Increasing customer lifetime value, driving up profitability and offering a personalised service that shoppers love – sounds like a retailer’s dream wish list. Which is why the twin strategies of cross sell up sell continue to be an essential element of a thriving retail business. The notion of upselling and cross-selling is as old as retail itself, but today’s retailers have the advantage of technology to help them. They can use the power of retail management solutions to hone their upselling and cross-selling for maximum impact.
iVend helps retailers to cross sell up sell.
Learn more about how our Retail Management Solution drives profitability.
What are upselling and cross-selling?
Let’s start, for clarity, with some definitions, because whilst the two terms are often used interchangeably, they are two separate techniques. Upselling is persuading the customer to buy a bigger/better/more expensive version of the product they have selected. It requires convincing the shopper that they will get better value from the higher-priced item. Cross-selling is offering them a complementary product or service to go with their original selection and is all about enhancing the customer experience of the product or service.
If we use electrical retail as an example, with a customer who has selected a TV, upselling would be encouraging them to buy a bigger-screen model, whereas cross-selling could be offering them an insurance policy to protect their investment, or a surround-sound system to enhance their viewing experience.
Why does it work?
Cross-sell up sell techniques engage with customers who have made, or are very close to making their purchase decision. According to data from Forbes, it is the fact that retailers are dealing with existing customers that makes the cross-sell up sell approach so beneficial:
Existing customers are 50% more likely to try a new product.
Existing customers spend 31% more than new customers.
The probability of selling to an existing customer is 60 to 70%, while a new prospect is 5 to 20%.
As the Harvard Business Review explains, acquiring a new customer is 5-25 times more expensive than keeping a current one, which is why cross sell up sell is a far more effective way to generate revenue and profit growth.
Both cross-selling and upselling drive similar benefits:
How does a retail management solution help?
Cross-selling and upselling requires planning, retailer data, and tools for implementation. An enterprise-class retail management solution offers retailers a suite of integrated functions that provide the platform for cross-sell up sell success.
Retail analytics –to create compelling cross sell up sell offers, retailers need to be able to:
- Identify existing purchasing patterns, such as which items have been most successfully upsold in the past, or which goods are typically bought together.
- Know who are their most valuable lifetime customers, to accurately target those who will be responsive to offers and generate the best results.
- Rapidly see the results of cross-sell up sell campaigns, to continue those that work, and adjust those that are not delivering the required results
Loyalty program – we know that existing customers are the most likely to respond to cross-sell up sell offers, so a loyalty program is the perfect way to make offers to customers. The loyalty program can be used to created tailored cross-sell up sell offers that enhance the customer experience, making them feel valued and understood, and therefore generate positive results.
Inventory visibility – the last thing a retailer wants is a customer who is all fired up about a cross-sell up sell offer and ready to buy, only to be told the item is out of stock. Retailers want to know about excess stock too, and potentially design offers to get the items sold. Flawless inventory management, with full visibility of stock right across the business is an essential component in successful cross-selling and upselling.
eCommerce solutions – online purchases are the ideal situation for cross-sell up sell, with offers presented to shoppers as soon as they have placed an item into their cart. With the right eCommerce solution, retailers can make offers, and link to the rest of their retail ecosystem, such as loyalty and inventory visibility with seamless online/offline integration.
Retail POS system – for shoppers in the brick-and-mortar store, the point-of-sale system is where cross-sell upsell offers are made and managed. A fully integrated retail POS system allows retailers to embed offers in the pricing files, generate shelf labels, and even provide reminder prompts to checkout staff.
Mobile POS – Staff with Mobile POS are at the customer’s side, and have the ideal opportunity to make cross-sell up sell suggestions. With an enterprise-class retail management solution, the Mobile POS can remind staff to make offers, show the customer’s loyalty history and give full visibility of stock.
Upselling and cross-selling have long been used to generate increased sales and profit. Retail Management Solutions add sophistication and scalability, meaning that retailers can reap even greater rewards from this tried and tested retail approach.