Drive and Convert

Announcer:
You're listening to Drive and Convert, a podcast about helping online brands to build a better eCommerce growth engine, with Jon MacDonald and Ryan Garrow.

Ryan:
All right, Jon. Here we are towards the end of 2022, in the midst of holiday chaos, us in the e-comm world, busier than we like to be, but always doing good things, hopefully. Lots of conversations happening around, in fact I had one this morning with a client wanting to talk more about cross-selling, upselling, specifically with the goal of increasing AOV. I don't think I've ever had a client that's like, "No need to get more AOV, we're fine. If it goes down, who cares?" It's always, "What more can we do?"
And so it's fresh on the top of my mind, and you brought up this topic, so it's great. So I'm sure you'll probably help me see where I maybe didn't advise as great as I should have this morning, and I'll follow up with the client with an email.

Jon:
There you go.

Ryan:
So, let's start with, generally what's your theory on cross-selling, upselling, because it has to have an impact on your conversion rate. If you do too much of it or not enough of it, or ...

Jon:
100%. I always like to answer your questions with another question. I think that just creates a more interesting conversation for everybody. I'll ask you this though, what if you could elevate the customer experience and generate extra revenue at the same time?

Ryan:
Well, you ask very easy questions, Jon. I think I should probably say yes to all your questions. Of course. Yeah, I think that obviously would be the goal. [inaudible 00:01:44]

Jon:
And that's probably what your client you were talking to this morning was interested in. Cross-selling and upselling, they generally offer a way to convert those one-time buyers by serving relevant upgrades and complimentary products that increase both the average order value and customer satisfaction. And I think that's key, because there's a lot of ways to do this that are black hat, and we want to avoid those.
So more specifically, if you're looking at just cross-selling, we'll start there and then I'll go into upselling. But cross-selling is an eCommerce strategy like any, that really just recommends complimentary products. So it's for a shopper who's already made a purchase or has items in their cart. At that point, maybe let's think about an example. So if you suggest to a shopper to add boot polish to their order and they've just bought a pair of boots, maybe you suggest batteries to go with a camera. So it's complimentary products that enhance the experience.

Ryan:
Wait, so if I buy boots, I should have-

Jon:
Buy polish.

Ryan:
... batteries with my camera. Oh. Oh, okay.

Jon:
So if you're buying boots, you get polish. If you have a camera, maybe you get batteries, right?

Ryan:
Okay, got it. Now it makes sense.

Jon:
I didn't say that very well. Excuse me. So look, I think successful cross-selling here really thinks about products that are highly relevant, and that's where the customer service angle comes in.

Ryan:
Do you start to cross-sell once it's in the cart, or does it start on the product page if they came from shopping, on the boots page?

Jon:
You can do both, and you should. I highly recommend doing both. And one of the things I have in our notes for the show today is a whole bunch of examples we can talk about.

Ryan:
Oh, love it.

Jon:
So we will get into all of those. But I do think that the idea here is to make the consumers' lives easier and better. So if they buy boots, they're going to need polish eventually. If they buy cameras, they're going to need batteries. So why not just offer it to them right then? And that's called cross-sell, because you're selling a separate item that you can bundle, essentially. And bundling is a cousin to this, for sure. Think about it this way, if you buy that camera, nobody wants the camera to arrive without batteries. And you don't want to realize that you don't have the right batteries, because then you can't use the product you're super excited to get, and you want to just start taking photos.
The second half to this is upselling. So upselling is used by retailers to encourage people to upgrade their orders, to upsell their orders. So instead of recommending additional products like batteries for a camera, or polish for boots, really what you're doing here is inviting shoppers to invest in a more expensive product or a better version of the item they were looking at. So you're getting them to sell more by upselling them a level to the next product. For example, you might suggest a roller suitcase with added pockets and security or more coffee, for extra price. So-

Ryan:
Got it. I get up-sold all the time, because I'm like, "Oh, well the cost per pound of coffee is this, sell me an extra half pound. I'll buy less, get one shipping rate and it's cheaper per cup of coffee." [inaudible 00:04:58]

Jon:
That's exactly it. That's exactly it. And I do this all the time too. I just had to buy filters for my coffee machine yesterday, and Amazon is the king of this. They were like, "Well, if you subscribe and save, we only offer subscribe and save for the 50 pack. You were looking at the 25 pack. But if you get the 50 pack and you subscribe and save, you're going to save a lot of money." And it shows you the per-item price. And that's what got me. I was like, "Oh, you mean it's a few cents each versus 20 cents each? Fine, I'll do it". So, it makes a big difference.

Ryan:
Got it. But upselling and cross-selling, they are similar, but I can see how terminology-wise, you can probably have a lot of people get confused on, "Do I need to focus on one not the other? Do I do both at the same time because they are-"

Jon:
Right. Cross is additional products. You're you're not staying on the same product, you're crossing into an additional product. Upselling is the same product, but better. An upgrade. So that's why it's an upsell. You're upgrading the consumer.

Ryan:
Okay. Upgrade, upsell. I think I can get that in my vernacular. Upgrade, upsell.

Jon:
Awesome.

Ryan:
Okay. Being similar, is there a direction that you think people should focus on one first versus the other? If I've not done either one of these before, is one easier to pull off on a site than another or they should always be both, always be upselling and always be cross-selling?

Jon:
Well look, upselling will grow revenue by promoting higher tier products. Pretty simple. Cross-selling suggests more items that a buyer could buy. So I don't think ... The key difference really is in the purpose. And I think this is where you need to decide as a brand, do you want to ... Well, do you have a product that it can be an upsell, first of all? Because if you don't have a product that's an upsell, just shelve that one. And some brands don't. But technology is a good one.
Apple is really good at this, where you go to buy a certain Mac and then you go to that product page for that MacBook Pro, for instance, and it has, "Here's all these additional upgrades and how much they cost." So you can get a bigger, faster processor, bigger hard drive, more memory, whatever. And you can play around with it and see what the total cost will be. That's just 100% pure upselling, because they're just showing you additional products you could get that increase your average order value. So they're really good at that. So you have to think about, do you have the option, first of all?
The other thing is, cross-selling advises shoppers to purchase items that maybe they never had thought about, they had no previous interest in buying it. So I came to a camera site, I wasn't looking for batteries, but you're telling me that it requires these special batteries that I really can't just go to my local drugstore and buy, then I probably am going to get them from you right then, so I have them. So again, it's a complimentary item and the idea there is, "It's going to make my life easier." I think that's the two key points of cross-selling.
Upselling on the other hand, is really about leveraging the fact the consumer has already chosen a product. I've already said, "I'm going to get this MacBook." Now, I get in and I say, "Oh geez, you know what? I could have a faster processor, more RAM or memory. Do I need those things? What does this mean for me?" And I'm already sold on buying one. Now I'm just configuring what I want. So it's all about recommending the same product or service, but better. And I think it's a key that the consumer's already going to buy.

Ryan:
Okay. So in both these instances, we have, hopefully, more revenue and higher AOV to a business that's doing these techniques. Have you ever seen a company randomly decide that it makes sense to down-sell? What if there's more margin on another product, they're like, "Yeah, they come in on this a lot, but even though it's cheaper, I make more money on this one, so I want to force them to that one?"

Jon:
Usually not for that reason, usually for the reason that a consumer could be ... And again, Apple does this really well with their MacBook Pro. They have several lines of laptops, and the MacBook Pro is the top of the line. And then you could get just the MacBook or you could get a MacBook Air and you could keep going downgrading. They have these different tiers. They do the same thing with their phones. They are very good at this strategy, all in all. And they down-sell you if you are like, "Hey, the MacBook Pro is too much power," or "I'm not going to be using it for these purposes that are listed." They clearly say, "For business," it's really pushed for business, video editing, hardcore processor-intensive stuff.
But if you don't need that, then they say on the product page, "Have you considered our MacBook?" And they list, starting at $1000 as opposed to $2,500 or whatever the MacBook Pro is. So really the idea of down-selling is not something that you want to do, but it's an alternative. Again, you're aiding the consumer and saying, "Okay, you were going to abandon because you didn't want to spend $2,500 on a MacBook Pro, but don't worry, we have this $1000 laptop here that's just as good for your needs." So that's one way to do it.

Ryan:
Which would be better than, for a lot of brands, probably, if you've got the product depth of course, but the default for a lot of brands I talk to, and maybe you as well would be, "All right, you got this in the cart, nah, you haven't checked out, you want 10% off." It obviously cheapens your brand because discounts are the easy button we talk about. But if you have a product that is 10%, 15% cheaper, just suggest that, because it might meet their needs, and you don't have to actually give a discount on your brand, and plant that seed for the future. Again, I think I mentioned my wife is notorious for walking away from her shopping cart just to see what emails will come through with discounts.

Jon:
She's been trained like everyone else. But here's the thing, this is such a missed opportunity, because so many people will just send an abandoned cart email with a discount. And what you really should do here is send an abandoned cart with maybe a down-sell option. Maybe they abandoned it because it costs too much. And this is a big reason why people abandon, that I think a lot of people forget about. So I highly recommend that abandoned cart emails maybe offer a lower-priced version, a smaller version, some incentive with purchase. I'm not saying a discount, but maybe a free gift with purchase, or samples of products with purchase. Something of that sort that would keep the price down or add more value. That, I think, is a huge missed opportunity for down-selling.

Ryan:
Even Target started doing this, we just went and bought our kids a bunch of Christmas presents, and you get gift cards rather than discounts. Like, "Oh, you spent $100 on toys, here's your $10 target card, so you got to come back and buy, because you can't use it on that transaction."

Jon:
And you're going to spend more than $10 next time you come back.

Ryan:
Yes.

Jon:
They know it.

Ryan:
We for sure will. But that's ... They didn't give me a discount. It's technically a discount, but it's something I have to come back and spend more money and it's generating a lot of goodwill cause my wife treats them as free money that's like, "Oh I can just get this extra thing because I have a $10 gift card, so what the heck?"

Jon:
Right. And that extra thing is probably $15.

Ryan:
It's never $10.

Jon:
Right. And so who wins on that? Likely Target. I think you called out a really good benefit there, which is, you can increase your average order value or even do it on the next purchase, and increase customer lifetime value. But I think there's a ton of metrics that people should be thinking about, or just overall benefits of cross-selling and upselling, that ... I think, really everyone looks at AOV as the one that is paramount here, and that's true. Average order value matters, and that is generally what leads people here. But there's a lot of other metrics that this influences. Just for instance, increasing revenue, overall revenue. The majority of customers are going to spend more on their orders and your overall revenue's going to increase. There's a stat that cross-selling accounts for 35% of Amazon's revenue.

Ryan:
What?

Jon:
35%

Ryan:
No, that's insane.

Jon:
And that-

Ryan:
You have to send me that link at some point, because I-

Jon:
Google it.

Ryan:
Amazon's good, but ...

Jon:
Yeah. Google it. Now here's the thing about that, is they are so good at those recommended products. How many people are looking at a product detail page? Scroll down and half of a product detail page on Amazon is other products.

Ryan:
That's true.

Jon:
And if you look at that, some of them are sponsored and purchased, but most of them are more expensive than the one you're looking at. Generally that's going to be the case, and Amazon knows how to play this game. So they've increased their revenue by doing these cross-sells.

Ryan:
That's insane. I never would've guessed it's that high, but that's awesome.

Jon:
They're so good with complimentary products, and it's just their engine, it's really well done. Now, I suggest that if you're going to do this, you make it relevant. Because the thing that really turns people off on this is having cross-sells that aren't relevant to the product that they're buying. Then it just defeats the whole purpose. You can also ... I talked about increasing customer lifetime value. That is a big one. And it is something that I think that most brands don't think about, but the probability of selling products to existing customers, 60%, 70% higher than new customers. It's always easier to sell to somebody who's come back and ordered from you before. So complimentary products or add-ons, it's just convenient and it will keep them coming back. So I highly recommend that.
You can increase your ROI. The higher your average order value, customer lifetime value, the better your return on investment will be against that acquisition cost. So you want to get more out of your ad spend? Get people to spend more, you're going to get a higher return.
You can increase product awareness. This is one that people don't think about very often, but cross-selling and upselling, they introduce consumers to other products that they maybe wouldn't have seen because they weren't looking for those. And now they're aware that they exist. So that's a good way to increase awareness of add-on products or higher tier products that maybe they wouldn't have been interested in.
And last, I think, and this is key. I talked about this earlier, there's some black hat ways to do this, and we're talking about the right ways to do this, in my opinion, but you're increasing the customer experience overall. And I think that's really important, out of this. You don't want to just ... this is not being done for a money grab. If you do this with the right intent of offering products that are more helpful, then you can't go wrong. But it's very easy to tell when somebody's just trying to force more products down your throat instead of saying, "Hey, these are actually related and things that have proven to be helpful." And so personalizing that shopper experience can really add to credibility for you as well, and I highly recommend you take that point of view as you're doing this.

Announcer:
You're listening to Drive and Convert, a podcast focused on eCommerce growth. Your hosts are Jon MacDonald, founder of The Good, a conversion rate optimization agency that works with eCommerce brands to help convert more of their visitors into buyers, and Ryan Garrow of Logical Position, the digital marketing agency offering paper click management, search engine optimization, and website design services to brands of all sizes. If you find this podcast helpful, please help us out by leaving a review on Apple Podcasts and sharing it with a friend or colleague. Thank you.

Ryan:
Those are all tremendously important pieces to every e-comm business, I think. If you're not doing these things, I would argue your business is suffering. You're leaving a lot on the table and your customers aren't getting served very well. So there's a lot of places in the process you can be cross-selling, upselling, but I'm sure you have to be careful, like right as you walk into my site, don't pop up and offer me a discount when I have no idea what I'm doing yet. Let me find some stuff. So where do you suggest people or brands do cross-selling and upselling on the site or through the conversion process?

Jon:
Yeah. I think there's two words that come to mind here, "tastefully" and "organically." If you're tasteful with it and it's done in what feels like an organic manner, then you have a much better opportunity, I should say, to convert. So the last thing you really want to do is just paralyze shoppers with too much information. You give them too many choices or recommend these irrelevant items and that's just going to turn them off. So you want to make sure it's done tastefully, but also I like to think about three key places that you could use this, to more directly answer your question.
So pre-purchase, so on the product page before the customer's added to their cart. The second place is during purchase, and pre-purchase and during purchase are both where Amazon succeeds at this beyond belief. During purchase is during the checkout process or when you just view your cart. Adding an upsell in cart, it's easy to do with Shopify, there's a clear plug-in for it, it's not hard. The hard part is manually going in and adding what products should be related to other products, so that it's not done in a distasteful manner.

Ryan:
Yes, I think that's an important point. Most people that want to do this with apps. Yes, you want to let them do some things, but you have to be careful with that. Tastefully.

Jon:
Yes. The last thing is post-purchase. And again we talked about abandoned cart emails, et cetera, but this is after they've already made a purchase, you could send an email, SMS, or even next time they come back to your store, say, "Hey, we know you bought this item, here are other related items." So a big one is carrying bags. At The Good, we bought one of these things called an Owl, a Meeting Owl. And it's this device that has a speaker and a microphone and a 360-degree camera on top of it. And so you put it in the middle of a conference table and it can see the entire room. So it shows the Zoom participants at 360-degree view, and then it automatically zooms in on the individual who's talking. And so it detects movement on individuals, and noise. So if you're talking and moving, it will pan the camera addressed just to you and still show the 360 above you.

Ryan:
Wow, that's pretty cool.

Jon:
It's a really cool device for making it more immersive. And I got an email after we bought one, that said, "Hey, we see you bought this. A lot of people have issues moving it from location to location. Here is a custom-made pelican hard case. If you're interested, here's a discount code for just that case." And that was a cool upsell, and I should have bought it because I literally just got back from Austin, Texas where we did a leadership team meeting and I put it in its box that it shipped in, and had to carry that box around. I was definitely afraid it was going to fall and break the camera. So I should have bought the hard case. It knew what was going to be helpful to me, and I saw that after I got back and I was like, "Yes, I should probably buy that and just ensure that I'm not going to screw up my camera." So I think that that's something that a lot of people forget about, is doing this after purchase.

Ryan:
Yeah. And my favorite one after purchase that you've brought up that I like is where you have a quality cross-sell that makes sense like that, and you say, "Hey, if you add this in, you'll get the discount and we will also include that in your free shipping," or "No additional charge for shipping," which would speak to me, being like, "Oh, I hate shipping charges. So 100%, let's put it in there," because maybe individually, it falls under a shipping threshold, so you'd have to pay shipping if you don't add it on now.

Jon:
Yeah. It's a great plugin that will do that upsell after the person purchases. So after checkout on the confirmation page you could say, "Hey, you want to add this to your order?" This will air after Christmas, but I bought my wife a set of pans from HexClad, I believe it's called HexClad, and it's a new direct-to-consumer cooking brand that's taking off. It's supposed to be one of the best ones out there now. And so I bought her a set of them and at checkout, it said, "Hey, did you also want to get these other items and add them into your order and we'll ship them for free?" And normally, it's heavy items, so shipping's not cheap. And I thought they did a really good job. So if anybody wants an example, that's where I would go.

Ryan:
Hexchant? I'll have to look at that.

Jon:
HexClad, I believe.

Ryan:
HexClad. Okay. I'll have to look at this. But okay, well it leads us into this point, which I was excited about from the beginning when you said you had examples. I know you're packed with examples of other ones where people can do specific things to help increase cross-sells and upsells.

Jon:
Okay. Where do we start? Bundles. We can say product bundles. So bundling, I think, is the easiest way to expose customers to new products. And this is a form of cross-sell. It can also be a form of upsell depending on what's in the bundle. But the Owl camera could have said, "Here's a bundle with the case." And I didn't see that on the site. I thought that was a missed opportunity. That would've been an upsell because it would've ... Well, it was a cross-sell, because it would've been adding additional items. It wouldn't have been selling me a better camera, necessarily. But really just grouping together these similar complimentary items, it gives shoppers a chance to try out other products, but they also are willing to pay more because they're getting more. So it's a great way to increase your AOV. A good example here is beauty products. Maybe you create a bundle for different skin types or anti-aging. Those are all things that would be more expensive than just buying one product on its own. So it's a good opportunity.

Ryan:
Oh yeah, beauty's great at that.

Jon:
Yeah. Beauty's really good at this, that's probably why that example came to mind. But okay, so another one. We already talked a little bit about this, so let's get it out of the way, but post-purchase experience. It's always forgotten about. As I've said several times, if you're not offering something post-purchase, you won't make any money post-purchase. It's pretty simple. So why do people forget about this? You just make the money, right? But I think data has shown that if you do, roughly 20% of customers will buy. That's a lot of money you're leaving on the table. Imagine you could increase your AOV by 20% by doing this. So you'll make more revenue, you're going to have a better AOV, better return on ad spends, all your shoppers are going to be happy because nobody gets upset that they were offered these things after purchase. If they don't care, they just close the window and move on. But if you're going to make their lives better, then you have a good opportunity there.
And I do agree ... Again, I think the most missed opportunity for this is follow-up emails. And again, the key here, make it personal. You just bought that really sensitive camera that you know Jon is running through the Austin airport in a box, it's falling off his suitcase all the time, sell him that case. He's going to buy it.
One we haven't talked about is bulk ordering, so suggesting bulk orders. This is a great one because nobody loves to run out of their favorite product. So they're already buying a product, you just suggest that they buy it in bulk. That's a great way to increase your AOV and secure long-term loyalty. I just did this with body wash. There's a particular brand that I like to use, and over holidays they were like, "Oh, we came up with this Axe spray."

Ryan:
You're the Axe guy. Five gallon tub of Axe.

Jon:
You might actually like it. It's called Black Wolf, and it is amazing, direct-to-consumer brand. It smells amazing and I really like it. And they used to come out with these small containers and I used to run out of it all the time. I'm a big guy, it was just annoying. And now they came out with a pretty big one. So-

Ryan:
The key ... More importantly though, does your wife like it?

Jon:
Yeah. Look, we've been married 10, 11 years. Doesn't matter what I smell like at this point, right?

Ryan:
Oh man, my wife for sure cares.

Jon:
Let's just say as long as it's not when I've just come home from playing basketball. How's that? Because then she cares.

Ryan:
That's true. Okay, yes. Yes.

Jon:
Yeah. Yeah. So at any rate, I think according to, what is it, NRF I believe, 90% of online customers claim that free shipping motivates them to purchase, while 65% of buyers said they will typically look for a free shipping threshold on items they plan to buy before adding to cart. So you could easily say, "Buy in bulk and ship for free." There's things like that you could be thinking about and 65% of your buyers are already thinking about it. So you can make it more appealing by making it free to ship as well.

Ryan:
You would get me to upsell to a bulk 100% of the time.

Jon:
Okay. So here's the one that we talked about earlier that Amazon got me on the other day, pitch a subscription. And Amazon's just so good at this, it's crazy. It's one of the most effective ways to secure recurring revenue, is just, promote a subscription model. If you have a renewable product that gets consumed quite a bit, then why not automatically ship it to them? It happens quite a bit, but, I don't know, we talk a lot about coffee. I wish that I could find a brand that would just ship me good coffee whenever I want it, just on demand. I used to have an espresso in the pods, and they did it. And they did it really, really well because they knew when I was going to run out based on my prior ordering habits. So they did a really good job with that. But if a consumer's regularly buying the same product, then encourage them to just sign up for a subscription and give them a small discount. Again, Amazon's great at this.
Lastly is pretty simple, but recommending a complimentary product. I think this one is something that again, Amazon's great at, but this is just the simplest cross-sell strategy. It's just recommend a complimentary product or suggest products that other similar shoppers have bought. Again, this has to be helpful. And when it's done in a distasteful way or without the eye of trying to be helpful, it really actually turns people off because they're like, "I'm buying boots, why are you recommending a tent to me? Yeah, maybe I could use them both on the same trip, but that's unlikely what I'm here for." So you really have to be thinking about this. You can do this on your product detail page, checkout page, or post-purchase. So you hit all three of them. But the thing about it is, again, you only have to recommend complimentary products. And I think that's key, not just random items out of left field.

Ryan:
Got it. I do think on a lot of sites, the product pages ... Again, and you do obviously CRO all day every day. It's one of the most overlooked pages, because SEO doesn't optimize product pages, and it's just getting shopping traffic. And so there's so much opportunity there because most people aren't even going to buy that product. So if you look at your product page from the view of, the only reason people hit a product page is shopping, because product pages don't rank well organically. So there's intent, "I'm trying to buy something, that's why I'm on this page." And you know on average, they're not buying that product. Okay, great. Either I have to find them a different size, a different color or a different product entirely. But test and measure those product pages and just make sure you're not being stupid, and your conversion rate should increase.

Jon:
I fully agree with that. So if you haven't already started testing, cross-selling, upselling, you are leaving money on the table, you're behind.

Ryan:
Instead of AB, always be closing. Always be AB, up, US, always be upselling or ... there's got to be something there. I didn't do it on the fly very well, but you better be [inaudible 00:29:47]

Jon:
We'll go get Alec Baldwin, and maybe he'll come up with something.

Ryan:
Yeah. That's not going to be steak, guys.

Jon:
Yeah. No coffee for us.

Ryan:
No.

Jon:
Yeah. So just experiment with these tactics. And I think there's a lot of things, but just remember, the biggest point I want to make today is that it has to resonate with your target shopper. If you try to use these in a black hat way, it's too obvious, and you're going to just turn people off. So I highly recommend that you keep all of this under that intention, and you'll win. It will help you.

Ryan:
Jon, thank you for the enlightenment, especially this time of year. Well, most people get to hear this probably in January, but as we start making plans, cross-sell, upsell is where many of you listening to this are missing out and leaving money on the table. If 20% of your customers aren't getting that email to buy something after the purchase, you're welcome, Jon just added 20% revenue to your company.

Jon:
There you go.

Ryan:
Send him a bottle of wine.

Jon:
That's what I like to hear. Yes, I like Pinot Noir.

Ryan:
Thanks, Jon. I appreciate the time.

Jon:
All right, bye.

Ryan:
Bye.

Jon:
We'll talk soon.

Announcer:
Thanks for listening to Drive and Convert with Jon MacDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at driveandconvert.com.