Upselling, cross-selling and bundles: boosting your retail sales

Growth and strategy

18 July 2023

Hundreds of books have been written on how to improve retail sales, but whether you're selling in-store, online or both, few tactics are as tried-and-tested as the holy trinity of upselling, cross-selling and bundling.

The trick is to clearly differentiate between these techniques, deploying the right tactic at the right time. Here's a quick look at the basic principles.

What is upselling?

Offering up a high-end version of the product your customer is considering purchasing to increase your sales revenue.

How upselling works:

If you sell actual products, this might mean convincing customers to buy a premium or a deluxe version of a product they were already considering. To be successful at this, you’ll need to not only understand the various product features, but also be able to explain how the high-end version might be more beneficial to the customer than the standard version. You have to be clear about the added value that they can get from the upsold product.

If your business sells a service, you could organise your services into different tier level – like a bronze, silver or gold package that shows how stepping up a tier means getting a or more comprehensive service.

Why use upselling?

If the higher-spec version of a product will really suit your customer’s needs, it’s a win-win. Not only are they getting the right product for them, you’re also generating additional revenue for your business. Make sure you’re not needlessly upselling to a customer who doesn’t need it as that will hurt any trust you’ve built up with them.

Typically, it’s easier to upsell to a customer who is already in your store and engaged in making a purchase than it is to find a new customer. So if you have someone who is ready to buy and you’re just increasing the value of their purchase, that’s an ideal sales scenario.

When to use upselling?
  • Product pages: Using comparison charts on product pages can show what benefits the higher spec version has that the basic version doesn’t.
  • Selling in person: make sure you’re well versed on the differences between different product specs and strike up a conversation with potential buyers on what they’re using it for and how they can make the most of it.
  • At checkout: There are a few ways to upsell at checkout such as offering extended product warranties, faster shipping, gift wrapping or personalisation options.
How to upsell effectively?
  • Get to know your customer and their needs by asking open ended questions
  • Make the right recommendations and don’t oversell to a customer
  • Ensure the product you’re upselling isn’t too far away from the initial price point they were in. If it’s more than a 25% markup, odds are they won’t go for it.
  • Educate your customer on the what they’re missing if they don’t get the better product. Show them the real added value that spending a bit extra buys them.
  • Don’t push it – if they’re not interested don’t keep trying. Give them the space to make their own decision.

What is cross selling?

Using a customer’s interest in one product to fuel their interest in a related product. The related product usually fills a complementary need that the original item does not fulfil.

How cross selling works?

Unlike upselling, this isn’t about offering a better or improved product. It’s about selling an additional, complementary product to the one the customer is interested in. The key to cross selling is to show the right product at the right time. “Would you like fries with your order?” is probably one of the most recognisable cross selling phrases you’ve heard in your day to day life.

When to use cross selling?

If there’s an accessory that’s necessary to make a product work, such as a charger or batteries to go with an electrical device, then that’s a great time to cross sell the needed supplementary products.

If you have a website, it may be possible to implement a “people who purchased this also bought…” strategy which pops up with products that are often bought together by your customers.

Why use cross selling?

Cross selling can help increase revenue by selling more products to the customer and increasing their average purchase value. You may also increase customer satisfaction by ensuring they have all of the items needed to us their product correctly

How to cross sell effectively?
  • Have a think about what products or services are suitable for cross selling. Knowing what goes together well will help you prepare better for cross selling opportunities.
  • Have a look at your customer journey for those products and think about when and where is the best place to tell them about the cross sold product or service.
  • Ensure the items that you are trying to cross sell are genuinely useful from the customer’s point of view and that you’re not just trying to increase revenue without increasing value to the customer.

What is bundling?

Grouping different items together and selling them collectively for a lower price than they would have sold for individually.

How does bundling work?

The initial sell is on the saving made by buying several items that would naturally complement each other in one go. Psychologically, it works by masking how much the customer spends on an individual product, lowering the barrier to a bigger purchase.

When to use product bundling?
  • Deadstock: Deadstock are items that are unlikely to sell and will lose you money in the long run, so it’s important to use every sales tool available to you to try and earn some profit from them! Bundling slow selling items with related popular ones can help to move stock that otherwise might not get sold.
  • New product lines: If you have a new product that people seem unsure of, pairing it tactfully with other items they trust could help convince customers to give it a try. They’ll sample the product because it’s bundled with something they usually buy and maybe be exposed to a whole new range that they enjoy!
  • Seasonal stock: Bundling items at the peak time of the year for holiday or summer sales can create a sense of urgency for customers to purchase since the bundle is for a limited time only!
Why use bundling?
  • Boost revenue: Encouraging customers to buy more items usually results in a higher sale value and should increase your revenue
  • Increase product awareness: For any stock that is struggling to be discovered by your customers, bundling might help raise awareness of an item that isn’t often purchased as a standalone item.
  • Change pricing perception: Bundling can help to build upsells into a package because it takes the focus off of the price of individual items. As a full set, items may appear more worthwhile than they do as separate items or might seem to provide more value for the price when they are sold together.
  • Create positive impression of the brand: If a discounted or free product is included in a bundle, customer may feel like they’re getting a bargain and maximising the value of their purchase. They’ll feel good about that and it could result in improved customer loyalty as well!
How to bundle products effectively?

There’s many different ways to bundle products and the method you go for will depend on what you’re trying to achieve with the bundling. Here’s a few of the most effective bundling methods:

  • Pure bundling: In this option, the items in the set are only sold as a set and not individually. While this is less flexible than some other bundling options, it may push customers to try something new since it comes as a set with something they might already like.
  • Mix and match bundling: This allows customers to choose multiple products from a list of several options so that they can create their ideal bundle.
  • Giftset bundling: This is particularly popular during the holiday season and might even include gift wrapping services.
  • BOGO bundling: A “buy one get one half off” offer might convince people to buy more than usual.
  • Clear out bundling: If you’re looking to shift slow moving items, bundle them with popular ones. It’ll help clear out that old inventory faster.

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