similar task: keeping your customers interested while buying more products than they had initially anticipated.

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By Milica Milenkovic · March 01,2022
To run a successful business and transform leads into customers, you’ll really need to be taking advantage of your sales pipeline. So what is a sales pipeline? In short, this is a visual snapshot of every stage in the sales process that tells you at a glance whether you’re going to reach your goals. If used properly, it can have a positive impact on your growth. Our guide dives into more details, outlining the different stages, benefits, and ways to create and manage a pipeline.  A Rundown The sales process involves many different stages, including identifying potential customers, contacting them, pitching the product or service, negotiating, and, of course, closing. The ultimate goal is to gain and retain loyal customers. Having a visual representation of this journey can help you make revenue forecasts, get insight into buyers’ trends, and keep track of sales prospects. So what does a pipeline mean in sales? Simply put, this is a breakdown of the whole sales process into smaller and trackable pieces.  Pipeline analysis enables you to track the evolution of sales opportunities into shopping orders as they move through several stages. The entire process is backed by recording and storing relevant data and activities. The pipeline helps you gain better insight into your deals and shows you the possible trajectory of your business. If you’re running a small business, using reliable CRM software that can generate a fully customizable pipeline can boost your profits.  The Shapes of Success: Pipeline and Funnel Many people make the mistake of confusing a sales pipeline with a funnel. But these are two entirely different things. While the sales pipeline is a representation of the actual sales process or closing the deal, the sales funnel is all about leads and the process they undergo to become regular customers. In other words, the sales pipeline is brand-focused and outlines steps that your marketing and sales team need to go through in order to gain and retain customers. On the other hand, a funnel is customer-focused and offers a representation of the buyers’ journey, starting from brand awareness to buying a product and staying with the company.  This clear distinction also expands on our original question: what is a sales pipeline? In short, the pipeline showcases the seller’s actions throughout the sales process, whereas the funnel tells you about the percentage of leads that advanced through each stage of the pipeline.  Benefits of Sales Pipeline Having deciphered the sales pipeline, it’s time to look at some of the perks of using this strategic tool.  Insight into deals: For starters, using a pipeline to track your sales process gives you insight into your teams’ progress and helps you identify areas for improvement. A sales pipeline, by definition, keeps track of your business’s financial metrics, so you’ll know which deals you’re most likely to close and which processes are ineffective and need to be removed. Sales pipeline analysis quickly exposes the weaknesses with certain deals and helps you plot a course of action to boost sales.  Measure team performance: Selling a product or a service requires teamwork, and if one link in the chain performs poorly, the whole process will suffer. Optimizing the sales pipeline allows you to monitor sales representatives and if they’re hitting their targets. Thanks to sales pipeline reporting, you’ll be able to identify the weak links and improve the number of leads transitioning into sales. Predict profits: Crunching the data tells you where each sales representative stands in the sales process and how close they are to inking the deal. By seeing the number and percentage of deals that are likely to be closed and their value, you can easily make accurate forecasts regarding revenue. Help increase sales and profit: Building a sales pipeline won’t only assist you with monitoring and organizing your sales team. It’s also a useful tool for making projections by identifying the number of deals that your business needs to close in order to meet the targets and increase profits. Moreover, it helps you zero in on the steps that speed up the deal-making process and thus increase profits. Step by Step: Pipeline Stages Just like every industry and every individual business, sales pipelines are unique. Instead of simply copying one of the many templates, try to invest some time and effort into building pipelines with well-defined sales pipeline stages and adjusting them to fit your company’s needs. Consider employing CRM software to generate a pipeline, as statistics show that using it increases customer retention and satisfaction rates by 47%. When setting up your own pipeline management system, think about sales targets, prospects, and the number of steps in the process. Make sure to have somewhere between five to eight stages that hinge on identifying prospects, evaluating their needs, convincing them to buy your product, closing the deal, and retaining them as customers through regular follow-ups.  Remember to tailor the different stages to the relevant industry. For instance, real estate’s customer relationship management strategy must include a house-viewing stage. In another sales pipeline example, a car salesman should probably include a test drive stage. Lead generation. Prospecting new leads interested in your product is the very start of every sales process. Raising brand awareness and reaching out to potential customers can come in different shapes. Some companies might use downloadable content, phone, emails, and ads on social networks. Others might go on the hunt for cold leads, and some might even hire lead generation companies to do the leg work. Whatever your chosen method, make sure to consolidate all new leads and follow them throughout the process.  Lead qualification: To define a sales pipeline strategy, the next step should focus on identifying the potential buyers by researching their shopping preferences. Skipping this vital step can lead to sales reps losing a lot of time on cold leads. Sorting them from hot ones might be a game-changer and lead to successful closures.From the moment they enter the sales pipeline, contacts need to be researched. Conducting a phone survey or another questionnaire can help you determine whether the lead has the budget to afford the product if they need it and whether they’re ready to purchase it. If you’re wondering, what is a healthy sales pipeline, the answer is simple: it’s the one with hot leads. If the answer to the aforementioned questions is “no”, the lead should go down the drain; otherwise, it might clog your pipeline. Initiate contact: Those who make it through the sieve should immediately be contacted by sales reps. Leads that reach these stages of the sales process are interested in closing a deal with your company. That’s why you can safely ask them if they are eager to buy your product and present all the perks of purchasing it. Make sure to engage with the lead by sending a series of emails that educate them about the product. Schedule meeting or demo: What is a sales pipeline without an actual pitch? This is the part where you make your proposal. It can be done in person, via phone, e-mail, or even social media. Make sure to track and record conversations because searching through old emails can be time-consuming. Also, be well-prepared for meetings and demos because these brief moments can transform prospects into clients. Negotiation: If the lead expresses interest in buying your product or service, it’s time to start more strategic discussions. This usually involves the unveiling of the price and the terms and conditions of the contract. If you’re wondering how to get to this stage and what is the best process for a sales pipeline, always remember to align sales and marketing. This is a great strategy for getting to the negotiations stage. Closing the deal: From the very moment a lead enters the sales pipeline, the only desirable outcome is closing the deal. Once negotiations are completed, you can sign the contract, and you officially have a new customer. If you never make it to this stage, you were either trying to sell to the wrong person, or the sales rep failed to create/build value. So what do you do if a deal is lost in the sales pipeline? In these situations, it’s important to keep the conversation going and reconnect with lost prospects. Of course, the customers you gained shouldn’t be neglected either. Provide them with a good service during the onboarding process, inform them about upgrades and fresh promotions, ask them for referrals, and make sure they’re satisfied with the product.   Sales Pipeline Management Understanding the pulse of the industry and adequately managing your sales pipeline is crucial for running a company in today’s digital world. Having access to a wealth of information and analyzing it enables you to use the numbers for strategic goals and boosting sales. That’s why we’ve answered the ultimate question: what is a sales pipeline, and how do you use it? Now it’s time to focus more closely on each stage of the process.  With careful sales pipeline management, you’ll be able to track and then evaluate all stages, identify bottlenecks, better understand the weaknesses and strengths of your deals, and thus predict and prepare for potential plunges or sudden growth.  The pipeline management process is made possible by six key characteristics: metrics, maintenance, optimization, sales team management, sales forecasting, and tool integration.  So, what is a good sales pipeline size? The truth is size doesn’t matter. You can add as many stages as you think are needed, but what matters the most is good pipeline management. So let’s dive deeper and explain the details.  Sales pipeline metrics: Analyzing the sales process wouldn’t be possible without a wide variety of metrics to show you where your business stands. Pay close attention to the number of deals in your sales pipeline, their average size, the average percentage of closed deals (deal close rate), and the average lifetime of a deal before it’s closed (sales velocity). A common question entrepreneurs ask is: what is a good conversion rate for my sales pipeline? In the beginning, the percentage of opportunities that turn into leads should be around 50% to 60%. However, as time goes by and you get a better insight into the flaws and merits of your sales process, a pipeline report should show a conversion rate of around 80% to 90%. Make sure to track the data on a weekly basis so that you can predict future sales trends. Unhealthy measurements monitoring: Pipeline health spot-checks can show you bottlenecks, such as dead leads or too many unresolved deals that cause stagnation. Improving these metrics is crucial for boosting your revenue. So, what is a quota in the sales pipeline competition? This is an essential question for every entrepreneur. Keeping an eye on target sales your reps have for a certain period can help you understand them better. According to MarketingProfs research, 67% of sales representatives do not meet their individual quotas. That’s why regularly checking up on your sales pipeline report and keeping it organized is crucial. These are the steps for unclogging your pipeline: - Pinpoint sluggish leads - Decide what to do with them - Get in touch and reevaluate their interest Update your sales pipeline stages: When trying to figure out how to build a sales pipeline, the first thing to consider is your individual business preferences. But over time, some of the steps that you thought were initially important may become inconsequential. Some cycles might become too lengthy and time-consuming, while some can be too cumbersome. Consider removing them because pipelines that are too long risk having prospects fall through the cracks or change their mind. The sales cycle length is an important factor, so keep it short and effective but do not cut out the critical stages to achieve that. While building a sales pipeline, keep in mind that including a follow-up stage is a must and that a precise prospecting stage means more closed deals. After all, what is a pipeline management strategy without adding extra stages? Keep an eye on new trends in the market and adapt to them accordingly by implementing additional steps in the sales process. Coach your sales team: By assisting the sales representatives and coaching them on pipeline management, you’ll empower them to get more control over their targets. Working with your team will help them better understand the amount of time that leads need to spend at each stage and use it to their own advantage. Another thing to pay attention to is teaching the sales reps how to clean pipelines effectively. Being a good pipelines manager also means knowing the answer to the question: what is a pipeline report? Instruct your sales reps to monitor sales pipeline metrics and generate reports on the gathered data to get the most from the numbers.  Bottom Line: Being a Good Plumber Knowing how to be a good plumber to your sales pipeline, how to unclog the bottlenecks, and regularly clean and maintain it is a skill worth mastering. A healthy sales pipeline is the beating heart of a business. It can show you and your team members where your company stands, how many deals are closed, how many prospects turned into customers, where the process is stagnating, and which elements need to be removed.  If you can answer the question: what is a pipeline in business, you’re probably all too familiar with the difference between closed deals and cold leads. The visual snapshot shows the trajectory of your prospects on their buying journey and can provide you with helpful insight into the metrics and boost your sales.
By Danica Djokic · March 01,2022

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