What is the difference between upselling and cross-selling?

Two strategies often get mixed up in sales and marketing: upselling and cross-selling. They may seem similar. But, they serve different purposes and can affect your revenue and customer experience in different ways. And with almost four out of ten salespeople avoiding these strategies, using them in the right way gives you a leg up on the competition. 

So, what do each of these strategies mean? How do they differ? More importantly, which one should your business focus on to maximize sales and customer satisfaction?

This article will define upselling and cross-selling. We’ll explore their benefits, share proven strategies to use them in your sales process and identify mistakes you should avoid.

Whether you want to boost your order value or increase customer loyalty, these techniques can elevate your business.

Ready to dive in?

Understanding upselling and cross-selling

Before understanding their differences, let’s define upselling and cross-selling. Then, we’ll look at how they function in real-world sales strategies.

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What is upselling?

Upselling urges customers to buy a better version of their desired product or service. This might mean upgrading to a premium model, choosing a better package, or opting for enhancements to improve the experience. 

The goal of upselling is to increase the overall order value and your total profit margins. Studies show that upselling can increase your company’s revenue by 10-30%. But it’s a win-win for you and the customer: upselling provides the customer with a better or more efficient solution.

Example: A customer shopping for a laptop is initially interested in a basic model. However, the salesperson recommends a product with a faster processor and more storage. 

What is cross-selling?

Cross-selling means suggesting related products that enhance the customer’s purchase. Cross-selling adds value by offering items that go well with the customer’s purchase. It does not replace the initial choice. 

This technique helps businesses maximize revenue while improving the customer experience.

Example: Suppose you sell digital products like custom prints or an ebook. You might cross-sell by offering complementary add-ons. If a customer buys an ebook, suggest an audiobook or a related online course to enhance their learning. You often see this on retail sites like Amazon. The page will show recommendations under the product you’re about to buy.

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Key differences between upselling and cross-selling

Upselling and cross-selling both aim to increase revenue. But they do that in completely different ways. Understanding these key differences can help your sales team implement the right strategy at the right time.

There are four main differences between upselling and cross-selling: objective, approach, timing, and the psychology behind the strategy.

Let’s take a brief look at each one.

Objective: Increasing value vs. enhancing utility

Upselling aims to boost the overall individual order value (and the average value of all orders combined). It does this by getting customers to buy a higher-end version of a product or service. 

This allows businesses to maximize the revenue per transaction and ensure the customer gets a premium product.

Cross-selling, on the other hand, aims to boost product usefulness. It does this by recommending complementary items that will ultimately enhance the customer experience. 

Here are two examples:

• Upselling example: A customer exploring QR code generators is offered a digital business card solution. It includes an option to buy physical business cards.
• Cross-selling example: A law firm seeking SEO marketing services help is also offered PPC and social media services.

Approach: Better alternatives vs. additional items

Upselling encourages customers to move to a more advanced version of the product or service. The emphasis is on offering an upgrade that aligns with their needs.

Cross-selling, however, introduces additional products that pair well with the original purchase. These suggestions add value but do not replace the primary product.

In the legal industry, it might look like this:

• Upselling example: A personal injury attorney, Shaked Law, might offer a full-service legal package. It would help with the injury case and settling medical bills, or with negotiating long-term care needs.
• Cross-selling example: Baumgartner Law, on the other hand, may only offer to help with workers’ compensation claims if the client was injured at work.

Timing: When the strategy is applied

Upselling and cross-selling can occur at any time during the buyer’s journey. But that doesn’t mean you shouldn’t consider the best option for when to use each strategy.

Upselling is most effective during the purchase process when the customer is actively making a decision. You can highlight the advantages of upgrading before the transaction is completed.

Cross-selling can happen before, during, or after the sale. For example, it can recommend accessories at checkout or suggest related products in a follow-up email.

Here are different timing examples of each strategy:

• Upselling example: An e-commerce store suggests a better laptop when a customer is about to buy a base model.
• Cross-selling example: The customer gets a follow-up email after buying a laptop. It recommends a laptop bag and an external keyboard.

The key to knowing when to offer a premium upgrade or a complementary product is understanding the customer’s needs, not your preference.

Customer psychology: Aspiration vs. convenience

The psychological triggers behind upselling and cross-selling are vastly different. Upselling leverages aspiration and perceived value. Customers are drawn to a better experience, improved performance, or higher quality.

Cross-selling taps into convenience and necessity. It shows customers how complementary products can enhance their original purchase.

Consider these examples:

• Upselling example: A customer buying a smartphone is persuaded to upgrade to the latest model with better features.
• Cross-selling example: The same customer is urged to buy a wireless charger and a protective case for convenience.

If your salespeople understand these differences between upselling and cross-selling, their impact will be that much greater. Over time, the expectation is that their tactics will boost revenue and encourage customers to continue to do business with you. 

Benefits of upselling and cross-selling

Upselling and cross-selling provide valuable advantages for both businesses and customers. These techniques can boost revenue, strengthen customer relationships, and create a better overall buying experience when used strategically.

You likely already have a sense of why this is the case, but let’s walk through each benefit quickly.

For businesses

1. Higher order value and revenue

Upselling and cross-selling encourage customers to spend more. Instead of just buying one item, they can upgrade to a pricier option (upselling) or add related products (cross-selling). This boosts the total sale amount.

2. Increased customer lifetime value (CLV)

CLV is the total revenue a business earns from a customer over time. Effective upselling and cross-selling keep customers loyal to the brand. This leads to long-term relationships and repeat sales.

3. Improved profit margins

Upselling and cross-selling raise profits. They encourage more purchases with low costs. Selling to existing customers is cheaper than finding new ones, so these strategies increase revenue.

4. Stronger customer relationships and loyalty

Effective upselling and cross-selling provide real value to customers, building trust and loyalty. Instead of feeling pressured to spend more, customers appreciate helpful recommendations.

For customers

1. Better product fit (upselling)

Upselling helps customers find products that suit their needs better. By suggesting upgrades, businesses ensure customers get the best solution. This leads to satisfaction and long-term value.

2. Enhanced user experience (cross-selling)

Cross-selling improves the experience by suggesting complementary products. Customers receive helpful suggestions that enhance their main purchase, and they don’t have to search for other items.

3. Cost savings through bundled offers (cross-selling)

Many businesses offer discounts for bundled purchases, making cross-selling a way to save money. Customers get everything they need at a lower price than buying each item separately.

4. More informed purchasing decisions

When businesses suggest relevant upgrades or complementary items, customers better understand their options. Instead of settling for a basic product, they can make informed choices.

5 Effective upselling strategies

Upselling increases revenue and ensures customers receive the best products or services. Here are five effective strategies with steps to implement them.

1. Offer a premium upgrade

Encouraging customers to choose a higher-tier product is a common upsell method. It’s especially effective for subscriptions and professional services.

How do you do it?

1. Find the right upgrade: Identify a premium option that suits your customer, like a software plan with extra features.
2. Highlight added value: Explain how the upgrade benefits them, focusing on performance and savings.
3. Show comparative pricing: Display the cost difference between basic and premium options. Emphasize the added value.
4. Offer a free trial or demo: Allow customers to try the premium version first with a free trial or discount.
5. Simplify the upsell: Make the upgrade process easy, like a one-click purchase.

Example: A law firm could upsell a basic will to a full estate plan by highlighting better asset protection.

2. Use personalized recommendations

Customers respond well to tailored suggestions. This strategy works well in e-commerce and services.

How do you do it?

1. Analyze customer behavior: Use data to understand what customers might need next.
2. Segment your audience: Group customers by buying patterns for relevant upsell offers.
3. Showcase upgrade benefits: Personalize messages explaining why the upgrade is best for them.
4. Use automation tools: Set up automated emails or chat suggestions for upsells.
5. Incorporate social proof: Share testimonials from customers who benefited from the upgrade.

Example: A business attorney might send a personalized email offering a discounted legal service to a client needing contract reviews.

3. Bundle complementary add-ons

Bundling related products or services adds value and increases transaction amounts.

How do you do it?

1. Identify logical add-ons: Find products that enhance the main purchase.
2. Strategically price by bundle: Offer a slight discount to make it attractive.
3. Present option at the right time: Introduce the upsell at checkout or in follow-up emails.
4. Explain bundle value: Show how the bundle saves money or improves results.
5. Create urgency: Use limited-time deals to encourage action.

A personal injury lawyer like Brian White and Associates might upsell a package to include assistance with insurance on disability claims.

4. Implement tiered pricing

Tiered pricing offers budget-based options. It encourages customers to pick a higher-priced tier.

How do you do it?

1. Create distinct pricing tiers: Offer at least three levels with increasing benefits.
2. Clearly define the differences: Show what’s included in each tier.
3. Use anchoring to highlight the best option: Present the mid-tier as the best choice.
4. Offer incentives to upgrade: Provide bonuses for choosing a higher tier.
5. Make it easy to switch tiers: Allow seamless upgrades from lower options.

Example: A defense attorney might offer tiered pricing for consultations, with ongoing guidance in the premium package.

5. Leverage social proof to drive upgrades

Social proof reassures customers that upgrading is worth it. Seeing others benefit encourages similar choices.

How do you do it?

1. Show real customer testimonials: Highlight success stories from customers who upgraded.
2. Use data and statistics: Share numbers proving better outcomes with the premium option.
3. Feature endorsements: Showcase endorsements from trusted figures in your industry.
4. Incorporate social proof in key touchpoints: Display testimonials on pricing pages or emails.
5. Use case studies for high-ticket upsells: Provide examples of how an upgrade led to better results.

Example: Zehl Law shares a customer testimonial from a case where they provided superior service and protection.

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Common mistakes to avoid when upselling

Upselling can boost revenue and improve customer experience. However, if done poorly, it can drive customers away. Here are common mistakes to avoid.

1. Being too pushy

Customers dislike feeling pressured. If an upsell feels forced, it can frustrate them and drive them away.

Here’s how to avoid it:

• Focus on value, not pressure. Frame upsells as helpful, not just sales.
• Use subtle recommendations. Suggest upsells naturally during the buying process.
• Watch for customer signals. If they seem hesitant, back off.

Example: A fitness center selling gym memberships shouldn’t aggressively push an expensive personal training package on someone signing up for a basic plan. Instead, they could offer a free introductory session to showcase the value first.

2. Offering irrelevant products

Upsells should match customer needs. Suggesting unrelated upgrades can make your business seem out of touch.

Here’s how to avoid it:

• Analyze customer behavior. Use past purchases or inquiries to suggest relevant upsells.
• Keep it complementary. Ensure the upsell enhances the original purchase.
• Segment your audience. Tailor recommendations based on different buyer profiles.

Example: A streaming service shouldn’t push a sports package upgrade to a customer who primarily watches movies and never engages with live sports content. Instead, offering an extended movie library or an ad-free experience would be more relevant.

3. Choosing the wrong time to upsell

Timing is key in upselling. If you offer too soon, the customer might not be ready. If too late, they may have already decided.

Here’s how to avoid it:

• Introduce upsells at the right stage. For high-value purchases, wait until they understand the base offer.
• Use post-purchase upsells. If the timing isn’t right during the sale, consider follow-up emails later.
• Train your sales teams on timing. Ensure they know when to introduce an upsell.

Example: A defense attorney shouldn’t push a long-term legal retainer on a client just seeking a consultation. Instead, offer it after you have assessed the case.

4. Not explaining benefits clearly

Customers won’t upgrade unless they understand the benefits. If the upsell is vague, they’re likely to decline.

Here’s how to avoid it:

• Highlight key benefits, not just features. Explain how it improves the customer’s situation.
• Use comparisons. Show side-by-side comparisons of options.
• Incorporate social proof. Testimonials or data showing the upsell’s success can reinforce its value.

Example: A SaaS company should show how extra features save time, not just list technical upgrades.

5. Creating a complicated process 

If upgrading requires too many steps, customers may abandon it. Complicated upsells lead to frustration.

Here’s how to avoid it:

• Make it seamless. Allow one-click upgrades or quick in-store additions.
• Avoid too many options. Too many choices can overwhelm customers.
• Simplify pricing. Make costs and benefits clear and compelling.

Example: An online learning platform offering a premium course bundle should make the upgrade as simple as a one-click purchase. If users have to navigate multiple pages or fill out extra forms, they may give up before completing the purchase.

You’ll make upselling and cross-selling feel natural and valuable if you avoid these mistakes. The alternative is that you may lose business and loyal customers! The most important thing to remember is that the goal is to enhance the customer’s buying experience, not disrupt it.

Wrapping it up

Upselling and cross-selling boost revenue and improve customer experience. Understanding their differences is essential. With the right strategies, your business can make these techniques feel natural and valuable. When done the right way and at the right time, upselling and cross-selling increase sales and strengthen relationships, leading to long-term loyalty.