Cross-Selling vs Upselling: What's the Difference? (+ Examples)

There's one universal truth about all businesses: the day you stop selling is the day everything else starts falling apart. Without revenue, you struggle with covering operating costs, eventually accumulating debt. And if the situation persists for long enough, you eventually have no choice but to cut your losses and close up shop.

Since bringing in revenue comes with such high stakes, it's no wonder 85% of companies state lead generation as their most important goal. And while acquiring new customers is crucial for generating more revenue, there's an easier way to make more sales - cross-selling and upselling to your existing customer base.

What is cross-selling?

Cross-selling is a sales technique that consists of offering customers complementary products or services that the customer didn't initially intend to buy. For example, imagine going to a physical store to buy a laptop. You come up to the salesperson, they have it in stock, they bring it out for you.

However, the salesperson also suggests a bluetooth mouse, some headphones, and an extra keyboard. Should you walk out of that store with anything more than the laptop you came in for, the salesperson did a great job at cross-selling.

What is upselling?

Upselling is a sales technique that involves persuading customers into purchasing a higher-priced version of the product or service they already intended to buy. For example, imagine buying a laptop again, except this time the salesperson isn't offering you additional products. Instead, they show you the laptop you came in for, but also inform you of a similar one with more RAM and a better graphic chip.

Naturally, this second laptop also comes at a higher price point, but the salesperson convinced you that it's the better choice based on its features and performance capabilities. Should you end up buying the second, more advanced option, the upsell was successful.

What's the difference between cross-selling and upselling?

Both cross-selling and upselling are sales strategies ultimately aimed at increasing the value of a customer's purchase. That said, there are 4 key differences between them:

• Approach: Cross-selling is all about offering additional, related products or services. Upselling, on the other hand, is offering an upgraded, usually higher-priced version of the same product or service.

• Goal: The purpose of cross-selling is to increase the total number of purchased items, while the goal of upselling is to increase transaction value.

• Customer focus: Both cross-selling and upselling focus on enhancing the customer experience. However, cross-selling puts focus on additional solutions and options, while upselling focuses on higher-quality features.

• Effect: Ultimately, cross-selling is aimed at increasing sales volume, while upselling can lead to higher profit margins by boosting revenue per transaction.

Keep in mind that cross-selling and upselling are not mutually exclusive. In fact, there are many businesses who use both of these sales strategies at the same time for maximum benefits.

The benefits of cross-selling and upselling

The biggest benefit of cross-selling and upselling is the fact that your success rate is 60-70%, as opposed to the 5-20% when trying to sell to new customers. And if you're not sure whether you should make cross-selling and upselling a part of your sales strategy, here are some other advantages these sales techniques bring. 

More revenue

A revenue boost can't be bad for business, right? Both cross-selling and upselling are great ways to increase your average transaction value by encouraging customers to spend more or buy additional items. As a result, you end up with more income and improved financial performance.

Increased customer lifetime value

By successfully upselling and cross-selling, you're increasing the lifetime value of each customer. The logic here is simple - larger or extra purchases result in better long-term profitability.

Improved customer satisfaction

While upselling and cross-selling, what you're essentially doing is providing your customers with additional options, products or services. If you do it correctly and keep your suggestions relevant and beneficial, you'll end up meeting their needs more effectively, resulting in higher customer satisfaction levels.

Inventory optimization

If you notice some of your products having a lower sales volume than others, cross-selling is the way to go. By strategically promoting or bundling these products, you can minimize waste and optimize your inventory.

Reduced costs

Cross-selling and upselling to existing customers is generally more effective than acquiring new ones. This is because capitalizing on your customer base reduces marketing costs while eliminating acquisition costs altogether.

How to successfully cross-sell and upsell

Your go-to online store, favorite software company, and your local fast food restaurant have one thing in common: they all try to cross-sell and upsell to you constantly. Looking for a pair of boots? Here's a superior version of the ones you're currently looking at.

Want to remove the watermark from the image? Upgrade to a higher plan and you can, plus additional features. Craving a hamburger? How about some fries and a drink to go with that?

Even if you're fully aware of the fact they're trying to increase your order value, your final purchase decision depends on two factors: how tempting the offer is and how relevant the suggestions are. So, to successfully cross-sell and upsell your products and services, consider the following strategies. 

1. Understand your customers

To identify relevant cross-selling and upselling opportunities, you first need to figure out what provides value to your current customers. That's why you need to start by understanding your customers' preferences, pain points, and purchase history.

2. Personalize your offer

Once you know who your customers are, it's time to tailor your recommendations. You can do this by using analytics and segmenting your audience to create personalized offers. Keep in mind that, the more your offer resonates with your customers, the higher the likelihood of successful cross-selling or upselling.

3. Choose the right time (and place)

By offering relevant deals at the right time, you can significantly improve customer satisfaction, drive additional sales, and encourage long-term customer loyalty. Understanding the customer journey is key for cross-selling and upselling because it allows you to focus on:

• The relevance of your offer, which is determined by context and timing. When presenting an upsell, make sure it aligns with their current needs and purchase intent. That way, they're more likely to see the value and consider it as a beneficial addition to their purchase.

• Not distracting your customer during decision-making moments. Interrupting your customer's thought process with a cross-sell or upsell results in confusion, frustration, and ultimately a negative perception of your brand.

• Fostering a comfortable environment for customers to consider your offer. To effectively cross-sell or upsell, try giving relevant suggestions during the checkout process or when the customer is considering related products. However, avoid being pushy if you don't want to create discomfort and resistance to your offer.

4. Focus on the benefits

Whether you're selling products or services, you need to convince the customer that their purchase will bring added value. With upselling and cross selling, it's all about highlighting unique advantages. In other words, justify the relevance of the complementary products or the price of the more expensive version of the main product.

5. Consider bundling

Product or service bundles encourage customers to buy items they wouldn't consider buying individually. Use bundling in your cross-selling strategy by creating product or service packages that offer customers convenience or savings.

For example, if you were selling hair products, you could sell shampoo, conditioner, and a hair mask both individually and in a bundle. Naturally, to encourage customers to buy all three, the price of the bundle would be lower than the combined costs of all three individual products.

6. Provide social proof

Since 88% of people trust reviews more than advertising, it's easy to see why social proof plays a huge role in any cross-sell or upsell. Include testimonials, reviews or success stories to make customers more likely to consider your offer.

7. Offer incentives

To encourage customer purchases, consider limited-time promotions, discounts, loyalty rewards, and free trials. Besides letting customers explore cross-sell and upsell options themselves, these incentives can also make the purchase more appealing and create a sense of urgency. 

8. Test and optimize

Finally, without data, you don't have a way of knowing whether your upselling and cross-selling techniques are working. To make sure you're on the right track, regularly analyze, test, and adjust your strategy.

5 real-life cross-selling vs upselling examples

Now that we've got the theory down, you might be wondering how to upsell and cross-sell products or services of your own. Don't worry, we've got you covered. Here's how businesses in different industries cross-sell and upsell their products and services.

Example 1: McDonald's

McDonald's is one of the companies known for successful cross-selling and upselling strategies. From offering additional items that complement your initial purchase to suggesting upgrades, they focus on increasing your average order value to boost revenue.

Cross-selling: Multiple products

Whether you're ordering a burger in person or using an app, McDonald's will give you the option of making it a meal by adding fries and a drink. Since their pricing is set up in a way where the bundle is a better deal than buying only the burger and the drink, the customer is more likely to get the fries even if they didn't initially plan on it.

Upselling: Size increase

And once they've successfully cross-sold multiple products as a meal, they go in for the upsell by giving the customer a choice. For an additional fee, you can increase the size of your meal. Since the fee seems like an insignificant addition to the total price, the customer is convinced that it's a good deal.

Example 2: Apple

Apple is a great example of a company that uses both products and services as upsell and cross-sell opportunities. What's more, they also promote brand loyalty by encouraging repeat purchases.

Cross-selling: Relevant products

Whatever device you buy from Apple, they'll suggest AppleCare+ and accessories during the checkout process. This is a great example of the right time and the right place. After all, customers are more likely to get damage protection for a new device, and maybe throw in a new charger while they're at it, just in case.

Upselling: More expensive product

When you buy a computer from Apple, they'll offer you an upgraded version for an added cost. While the memory and storage upgrades don't come cheap, the reason the upsell works is simple - they aren't pushy about it. Instead, they even provide help with determining whether you need the upgrade or not, resulting in a positive customer experience.

Bonus: Customer retention

Besides offering relevant products and device upgrades, Apple also has a great marketing strategy for ensuring repeat business. To increase the chances of customers coming back once they need a new computer, Apple offers a Trade In option. That way, past purchases turn into credits towards a new device, making it a good deal to bring more business to the same company.

Example 3: Booking.com

As an online travel booking platform, Booking.com increases revenue opportunities by providing customers with a great travel experience. From presenting upgrades all the way down to personalized requests, they bring in more business by making sure customers find whatever they need.

Cross-selling: Extras

Booking.com focuses on the customer journey - literally. Once you've chosen a booking, you can add flights, airport transportation or a car rental for an extra fee. For customers who are all about convenience, this is a great added benefit.

Upselling: Upgrades

When it comes to upselling, Booking.com does it by letting customers view available rooms side by side. This way, the booking shows all the amenities they could be getting in a higher-end room, making them more likely to upgrade.

Example 4: Canva

Canva, a graphic design platform, focuses on giving their current customers purchase options that extend beyond the software subscription. In addition to that, their strategy of increasing sales through new subscriptions is based on premium features.

Cross-selling: Printing service

Canva does cross-selling through its printing services, allowing users to print their designs on various products. This strategy banks on convenience by letting customers seamlessly order printed materials. 

Upselling: Paid plan

When it comes to upselling, it's all about premium features. While Canva does offer a free plan, its limitations are used as incentive for purchasing one of their paid plans. That said, users who don't want to commit to a monthly subscription can also use premium elements, such as certain stock photos. 

However, once they want to download their design, the premium element comes with a watermark. But, Canva found a way to make this situation profitable as well. If you want to remove the watermark, you can - for a one-time purchase price offered to you during the download process.

Example 5: Better Proposals

Last, but not least, we also use upselling and cross-selling techniques here at Better Proposals. Here are some examples of how we do it.

Cross-selling: Add-ons

While we do offer advice and resources on creating the perfect template for your documents, we understand that some companies don't have the time or simply don't want to deal with the process. That's why we offer a custom template design service.

Upselling: Business needs

Unlike Canva, we don't offer a free plan. Instead, our plans and the features inside them are tailored to different business sizes. That way, you can upgrade as your company grows.

Final thoughts

If you want to maximize your sales opportunities and provide tailored customer experiences, understanding the difference between cross-selling and upselling is essential. By offering additional value and meeting customer needs, you can enhance the overall customer experience, increase revenue, and establish a competitive edge on the market.

So what are you waiting for? Draw inspiration from the examples provided above and start creating meaningful, profitable interactions with your customers.