Offering additional, complementary goods or services to increase a customer’s lifetime value (LTV) or average order value (AOV) is known as cross-selling. Simply put, the goal is to encourage customers to spend more by suggesting additional products. These recommendations are in addition to those already purchased or added to the cart. Let’s delve deeper into how cross-selling works and what strategies must be adopted in order to leverage success!
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How does Cross-Selling Work?
One of the primary strategies for generating new revenue for many businesses, including financial advisors, is cross-selling to existing customers. Since they already have a relationship with the client and are familiar with their requirements and goals, this may be one of the easiest ways for them to expand.
However, advisors must exercise caution when employing this strategy. A mutual fund that invests in a different industry can be a good way for a client to diversify their portfolio when it is cross-sold by a money manager. However, it can be detrimental to a client’s business relationship and a disservice to the advisor if the advisor tries to sell them a mortgage or another product that is beyond their expertise.
If it is carried out effectively, stockbrokers, insurance agents, and financial planners can reap significant profits from cross-selling. One of the easiest sales of all is offering insurance and investment products to clients of licensed income tax preparers. Cross-selling is a good business practice that also works well for financial planning.
Benefits of Cross-Selling
Here are three big reasons why cross-selling should be added to your marketing arsenal:
Boost in Average Order Value (AOV)
Naturally, if you show additional products and add-ons to customers, a good number of them will accept your offer and purchase items they wouldn’t have otherwise.
Keep in mind that people on your website are most likely to buy. So, it won’t take much to get them to spend more.
In fact, there is evidence to suggest that customers who click on product recommendations are almost five times more likely to add those products to their shopping carts.
Your average order value (AOV) will rise as more people add your cross-sell offers to their cart. This allows you to earn more money without incurring additional expenses.
Maximizes Profits over the Long-Term
The cost of acquisition appears to be rising annually, as stated in the introduction. As a result, maximizing each customer’s value grows in importance.
For instance, if you spend $50 on Facebook ads to acquire a customer and your average order value (AOV) is $60, you will earn $10 per sale.
Now, suppose you could spend the same $50 on acquisition but increase your AOV to $70 by using cross-selling.
You have effectively doubled your profitability over the long term. You can put this money back into your business through new investments. This will help in business growth and stay ahead of competitors.
Improves Customer Satisfaction
Cross-selling not only increases revenue, but it also gives you a chance to give your customers more value.
Take a look at it; You are giving customers a better overall experience by providing complementary products that enhance what they buy.
For instance, are the fries really necessary to make a Big Mac taste any better? I don’t think so.
Similar to this, a beginner guitarist might not be aware that they require a few packs of strings, right?
You see, a well-executed upsell can assist customers in locating the products they require to accomplish their objectives.
When we cover the best practices for upselling, we’ll talk more about this. However, if you can create a cross-sell that actually adds value, your customers will be happier than if you never offered it.
Cross-Selling Strategies
Now that we know what cross-selling looks like, here are three great ways to boost your average order value (AOV) with real-world examples from e-commerce stores.
Product Recommendations
Recommending products that are similar to what a customer is already looking at is the most obvious way to get started with cross-selling. These will be packaged as:
“Related products,” “Frequently purchased together,” and “Shop the look” are all excellent examples of this strategy’s ability to provide outstanding customer experiences. How frequently have you tried to buy something from a website because you liked what the model was wearing and wanted to buy it?
The shopper is assisted in doing so by the items displayed in a product recommendation carousel, which also increases the AOV (as well as profitability) of the order.
Product Bundling
One of the most effective strategies for cross-selling customers to a higher-order value is to combine complementary products into attractive packages.
Bundling is great because it makes it easier for customers to complete fewer buyer journeys. Bundles make it convenient to purchase everything at once, eliminating the need to research and evaluate three distinct products separately.
In addition, bundles can increase conversions by creating a higher sense of perceived value when executed correctly.
To entice customers to buy, one effective bundling strategy is to offer the bundle at a lower price than if they had purchased the individual items.
For instance, ordering a Big Mac, fries, and drink separately from McDonald’s will set you back significantly more than ordering one of their meals.
Cart Drawer Page
In most stores, the cart drawer is an extremely underutilized cross-selling space.
Because the cart drawer is essentially a pop-up, this strategy is very similar to using pop-ups.
Therefore, in order to ensure that your shopping experience runs as smoothly as possible, they have subtly moved this cross-sell to the cart drawer rather than bombarding you with yet another pop-up and risking your abandonment.
Cross-Selling Strategies: Better Campaigns?
You must keep in mind the golden rule of cross-selling, regardless of whether you choose to use the conventional strategy of recommending specific products for your cross-selling campaign or actually rely on a bundle or offer to sell more products and increase AOV.
It’s all about increasing value for the customer by promoting related products.
Instead of focusing on what will bring the most benefit to your company, consider what offers the most value. You might end up recommending products with a lower AOV. But you will create a much better campaign that will last for months or years and bring in a good return.
Featured Image: Whiplash
