As you look over your Shopify store conversion metrics, you’ll notice that a significant majority of users who begin the conversion process don’t actually follow through on their purchases. This abandonment rate is between 60-80% for most businesses, and that’s just including the people who decided to begin traveling down your sales funnel in the first place.
Your first instinct may be to try and improve your conversion rate by tracking down lost prospects who abandoned ship early. A second option is to work to increase the amount of relevant traffic your site receives.
Both of these tactics are well worth pursuing. But don’t neglect another option — increasing the sales and profit you make from the customers who are choosing to complete the process.
What are Upselling and Cross-Selling?
Upselling is working to encourage users to purchase a higher-end product or service than they were planning to. Perhaps they were planning on buying a hosting service from you, for example. During the purchase, you can show them how purchasing a higher-level service is beneficial and even perhaps offer a discount if they upgrade.
Cross-selling is encouraging those same users to buy complementary products or services alongside the items they are buying. A simple example would be offering a discount on a set of paints when someone chooses to buy an easel.
Upselling and cross-selling are effective at the immediate time of purchase, but they can also be done after purchase. Encouraging users to return to do more business with your company after they’re made a purchase by upselling and cross-selling other products can be a great way to build customer loyalty.
What Are the Benefits of Upselling and Cross-Selling?
Upselling can improve customer happiness and retention when done correctly. An upsell can be used to help the customer feel like they’re winning (by getting a better product at a reduced price), and they will associate this with your company as increased goodwill.
A big benefit of upselling and cross-selling is increasing your Average Order Value (AOV). More sales per order mean more revenue. The more you sell per order, the less you have to spend per customer to hit your intended profit targets.
Note: There are big differences in AOV between industries, seasons, devices, and markets, so it’s best to use the metric simply to compare how you’re doing against past performance. Also, consider that things such as purchase frequency, retention period, and conversions will all have important effects on how your AOV affects your bottom line, so you can’t simply watch your AOV in isolation.
Consider that the probability of selling to a new prospect is around 5-20%, the probability of selling to an existing customer is 60-70%, and you can see how it pays to keep your current customers interested and informed about your products.
Examples of Successful Upselling and Cross-Selling
Dollar Shave Club is a good example of upselling as the clue is in the name. You can get a shaver from the company at $1/month plus shipping, but you’re immediately offered much more expensive blades that are clearly much better. The more expensive options are shown to be much more appealing and the cheapest option quickly gets left behind.
Hotel booking sites like booking.com have made upselling part of the process. You’re enticed to the website with lower prices than you’ll get elsewhere, but you’ll be offered upgrades on the initial offer for a small price, such as free breakfast, larger rooms, and better refund terms. This works well as it gives the user freedom of choice.
What Makes for a Good Upsell App for Shopify?
Fortunately, adding upselling and cross-selling to Shopify is as easy as adding an upsell app. There are many from which to choose. A good upsell app for Shopify should be:
- Easy to install
- Easy to use
- Make pricing fair and transparent to the customers
- Do more than just offer product recommendations
Upsell apps like Product Upsell let you setup unique upselling offers. These can be offered to the purchaser when they first add an item to the cart, reminding them about supplementary products they may need and might have forgotten about. For example, selling a toy for Christmas can be accompanied by a popup reminding the buyer to get batteries and making it easy for them to add them to the cart.
Even better is a smart upsell app such as DataCue Upsell Recommendations. The upsell and cross-sell recommendations are automated so you don’t need to spend days or weeks creating complex rules. DataCue watches and analyses everything your store’s customers do and builds the right correlations for you. These correlations are automatically updated as trends change.
Top Tactics for Effective Upselling
Product recommendations drive around 10-30% of revenue, so ensuring the right product recommendations and upsell offers are in front of the right eyes is important to building sales.
Consider different types of upselling. Customized products, extended warranties, version upgrades, and bundled items are all variations of upselling and cross-selling that work well with different products.
Provide social proof to recommended products so the customer sees that other people have chosen another more expensive product and been satisfied with it.
Your upsell should be relevant to the original purchase, and you should sell the benefits of the upsell to the customer and why it’s important. This additional customer education reduces the feeling of being sold to.
Personalizing upsell recommendations in banners, product recommendations, notifications, and personalized emails have been shown to improve conversion rates for 75% of customers. The more you know about the customer and their purchase history, the more you’re able to offer them recommendations that they’re likely to act upon. This not only makes the customer feel more that the site is built for them and them alone, but it also drives up average order value.
With DataCue, the personalization of product recommendations, banners, emails, and notifications is all automated, showing customers the information they want to see.