Upselling is the sales act of getting a buyer to buy a more enhanced version of what they’re currently ready to purchase. If they’re at fast food place ready to order a burger, you should ask you if they want to make it a double. If they’re buying a laptop computer you want to sell them a bigger screen size, more storage, more RAM, or faster processor. Once a customer has made a commitment to buy the ‘basic’ version, the goal is to upsell the buyer on a better version.
Cross-Selling is the sales act of getting a buyer to buy other products (or services) that complements what they’re currently ready to purchase. If they’re buying a double burger, you’re going to suggest adding an order of fries and a soft drink (i.e., combo meals imply savings when compared to buying items individually). In the case of buying a computer, you may want to suggest that they add a computer bag, screen privacy filter, software applications, LED projector, or tablet to the overall order.
t’s worth noting that an effective cross-sell opportunity usually represents 5%-15% of the total purchase. For example, if the computer cost is $2,000, you may be able to sell the buyer an additional $100 to $250 worth of complementary products or services.
Next Selling is the sales act of following up with a buyer a few days later with an exclusive offer based on buyer’s original purchase. If the buyer bought a combo meal, a fast food chain could send them an exclusive burger-of-the-month club offer only available to real burger lovers. In the case of buying a computer, the store could send them an exclusive offer to attend a ‘how to use your computer’ workshop at a discounted level of $99 where the regular price is $300.
There are two ways to deploy a Next Selling strategy: Recency and Cohorts.
A Recency strategy is easiest to implement and execute since it only requires that you compile a list of buyers who’ve purchased, let’s say a computer, within a specified timeframe. For example, any customer who purchased a computer in the last 7 days would be targeted for a ‘Next Sell’ opportunity.
A Cohort strategy is one that requires a bit more analysis of those who’ve not only purchased a computer within a given timeframe, but also made other purchases (i.e., were cross-sold). One buying group (cohort), for example, may have purchased a computer along with a computer bag and extra RAM. Having identified this cohort, the question then becomes, ‘Are buyers who purchased a computer along with 2+ items likely to buy a discounted workshop?’
The next step would be to generate a list of buyers who would fit into this cohort, split the data into a Target Market group and a control group. The TM group will receive the discounted offer and the Control group will receive the full-price offer.
The results may show that for this ‘cohort, discounts had no effect (i.e., number of signups was about the same for both groups). Or you may find that for this particular cohort, a discount workshop had a significant revenue lift when compared to the non-discounted control group.
If your company has a massive customer data set, the number of possible cohorts you can generate are endless. This is where Machine Learning (ML), a subset of Artificial Intelligence (AI) steps in. The algorithm (program) can look at clients who have purchased the workshop and suggest one or many cohorts (buying groups with similar behaviors).
Upselling, cross-selling and next selling is the triple threat for any company looking for ways to grow their revenue with their existing customer base.