E-Commerce Strategy: Cross-Selling Techniques and Tips

When used properly, cross-selling is an effective marketing strategy that increases revenue by improving the business’s customer value and retention rate, says Martin Everly from www.theseoconsultantlondon.co.uk.

Using cross-selling techniques is an effective marketing tactic to quickly generate additional revenue without costing the company extra to launch. Since shopping cart software with features for cross-selling is now widely available to e-commerce websites of all sizes, this marketing tactic is no longer only found on large websites.

What is Cross-Selling?

Cross-selling is a marketing tactic used to increase sales by displaying products to the shopper that are closely related to the product he or she is interested in purchasing. It allows the business to promote similar products that the customer may not be aware of, or offer a complimentary product that the customer may be interested in as an impulse buy.

For example, if the customer purchased a Harry Potter book, then the business may want to suggest a bookmark featuring the image of the book cover for a low price when the customer is ready to checkout.

Examples of Cross-Selling Products

Amazon.com successfully uses cross-selling by having two sections on each of its product pages display them in the form of “Customers Who Bought This Item Also Bought,” and “What Do Customers Ultimately Buy After Viewing This Item.”

Some items have an additional section called “Frequently Bought Together,” which features items that are bundled at a discounted price with other products that are related. Similar types of cross-selling can be found on the websites of eBay, Life is Good, Barnes and Noble and Target. Even large banks can be seen cross-selling whenever a customer registers for a personal savings account, such as displaying an offer for its savings or money market account.

Cross-selling can also take place between branches of the same company. For instance, after eBay purchased Half.com, it used the merger to its advantage for cross-selling between sites. Customers browsing a product on Half.com now see a box displaying current eBay listings of the same product, which allows customers to conveniently bid on the item if it is available at a cheaper price that what is seen on Half.com. Well’s Fargo announced in May 2010 that it is aiming for a 10% growth in revenue per year based on applying its cross-selling model its newest acquisitions, Wachovia Bank, as per Zacks Equity Research’s article “Wells Fargo Expects Rev Growth.”

Using Shopping Cart Software to Cross Sell Products

Most shopping cart software or hosted shopping carts offer the cross-selling feature that allows the business to recommend related products to customers. Some shopping carts that current offer the ability to cross sale are X-Cart, Zen Cart and osCommerce.

Businesses can also build onto or create customized shopping cart solutions that use an advanced algorithm to recommend to shoppers the products that other customers purchased when purchasing that particular item, or that can determine items to recommend based on the buying habits of the shopper.

5 Important Tips to Cross-Selling

Make sure that the products recommended are closely related to the product the customer is considering. If the recommended products are not related then the business may end up annoying or discouraging the customer from making the purchase. Customers that see closely related products are least likely to be irritated by the offer and are more likely to return in the future.

If the cross sale is a combination of the original product plus an addition product in a bundled package at a discounted price, ensure the original price and discounted price are clearly displayed. This way customers are able to immediately see the savings for choosing the bundled package.

Use expert recommendations when recommending additional products. For example, if the business sells unique wine then quote a wine expert on his or her suggestion for other vintages the customer would be interested in purchasing. Expert recommendations adds value to customers that are unsure about trying other types of similar products or do not know how to match the product with other items.

Limit the number of cross sales per product to three to five. If the customer feels overwhelmed by number of options at the time of checkout, then he or she will be more likely to skip that section or page without looking at the recommended items.

Avoid deceptive or misleading practices. For example, do not have the cross-sale box pre-checked so that it will automatically add the additional purchase to the customer’s shopping cart and be sure to have all prices clearly displayed. Deceptive practices often result in having a high volume of complaints and questions to the business’s customer service department, more items returned for a refund, an increase in credit card chargebacks and it will lower the overall customer retention rate.

Visa and MasterCard Cross-Selling Regulations

In order to combat deceptive practices and reduce the number of chargebacks, Visa and MasterCard are enforcing tighter regulations when it comes to cross-selling. Cardholders must be able to distinguish the name of the company on both the original transaction and the cross-sale if these charges do not appear on the same transaction, plus businesses are required to notify customers each time a charge is made. Furthermore, e-commerce stores can only sell products of its own and not cross sale to products held by other companies.

Technically, what Visa and MasterCard requires is that the original product and the cross sale to be processed on the same merchant bank account. Some businesses get around this requirement by using a third party payment processor, since its transactions are then being processed on the payment processor’s own merchant account.

These payment processors often allow all its merchants to cross-sell amongst each other, however, business’s are limited to only cross-selling to merchants that use this particular payment processor. If the payment processor received a significant level of chargebacks, then it will halt the business’s ability to cross sale in order to avoid any penalties from the credit card associations.

Using Cross-Selling as a Marketing Tactic

Cross-selling is a useful e-commerce strategy to increase sales without having to make any additional investments, such as with creating new ad campaigns, developing new products, improving current products or entering new markets.

The cross-selling strategy simply focuses on increasing the current customer value, as well as the level of customer satisfaction. Since most shopping cart systems currently offer this feature, take advantage of this opportunity to increase the business’s bottom line.