Personalisation block is responsible for grow in whole CRM system. The idea of grow direction in CRM is simple: make your customer to spend more money in each purchase. You may see it well at pic. 1. Let’s see these important ways of grow improvement.

Picture 1

So, personalization has 3 ways of grow improvement:

  1. Cross-sell and upsell analysis
  2. Product & recommendations analysis
  3. Next-best action analysis

Which of these components generates more profit for the company? I believe, it’s cross-sell and upsell analysis. The reasons are simple: 

  • this type of analysis doesn’t require a lot of extra-additional data: it’s just require only that data which you have already;
  • this tool is simple in use and relevant for each type of business;
  • It based on internal data sales, so you don’t need to collect and adopt external data;
  • Almost each modern CRM system provides this type of analysis;
  • This method is cheap;
  • It can be used by small business organizations with low experience and budgets.

Let’s get more familiar with cross-sell and upsell analysis in order to understand it’s main profits. 

Cross-sell and upsell

The difference between cross-sell and upsell analysis is in the following:

  • A cross-sell is designed to get customers to buy complementary products. For instance, if you’re buying a camera, then you can buy a case for it, maybe another lens, a memory card, or a book about how to use it.
  • An upsell, on the other hand, is designed to get a customer to spend more money on the same thing. For example, if you’re purchasing a PC, you might want to buy extra storage space on the hard drive or a more advanced graphics card. You’re still purchasing the main item in question, just with augmented features.

Thoughtful execution of cross-selling and upselling not only leads to an increase in revenue for your ecommerce store, but it enhances the relationshipyou havewith customers when you suggest items or upgrades they enjoy and receive a lot of value from.

But this tactics have to be relevant for customer. Otherwise, he or she wouldn’t buy your products and services. So you have to keep in touch this tactics with three rules:  

  1. Does the product or service complement the offer that your customer is buying?
    Upsells and cross-sells are work only if they’re relevant to the original purchase. When you’re upselling or cross-selling an item, see to it that it’s 
    1. a product that goes perfectly with their purchase.
    1. a better option of what they’re buying 
  2. Will this product really benefit or valuable to them?
    Sometimes, an add-on item may complement another product, but it won’t benefit the customer. For example, while a certain type of lens may go with that camera your customer just bought, it wouldn’t be a good cross-sell if they don’t have a need for it. 
  3. Are they open to spending more?
    If the client has shown it clear that he is bounded with budget, then respect their wishes and don’t try to sell them anything else. You might send them packing if you insist on upselling or cross-selling.

Summary

I believe that cross-sell and upsell analysis is one of the most important and powerful tools in achieving revenue’s grow. Like Pareto’s rule says: 20% of work gives 80% of results, this tool allows the company to increase sales just by small and effective step. Do you agree with it or not?

8 комментариев

  1. I would like to give many thanks to Alexander for the article. He has succinctly and informatively described the role of cross-sell and upsell programs in growing the business. After having read the article, I would strongly agree with Alexander that this way of personalization is exceedingly effective as it is inexpensive, efficient and easy to implement. The author clearly states the acute problem the companies face at the moment, describes the ways how personalization can be deployed to reach the desired goals, gives a detailed explanation of cross-sell and upsell programs and speculates about its effectiveness for the companies. Alexander also makes a nice wrapping which summarizes the whole idea of the articles. As for me, it seems to be a good idea to give a more explanation about other two ways of personalization strategies: product & recommendations analysis and next-best action analysis. We may know that, for instance, product & recommendations analysis implies much more financial investments in comparison with cross-sell and upsell but it may turn out to be significantly more profitable. Maybe if I seek for long-term solutions to implement a personalization strategy, would it be a better option to stick to product & recommendations analysis strategy rather than this one which is strongly supported by Alexander? Does cross-sell and upsell can really give my company not only short-run, but also long-run results? I believe that this is the direction where the author can make a deeper research.

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    1. Sure, Maxim. I can say even more: cross-sell and upsell technics in combination with other tools of personalisation will give a great synergy in revenue. So it is neccesary to show up other two techincs. But this one is the most accesable for company. And it has low requirments in resources (time, money, info). So this is a reason why I’m focused on cross-sell and upsell.

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  2. I also want to thank Alexander and Maxim for their comments above and add from myself that it is very true that tools like cross-sell and upsell allow you to increase sales without costs. I believe that this is the main advantage of this ways of grow improvement.
    However, in order to correctly apply this technique, it is necessary to clearly understand the needs of this client and offer a product / service that exactly meets his needs with a description of all the benefits. If you decide to explain your proposal “it’s better because it’s more expensive”, then you are likely to lose this customer forever. It is extremely important to determine the values ​​of a particular buyer and voice them from the position of its benefits. This is where the role of CRM is present and competent work with its settings and implementation. It is necessary to spend resources on this tool once, and in return you will get more money at the cash desk and a grateful client.

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  3. Alexander, thank you for the rather insightful article.
    I love that you concentrated on the cross-sell and up-sell instead of doing a simple overview of the three methods you mention.
    However, I disagree with you first point about cross-sell and up-sell, which is that it has the potential to make the most profit out of the three methods. Product recommendations should be the most profitable, in my opinion. For instance, Amazon says 35% of their sales are thanks to their recommendation algorithms based on deep learning. That should be about 35% of profits, and if we consider it would’ve been only 65% without it, then it’s an increase of more than 50% in profits!
    Your following points are excellent, couldn’t agree more. The greatest benefits of cross-sell and up-sell are its ease of use, low budget, possible to use with as much data as you have. It’s a powerful tool in the hands of a manager who knows what he’s doing. Cross- and up-selling treads close to category management and using them together really enhances the business.
    You also hit the right buttons later when you consider the value of the product for the customer first. Cross-selling doesn’t have just selling more as its goal, but it creates more value for the customer. This is the essence of personalization! Creating additional value where there was none, it increases satisfaction, retention, referral rates.
    Your final point is also crucial. “Are they open to spending more?” As cross- and up-selling don’t require any deep learning or big data methods, the company can implement them after doing a simple RFM-analysis. Then, we can target only those big-ticket customers and not waste our efforts on poor schmucks who may even run away if we target them too aggressively.
    Overall, as I said in the beginning, a very insightful and worthwhile read. Thank you.

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    1. We can argue without any stop about which tool can make more profit. It depends on many factors, business models, industries etc. But we, I’m absoletely sure, can say that 1) all these tools may give profits and 2) combinations of these tools may generate synergy effect.

      But some of the tools have restrictions and barriers in usage, so my point of view is sources/results dimension, there cross sell and upsell technics have a huge advantage against other tools. We spend less sources, but get a lot from it. But still i don’t insist, that other tool less profitable. Cross sell and upsell is just the cheapest and simplest tool of personalisation

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  4. Alexander, thank you for the post.
    Cross-sell and upsell are vital for personalization. They allow the company to create personalized offers out of nothing, using very limited data which can be collected through the simplest loyalty program.
    Let me go a little more in-depth about the data required. As long as we have a bank card recorded into our data warehouse, we can mark every purchase done using the same bank card as belonging to the same person. From that, we can extract how much the customer spends, how often they make purchases, number of purchases in a period, which categories and in what proportion they buy. The loyalty program also gives us basic demographic data and a way to reach the customer, as well as all information on how engaged they are with the loyalty card.
    Aside from the implementation of a loyalty program, this personalization method is arguably the cheapest. A single analyst can start with nothing and prepare the full report in one, two weeks at most.
    Evgeny’s comment above mentions category management, and that is a powerful tool for managing a business and playing around with more and less marginal categories. Cross-selling needs to take this into account in order to be even more efficient and provide personalized service and manage the costs and profits better at the same time.

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  5. Лян Цзинкай

    I’m glad to see this article, and also let me learn a lot of professional knowledge I haven’t learned before.After reading this article, I think the application of CRM will undoubtedly play a very important role in product sales and company’s profit acquisition and promotion of popularity, but the sales methods used in the sales process, such as cross-selling and For upsell, we must consider these sales methods from the perspective of customers to maximize customer satisfaction. This is undoubtedly beneficial to the entire sales. All sales must be based on the premise of

    serving customers. Above, this is good for the company’s product sales and the company’s long-term development.At the same time, I also want to ask you a question. Regarding the flexible use of sales methods, is it more a test of personal sales skills or a more biased training of the company

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  6. Мария Французова

    This post perfectly described concepts such as cross-sell and upsell. Here you can add one method, which will help companies to prepare proposals for their customers. A simple matrix will help you to understand what products to recommend to customers and which are not necessary.Thus, for example, the website will recommend not all products, and those that are well-suited to those already selected.
    Sources:
    Organizing for cross-selling: Do it right, or not at allInternational Journal of Research in Marketing, In press, corrected proof, Available online 15 June 2019 Christian Homburg, Sina Böhler, Sebastian Hohenberg

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