What Is Cross-Selling And Up-Selling?

Written by Sean McPheat | Linkedin thumb

Businessman draw growing profit graph

I read an interesting article by Jim Domanski the other day, where he introduces the ‘rule of 25’.

This rule is good to know when you are trying to cross-sell or up-sell your client.

The rule states that, after people have made the decision to buy, they have accepted they will be spending or investing a certain amount of money. Now, if you have been taught to up-sell or add another product onto that sale, it is unusual for people to spend more than 25% more than what they have just invested.

Don’t ask me why that figure is important…it just seems to be the cut-off point for most customers.

So, if your client has already invested £100 in your product or service, asking them to spend more than around £25 more on back-up products or services may prove to be a step too far.
According to bigcommerce.com, cross-selling identifies products that satisfy additional, complementary needs that are unfulfilled by the original item.

As an example, think of a customer who buys a new car. What could be considered ‘cross-selling’? Well, items such as extended warranty on top of the maker’s included warranty, car insurance, finance offers, gap insurance, etc. These are things that offer additional complementary needs that the car itself doesn’t fulfil.

How about upselling? Upselling often employs comparison charts to market higher-end products to customers, again according to bigcommerce.com. Showing visitors to a car showroom that other versions or models may better fulfil their needs can increase value and help users walk away more satisfied with their purchase.

Companies that excel at upselling are effective at helping customers visualise the value they will get by ordering a higher-priced item.

Cross-selling and upselling are similar in that they both focus on providing additional value to customers, instead of limiting them to already-encountered products. In both cases, the business objective is to increase order value and inform customers about additional product options they may not already know about.

The key to success in both is to truly understand what your customers value and then responding with products and corresponding features that truly meet those needs.

The key here is to ascertain what the customer sees as ‘value’. If you were to find out how a customer measures the criteria against which he or she values the product or service, you are in a stronger position to ascertain if you could offer something that says to the customer ‘hey, how about looking at something that will do a better job for you?’

Think about how this ‘rule of 25’ could work with your products. If you have a extras or services that could be worth your client investing in, think about the extra value they will get from those items or services. And be aware of the initial investment they have made. What could be worth them investing in? How much extra will they have to invest?

Keep this rule in mind next time you are thinking of up-selling or cross-selling. It might help you to gain more incremental sales, and you’ll have the knowledge to know how much farther you could expect your client to go.

Happy Selling!


Sean McPheat

Sean McPheat
Managing Director

Would you like to better understand the sales process? Learn from experienced sales professionals by attending our Essential Selling Skills Training Course.

MTD Sales Training | Image courtesy of Big Stock Photo

Sales DNA

Originally published: 26 November, 2019

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