What is the Difference Between Cross-Sell and Upsell?

Customer expansion is necessary for a B2B SaaS subscription company that wishes to survive in a competitive market. But to expand its customer base, a business must, first, strive to keep its existing customers through cross-sell and upsell proposals.

Cross-selling and upselling are strategic techniques that encourage existing customers to buy more. They help businesses improve sales by between 10 to 30 percent and customer retention by 75 percent.

But what does it mean to cross-sell? What is upselling and how does it improve net revenue retention? What is the difference between cross-selling and upselling? This article discusses all there is to know about these two customer retention strategies. Read on.

What Is Cross-Sell?

To cross-sell, a business sells a different product to an existing customer that had previously bought another product. In cross-selling, the original product and the new one could serve different purposes.

For example, a business could offer social media marketing to a customer who had previously enrolled in the company’s email marketing services. The customer might have no intention of getting email marketing services, but the salesperson explains its value until they enroll.

In that case, cross-selling leads to increased customer expansion, which in turn improves customer sales and customer revenue. SaaS businesses with multiple products should cross-sell to better keep their existing customers.

What Is Upsell?

An upsell is when a business encourages a customer to buy an enhanced version of a product they have already bought. For example, an SEO company may ask its first-time customers to buy premium versions of their products as a follow-up to their earlier purchase.

Since the price of the premium product is higher, the business will improve its net revenue retention. It is better than other strategies of customer expansion since it targets existing customers rather than new ones.

Besides increasing customer revenue, an upsell is cheaper than trying to attract new customers. Plus, the retained customers will talk positively about the business with their peers and help to organically increase customer sales.

Cross-Selling vs Upselling: What Is the Difference?

The difference between cross-selling and upselling lies in the intention of each marketing strategy. Here are the factors that differentiate cross-selling and upselling:

1. Products

During a cross-sell, the business offers an added product that a customer can use to solve a different problem. Also, the added product may help the customer to better meet their needs. For example, offering paid ads to a customer who had enrolled in a social media marketing program.

An upsell is different. A business offers a product of better quality than what the customer has bought before. For instance, a digital marketing agency may offer a premium email marketing package to customers who have enrolled at the basic level.

2. Complexity

While cross-selling and upselling improve customer revenue, they are different in terms of complexity. Cross-selling involves the business being aware of the customer’s needs and looking to meet them by offering a different product. Despite the research involved, cross-selling is more complex than upselling.

On the other hand, an upsell is easier. To pull it off, a business offers a more expensive product of higher quality. Since it involves products that meet the same needs, it is less complex than a cross-sell.

3. Earnings

One of the main reasons for cross-selling and upselling is to increase customer revenue. However, each strategy is different concerning net revenue retention, depending on what works for the business.

The earnings from cross-selling increase because of a customer spending on another product to meet a different need. It is different with upselling where customer spending increases because the new product is of a higher value and price.

Benefits of Cross-Selling and Upselling in Customer Retention

While customer expansion is great, businesses should strive more to keep existing customers through cross-selling and upselling. Here are how these two marketing strategies help improve customer retention:

1. Improving Customer Retention

Through cross-selling, SaaS businesses offer complimentary products that meet the customer’s other needs. It helps enhance the customer experience and satisfaction, which are the reasons the customer stays. On the other hand, upselling involves offering a product of a higher value. Customers enjoy better features and can stay with the business.

2. Increasing Customer Loyalty

Cross-selling and upselling lead to increased customer loyalty in equal measure. Customers get either added products or those of a higher value. Both involve personalization that significantly enhances the customer experience. Either way, the company increases customer sales while meeting customer needs.

3. Higher Customer Satisfaction

Due to offering better products or those of a higher value, cross-selling and upselling increase customer satisfaction. With every purchase they make, customers get something extra. It enhances customer experience and satisfaction.

4. Improved Customer Expansion

One of the greatest assets for a business is having satisfied customers. By talking positively about the business, they attract other customers, which enables the business to improve customer expansion.

The Bottom Line

The decision on whether to cross-sell or upsell depends on what the business looks to achieve. If the aim is to diversify sales, cross-selling is the best strategy. However, if the business wants to sell more of one product, then it should try upselling.