Optimized Ecommerce EP 035 – Increasing Brand Profit through Upsells, Downsells & Cross-sells
Today on The Optimized Ecommerce Podcast, James Backenstose joins Tanner Larsson to talk about how can Ecom Stores increase their brand profit through upsells, down sells, and cross-sells. Join us in today’s episode and learn some of the best upsells, downsells, and cross-sells strategies you can apply in your stores and how these can
Welcome to Episode #035 of Optimized Ecommerce – Increasing Brand Profit through Upsells, Downsells & Cross-sells. I’m your host, Tanner Larsson, CEO of BGS.
BGS means Build Grow Scale! It is a community that we founded where eCommerce entrepreneurs and physical product sellers come to learn how to take their businesses to the next level.
Joining us today is James Backenstose one of the pioneers of BGS Revenue Optimization Program. He is one of our Revenue Optimization Experts who works with our amplified and partnership stores and also oversees the entire revenue optimization operation.
Here’s just a taste of what we talked about today:
James shared a little background about himself and what he does on a daily basis.
James was one of the very first Revenue Optimization hires at Build Grow Scale, he was hired in November 2017 – a day before Alex entered the program.
He started out learning the basic Revenue Optimization process and fine-tuned it over the years. James elevated himself through his knowledge in eCommerce and all its aspects. Now, he oversees amplified clients from communication to basic revenue optimization principles to training and onboarding new clients. He also dabbles a bit of minor developer work.
Over the years, James worked with big stores, seeing them grow from their infancy to reaching 3 to $4 million a month in gross revenue.
Then, we talked about the specifics of upsell, down sell, and cross sell. What are they? How do they work? And how can these affect your store’s traffic?
Upselling is the process of adding a product to their cart or offering a better product. For example, if a customer adds a neck massager to their cart, you can offer them a higher model as an upsell. But if the customer declines the upsell, then the down-sell would be something much less expensive than the original product.
Cross sell is offering a related item with the original product which the customer added to their cart or purchase. For example, someone buys a shirt with a design on it, the cross-sell would be offering them a related item on that same niche, like socks with the same design. It should be something relatable to the original product they have purchased.
We also discussed a few other fun topics, including:
- Doing bundles for upsells and down sells, not just quantity type or a more expensive item.
- The basic overview of upselling and down selling.
- Where is the best place to offer upsells, downsells, and cross-sells?
- Why do stores need to look at the products they are offering for cross sells?
- How does chaining the upsell on the downsell work?
- What is the average baseline take rates?
But you’ll have to watch or listen to the episode to hear about those!
How to Stay Connected with James Backenstose
Want to stay connected with James? Please check out their social profiles below.
Also, James mentioned the following items on the show. You can find that on:
- Stickers and decals – A decal is basically a decorative sticker, generally used outdoors. These types of items can be used by stores for upselling.
Tanner Larsson 0:07
Hey, everybody, welcome back to the Optimized Ecommerce podcast. I’m Tanner Larsson. And we are gonna dive right in with a really cool episode on a topic that you guys have been asking a ton of questions about in our various Facebook groups on our blog and everything else. And that topic is, what about upsells downsells? Cross sells how to use them. What are they? You know, we’ve talked about this a little bit in some other podcast episodes in the past with other team members. But we decided to do another focus podcast specifically on these three things and how you can use them to not only maximize your AOV boost your LTV, and just actually make your store or brand profitable, and also convert cold traffic, which is the whole thing that we’re after. So to help me do this episode, and actually share his wisdom, we’ve got James Backenstose, who James is got Dude, you’re what the second first person we ever brought in for RO.
James Backenstose 1:01
First RO, first RO so.
Tanner Larsson 1:04
Yeah, cuz you came in. And then Alex came in, right, like. One day later correct. One day later. So
He’s got massive amounts of seniority in the company, considering he’s one day older than Alex, but he’s been around with us from the very, very get go has helped us pioneer a lot of what we do. And not only is he a revenue optimization expert in terms of working on our amplified stores, and our partnership stores and stuff like that. But James is also the senior RO who also runs and oversees the entire RO optimization operation. So he’s basically running all the other revenue optimization experts and helping them and guiding them and overseeing their stores. And so he gets a really, really good look at, you know, what’s going on. So the other little tidbit, before we jump in, why James is so good at talking about upsells downsells, cross sells and stuff like that Is he really got his hands dirty with this with one of our past clients, or existing clients, I should say, who does a lot of racing. Well, they do a lot of sales. Of course, they’re doing about a couple million dollars a month. But they started out when they came to us at around 30 grand a month. And over about a 30 month period, we took them from about 30 grand a month to 45 grand a month, and then up to two to $3 million a month. And I think they topped out or close to around $4 million a month. A lot of that is due to being able to leverage traffic at a very, very effective rate. And to do that we had to use cross sells upsells and down sells. And James was the guy implementing all of that on that massive store. So James enough bragging about how amazing you are. Now tell people kind of what you know, so let’s start with Actually you know what? I told them a little bit, why don’t you give a little bit more background on kind of like what your day to day is like and you know, kind of just what you do because they’ve never actually gotten to talk to you or hear from you before. So
James Backenstose 2:54
Sure, sure, no problem. Like Tanner said in the intro. I’m one of the very first RO hires at Build Grow Scale I was hired in November of 2017. One day before Alex, I was like to make that point. And, you know, we just started out learning the basic RO process and fine tuned it over the years. And I’ve elevated myself just in my knowledge of e commerce. in all aspects and present day I oversee the Amplified partner are all relationships between BGS and our amplified clients, from communication to basic RO principles to training and onboarding new clients. I’m kind of got my hands in a bunch of different pots all day long, as well as you know, new site launches. I dabble in a little bit of minor developer work. So I’m all over the place. But I have had the blessing to work with a lot of big stores in my path. And seeing them grow from their infancy to like Tanner’s cut three $4 million a month in gross revenue. There’s a lot of different pathways that we took to get there. It’s something that didn’t happen overnight.
Tanner Larsson 4:10
That’s for sure. So I know as we talked about, one of the big things is their ability to leverage traffic, right. And so today, what we’re talking about specifically is upsells, downsells. Cross sells, and how what they are how they work and how they can affect your traffic. Right. So let’s jump into the first part of it. And the two they’re linked, right upsells and down sells, what are they?
James Backenstose 4:35
So what an upsell is, is basically when someone adds a product to their cart, you offer them a more sense of better product, right? So if they say add a, I don’t know a massage of massage or for their neck to their cart. You then offer them with a higher model, a better model of that massager, as the upsells, right, increase your average order value, lifetime customer value, etc, etc, more profit on your end. And then a down sell is a direct opposite of that. So, a down sell would be followed. The downside would follow the upsell. So using a massager as the base product here for this demonstration, there upselled a, like a better model and more Elite Model and the the customer declines that it says no, they don’t want it, then the down sell from that flow would be something much less expensive than the original product, that you still get to increase your average order value by adding a second product versus an upgraded product. So that would be the example of a down sell.
Tanner Larsson 5:49
So now with upsells and down sells, we can also do it with you know when it’s with quantity type items, right? It doesn’t always have to be a different item or a more expensive item. You can do bundles and things like that, right? Well, you talk about that for a second.
James Backenstose 6:01
Correct. So a real simple way to upsell it would be to utilize like a free shipping threshold, right? So when a customer adds a shirt to their cart, you know, say it’s 30 bucks, but the free shipping threshold on your store is 50 bucks, you can say have upsell thing, you know, add one more item and you get free shipping. That also, you know, intrigues the customer to buy that one extra item because they know there’s no added cost when they reach checkout because they’re they’ve reached that free shipping threshold.
Tanner Larsson 6:36
Cool. All right. So though that’s the two today, we’re gonna get into more details guys as we go. But let’s start with a basic overview of those two. And then the other piece is the cross sell and it doesn’t quite fit in with those two, it’s just another aspect of, you know, increase in AOV. So why don’t we dive into what that is.
James Backenstose 6:53
So cross-sell is basically offering a related item with the original product the customers added to their cart or purchase, right. And I’ll just do the simple, real simple example. And the most talked about POD upsells. Say someone buys a shirt, and it’s a second amendment shirt, right, and it’s got a design on it a cross-sell would be offering them a related item on that same like niche, right, so they buy a shirt, I’m going to offer him some socks, something relatable to the original product they’ve purchased. Right, versus offering them a better or lesser product is just something in the same line of it, or even another shirt. That’s the same niche. Yeah, it’s just offering something relatable to that original product.
Tanner Larsson 7:42
And Okay, so let’s talk about kind of baseball, let’s talk about where you do this. So sticking with the cross sell right now, where is the best way and what is the best way to offer a cross sell and then let’s kind of give some examples of that.
James Backenstose 7:55
Um, so a cross sells these can be a little tricky, there’s two main spots, the best way to offer a cross sell that would be after an item is added to the cart, offering, you know, related items, in addition, or you offer inside of the cart itself. But just a very quick, easy way for them to add a product. The most effective way for this is to offer a product that doesn’t have a lot of options or variants. That way, it’s just a one click Ad right so like a one size fits all hats or socks or something very, very simple for the consumer to add. And you know, have your profit margins go much much higher.
Tanner Larsson 8:33
So I want to touch on that for a second James because that’s a big part of it, right like the we see cross sells done wrong all the time where it’s like, yeah, I added this sweatshirt and then they cross sell them a dress which isn’t related but the dress itself is complicated because the customer can’t make an impulse decision to buy that they need to check it out. Right. So I just expand a little bit on that thought process as to how we need to look at the products that we’re offering.
James Backenstose 9:02
Sure, um, for a cross-sell you want to make it the easiest way for the consumer to add that item to their their order or to their cart. By doing this, you know, don’t have it be an item where there’s sizes and colors and gems and fabrics to pick out right. Here’s a product that’s very, very profitable for you. That’s also very, very easy for the customer just a one click and add it to their cart without much thought because what happens is when they they go down that rabbit hole of you know this more complicated product that you’re offering and then they get sidetracked and then they just abandon completely and then you lose the whole entire sale. So there is a little bit of a technique to it. You don’t want to disrupt the buyers journey number one. For one make it relatable to the consumer and the product that you’re cross selling with. Also just as important, if not more important would be do not disrupt the buyers journey. making it more complicated. Clarity Trump’s persuasion all day long in all facets of e commerce.
Tanner Larsson 10:07
And then cross sell guys like one of the ways to look at it is think about it like when you go to a grocery store, the impulse purchases that are right in front of you at the checkout counter require no consideration, do I want to pack a gum? Or do I not? Do I want some Skittles or do I not those things, you don’t have to think about it, you just if you want it, you grab it, you add it. That’s the kind of level of complexity we’re talking about or non complexity when you’re adding a cross sell, because you don’t want it like James said, you don’t want to interrupt their thought process. So the simpler it is, the better it is now, do all products lend themselves to this? No, you may have to get creative, you may have to figure out additional products or supplemental product or do something like we like to do which is priority processing, which is basically a lot or gift wrapping something that’s you’re basically selling a very generic offering that has a high value perceived value to people. And you can you know, use that and not actually even have to come up with another product. Both of those things are, you know, priority processing or gift wrapping is something that’s super simple, or would you like to include a note or something, you can always add stuff like that to it.
James Backenstose 11:17
So James. Good thing you touched on the priority processing thing, that’s one of the easiest ones to do and increase your, you know, average order value by three or four bucks per order. And that adds up over time, especially, you know, when you’re putting two or three hours through, you know, a week. And typically, the way we would offer that would be just something like, you know, add priority processing to your order, and your order will process up to 48 hours faster. It’s an impulse decision for the consumer. And of course, there’s no one that’s going to say no, I want my order to take longer. Yes, that’s just not something to do. And you know, it typically costs all business owners like two three bucks in order for a property processing depending on who’s you know, doing your fulfillment, or your warehouse, and then you can sell it for 699 799, upwards of 999. And your profit on that you know, is there’s no cost of goods except for just the two or three bucks service charge, or you don’t have to pay shipping on an extra product. So it’s really, really profitable. And when people do take that priority processing as an upsell from the previous data we’ve collected on stores, when someone does take that I’ve seen conversion rate is 45%. When priority processing is taken.
Tanner Larsson 12:30
Yeah, because those are your just best absolute buyers possible, because they’re and they’re also people who take the priority processing if you guys track that, they’re also the most likely to buy become repeat purchasers. And I mean, everything building off that that person who takes that little upsell indicates that they’re a potentially a whale client for you too. So you want to make sure you treat them very, very, very well and follow up with them. Alright, so that’s kind of the cross sell type thing. What about upsells and down sells where’s the best place to offer those?
James Backenstose 13:02
All right, so upsells and down sells the absolute best way. Or the best spot to offer them is a complete post purchase upsell for one offering it pre purchase. You’re disrupting that buyers journey especially when an upsell You know, you’re upselling them a more expensive product and additional product is not an impulse buy something that’s a lot to think about. And you don’t want them to be thinking about that so much that they you know, abandon and don’t make the first purchase. So the ideal spot is a true post purchase upsell so that after they give the credit card number they make the original purchase. Depending on what app you use for this, I know Shopify is coming out with their own inter integrated native one click upsell with Ezra that’s still in its infancy. So the you know, the experience I have is with one click upsell, and it’s not a true post purchase payments delayed, you know upsell, it comes as a separate charge, but you have already purchased the first order. So when you offer that completely post purchase, you already have the original sale, you’re not disrupting that original buyers journey. And you can tell a story with your product a little more because the customer has already purchased and now you can, you know, put their focus into that product with different copy descriptions offers, whatever it may be, and really speak to your audience.
Tanner Larsson 14:33
So that you can have fun with it. That as more complicated product that you wanted to use as a cross sell but you couldn’t because there were too many variations or colors or options or consideration can totally be used as the upsell because you have a full page like a product page to describe it right?
James Backenstose 14:50
Yep, precisely took the words out of my mouth. I was going to compare it to having a just a landing page at the very very end of your funnel right where you can get in detailed, you can have the various sizes and colors and fabrics and long descriptions and, you know, offer, then this is also a way too where you can offer a discount at a higher level than you can on your store, because you’ve already acquired that customer, you’ve already paid for them to hit your site. So this is just a higher profit margin, right? Because you’ve already acquired them, they made the original sale, that’s done. Now this margin just became elevated. And then you also can couple downsells with the post purchase upsells as well, they may not like the first product that you offer them and say, Okay, thank you How about this. And you formulate that the same way, a little less expensive item still related to the original product. That is the data that I’ve collected over the years that performs?
Tanner Larsson 15:49
Yeah, and the down sales guys are the thing is is like you have an upsell and a down sell. Then if someone says yes to the upsell, they’re not going to see the down sell the only time someone sees the down sell as if they say no thanks to the upsell, right? So if you’re thinking oh my god, I’m gonna have to show all these offers to everybody. And I don’t want you know, if they buy this, I don’t want to see it. Well, they won’t. It’s that’s the whole concept of the down sell. Now, the upsell itself, guys is the perfect opportunity for you to introduce your continuity program as well. If you have a recurring income thing, whether it’s a consumable product or membership and Association, a newsletter, whatever it is that you’re selling on continuity, that’s the best time to offer it. So if they’re buying the massager, maybe the upsell is a micro continuity membership that teaches them all the different ways to use it and gives them access to a portal where they can watch videos and learn all that stuff. In addition to other things, or maybe it is a maybe you could also position a warranty there or things like that. So there’s lots of different ways you can use it. An example of a warranty, you could have a you know, maybe your product comes with a one year warranty, you could sell a $100 product. Maybe you sell a lifetime warranty for 30 bucks, 25 bucks, something like that. And they’re like no, no, I don’t want that down. So could be another warranty that says hey, how about just a five year warranty for 15 bucks or something like that. And the thing is, is as long as you honor it, it’s legit that and if you go to like Best Buy or Amazon or any of these stores, they’re all offering these trade protection warranties for like two or three bucks. They’re all based on a percentage of the product price. Why? Because warranties are huge money. And most of them go unredeemed just like gift cards. So that’s another way you can leverage an upsell. But James, we were talking about the kind of chaining the upsell on the down sell. What are your thoughts on chaining upsells? How many is too many? what’s acceptable? How does that work?
James Backenstose 17:49
Um, so that’s going to depend on each store, right and your audience specifically I have most experience with like print on demand upsells. And we’ve tested this extensively, it’s print on demand tends to have a lower return customer rate. So with that, I’ve tested like upsell with one down sell twice in a row, right? So if someone sees upsell, one decline, if they’re seeing the down sell, then they decline that down. So they’re sent to another upsell followed by another down sell. So So there seems for
Tanner Larsson 18:25
potentially for office,
James Backenstose 18:27
correct that that they say no to every single one of them. If they say yes to one of them, the ones that follow they do not see.
Tanner Larsson 18:34
James Backenstose 18:37
And that is about the max, I would probably go as far as offers you can go deeper, but by that time, you’re probably irritating your customer a lot. So it’s a lot of testing, right. And with the applications we use like one click upsell, you can split test inside of the checkout itself. And that’s where you can really fine tune it and how many to offer and you’ll see the take rates go up and down based on your offers. Usually the deeper someone goes into your upsell funnel meaning like Step three, the take rates are going to be really high or they’re going to be extremely low. It’s one or the other. There’s never really a middle line. So the best way I’ve ever seen it happen is just one upsell with one down sell end of all that’s that’s kind of the middle line and the medium where you’re not irritating that client was hammering them with you know, offers and you’re also maximizing the opportunity to do close that sale and to make that upselling increase your profit. Yep.
Tanner Larsson 19:41
So guys, I want to point out something that James said when he was talking about like the POD stuff they were testing the print on demand. He talked about having two upsells and with each upsell having its own down sell and you know, talking about how they’ve tested in different ways and that if they took any one of the offers, they don’t see the rest of the offers. Right. That’s one way of doing it. And it’s something to test in a traditional upsell down sell environment, if you have two upsells, and let’s just let’s just say two upsells and down sells, just like James’s example, the flow would go they complete the purchase. They see upsell, number one. If they say yes to upsell, number one, they see down sell number one, okay? Either way, whether they say yes or no to either upsell one or downside one. Typically, they would see upsell number two, okay, and then if they took upsell, two, they would not see down sell two. And if they did not take upsell, two, they would see downside to what I’m saying there is the difference is that when you chain upsells, typically an upsell means that someone is always going to see all the upsells that you have, whether they say yes or no, but they’ll only see downsells. If they say no.
Right. so, Now the thing is, is if you’re going to have multiple upsells, you may not want to have multiple downsells, you may want to just be very careful with that. So we’ve seen people change three and four upsells together in a row. And like James said, that really typically just pisses off the customer. Because then they start feeling taken advantage of that you’re you know, you don’t care about them, you’re literally just trying to sell them which obviously store owners we are. But the customer has to come first in this environment. Because we’re building a brand we want them to come back, we want to and the real money with a customer is not made on this initial sale. It’s made on the repeat sales where that lifetime customer value comes into play. So if you alienate them with your crazy upsell flows, they’re probably never going to come back to you.
So okay, let’s, um, let’s dive into a couple examples of kind of we’re at. So let’s start with, since we’re on the downside, why don’t we start with downsale examples, what are some very well actually know what let’s start with upsells, because that segues into the down sell better. So upsell examples, what are some different ways you’ve seen it? So examples. So
James Backenstose 21:58
I’m gonna stick with the POD the platform just because it’s very easy to understand, and everyone pretty much knows what that is. So the way we tested and succeeded with, you know, print on demand post purchase upsells is offer the upsell that’s related to the specific design on the shirt. So with one, click upsell, which is what I’m most familiar with, you send your product in the funnel based off of tags. So if you have a second amendment related t shirt, you can tag it specifically. So it’s offered with the matching design on a hat, right. That is the best route to go for the POD the POD game just make it very, very relatable. Or you can offer a second amendment shirt paired with you know, their original purchase as a second amendment gun toting skirt, you can offer another shirt that’s in the same niche, the second amendment niche with a different design that, you know, that are related, right, because the Second Amendment problems use as example because they’re very dedicated crowd they love it, speak to your audience, right, you’re going to have your dedicated audiences on those hot button topics that they’re going to be work how they wear it right then with the down sell paired off of that the best performing downsell I’ve ever seen. And this could be paired with the cross selling the product page for priority processing is priority processing and post purchase. Down sell flows, kills it every time. I’ve seen 60 70% take rate on some of them. If your supplier can then force you to do fulfillment yourself.
Tanner Larsson 23:41
It’s really easy. You just fill those orders first, It’s super easy to do. Yep,
James Backenstose 23:45
yep. And, you know, at 699, you’ve already paid for the customer, that’s an additional 699 if you’re doing it yourself as a free you know, six bucks per order that adds up over time, it may seem small out the gate, but that compound effect there is phenomenal. Not just with the money aspect of it. But you know, you provide that experience for your consumers and your, you know, customers where Oh, my God, I got my product shipped to me in five days were so and so it took three weeks, right? It, it goes deeper than just the money. They provide that lifetime value for the customer. Yep. And if you if you make these upsells fun and the cross sells fun and make the copies funny and relatable, like people are gonna remember that they remember the story. They read that you’re you’re talking on their heartstrings at that point, and then you become a brand.
Tanner Larsson 24:41
Yeah. And another thing on these, since we’re talking so much about POD and other things that we’ve used very successfully in the past. If you’re like man, I only have this shirt or I only have a few shirts or whatever. Obviously the hat works really well or creating a bundle where it’s like, Hey, you bought you bought shirt, A Get shirt B and a hat for 45 bucks or whatever it is. And then the downside could be, oh, you just want the hat. But the other thing that I wanted to talk about was, you can also sell more of the same and it works really well, especially in an impassioned audience like second amendment or anywhere where they’re very, very passionate about what they do, because their friends are usually just as passionate. So if they buy a second amendment shirt, you could offer them another, the same exact shirt as the upsell and say, Hey, would you like to get one for your friend or family member for half off, and or 40% off or whatever the the discount is, and then they can select the size boom, and they can add another shirt, you can also, you know, they can do that on the front end. But sometimes they don’t think about it that way, until you incentivize them. So there’s ways you can do that very creatively with your upsells. And that’s where James is talking about kind of making it fun and different. It doesn’t have to be, you know, something crazy. It can be it can be very simple, like the priority processing, or, Hey, you got the shirt with the BGS logo. Well, now I’m going to sell you a hat with the BGS logo, oh, you bought the hat. Now I’m going to give you the T shirt or you know, whatever the combination is sweatshirt, jacket, whatever. The This is kind of odd, but in the in the print on demand space. And then the other space, people, if they like the design on one thing, they’ll typically like the design on multiple things. In my mind that I like I wouldn’t want to have the design on multiple things, but that I’m not the audience, the audience is typically like that. So keep that in mind as you’re going we’re talking about a POD here. But it applies to other stuff. If you’re selling supplements, the easiest supplement upsell is more of the same if you don’t have continuity. Either your upsell is continuity, Hey, get on a subscription program, or it is Hey, you bought one bottle, would you like six? No, the down sell is about just three. Very, very easy to do those kinds of things. You can upsell batteries, if your product that requires batteries, or rechargeable battery system, you know, or that’s the upsell. And the down sell is just regular battery. There’s so many different ways that you can you guys can do this. It just takes quicker than you thought,
James Backenstose 27:06
Stickers and decals are really well too. And they’re cheap. Their Cost of Goods is extremely low, you can sell them for 699 a piece, your cost of goods is probably 20 cents or something. And people love stickers. People love decals. So that’s a great down sell as well. Yep, that stickers are especially if it’s a sticker of the design that’s on their shirt. If you’re doing something along those lines. That’s really what sucks it in. So yeah, that’s great. Now let’s talk cross sell examples.
Cross sell example so, the best place today to offer cross sell is pre purchase. From my experience, there’s obviously testing that needs to go into place to find that weak spot for your store. The cross sell example would be like Tanner mentioned earlier like another of the same item for lesser costs, or a related product, it’s cheaper kind of crossover real tricky to to fine tune that takes a lot of testing, not only with you know where to offer it what to offer. Because it’s got to be relatable to the original product, you’re not you know, offering a better product or a lesser product, it’s got to be somewhat on the same line. Sort of like, I just use like pod for example a shirt, your cross selling another shirt with a similar design or a second product to increase, you know, your AOV to to incentivize free shipping or something like that. Like I said, the best spot in the funnel, where I’ve seen that cross seel perform is usually on the cart page, or as a product added to cart a pop up or something like that is implemented now pop ups can be distracting, and they can increase your bounce rate. So that’s something that needs to be tested on your store. Typically, with higher AOV products you can offer you know, a pop up like that, because the customer is really engaged in your product. It’s not like spending 20 bucks on a shirt or spending, you know, three 400 on a physical product. So they’re reading all your copy, they’re comparing it to competitors. So they’re engaged in your store, so you don’t have to worry as much about disrupting their journey with like a pop up as you would on a lower AOV store. So it’s really just the importance of testing a location, and of course testing the offer as well.
Tanner Larsson 29:28
So with that, guys, the cross sell, like in the cart is great if it doesn’t distract. And this is where, as James I just want to really really drive this home. Just because you see your AOV go up does not mean the cross sell is actually helping you. Okay? The cross sell could be driving AOV up. Of course it is it’s of course somebody’s going to take it so your AOV is going to get a little uptick. It’s going to have that green arrow, but it could be hurting other key metrics like conversion rate, proceed to check out many others or even add to cart depend on how you’re using it. And it could be effective bounce rate. So all those other metrics could actually be going down, which create a bigger loss for you than the gain you get from the increased AOV by using the cross sell. So this is one of the things why James says they’re tricky. They’re very powerful when used correctly. But don’t take it at face value. Just because you see an uptick in your AOV, you’re gonna see it just by turning it on. And it’s gonna happen. But that doesn’t mean that’s right. And, you know, we spend a lot of time fixing stores, and one of the things we usually do is take off their AOV thing once we test as we test it, because we found that Hey, guys, yeah, your AOV is up, but everything else is down. And usually the it’s it’s more painful loss than what the uptake is. Also, with that, you’ve got, you got your cross sells. Again, I just want to reiterate the simplicity of them is key that that that’s going to increase the take rate, it’s going to increase the completion, the acceptance, also the decrease the amount of people who get distracted, and go down that rabbit hole James was talking about. So another example would be if you’re selling sunglasses, offer them a case or a cleaning kit, something very simple. If you’re selling a flashlight, offer them batteries, if you’re selling a like a tactical flashlight, and you have lenses that can go over the top to change the color of the light, offer them a lens kit. There’s very simple things offer them a lanyard to go off the back or a pressure switch or, or bicycle mount or whatever. But it’s got to be something that can be described with What do you say, like two sentences or less?
James Backenstose 31:41
Yeah, something very simple. Yep. And they don’t have to research it, right. Like you said, it’s directly related to the original product, they don’t need to look at a research they know it’s paired with it. That way they can make that impulse decision, they don’t got to think about it. And it’s
Tanner Larsson 31:56
got to be related too like, either related or applicable to every product. That’s that’s the thing. So applicable to every product would be gift wrapping priority processing. And gift wrapping could be a seasonal cross sell that you use doesn’t have to be 24. Seven. And you can obviously charge more during the holiday seasons for that as well because people are rushed. But if it’s you know, just because you have something simple like, like a pin, like, okay, we’re gonna give you this, I’m going to upsell you this pin, but I bought my product that I’m adding to cart is a shirt that’s not related, your people are gonna be like, why are they offering me a pin. But if you offer me a hat with a unisex hat with the same design, I don’t have to think about I know it doesn’t it’s one size fits all. I know it’s got the same design, I can see you know what it looks like with the picture. And I should be okay with that. But if you’re talking profit hats, now we got a whole other story. Because pro fit hats don’t fit all head sizes, they have to have a small, medium, large, whatever. So now they’re going to have to go Okay, well, how does what’s the sizing on these in certain types of you know, fitted hats have different heads or conferences than others, in terms of like a small may not be the same as a small other brand. So you’re creating complexity in your buyers mind when you do that. So make sure it’s super related. The other example we talked about is like, when someone’s buying a pocket knife, don’t offer them a camping tent, or something crazy like that. Like even as an upsell your upsells need to be related as well. Just because they bought a hunting knife does not mean that they want to buy your sheep herders tent. It’s not related, but you can offer them another knife, a pocket knife, a different a sharpener, a different sheet, a flashlight, you know, those things are more relatable, you just kind of get into your customer’s head and see the other thing. They can use their search their their store search results, right and kind of to seek to figure out some ideas for upsells and down sells, right.
James Backenstose 33:50
Yeah, I mean, using a start search results, I mean, that’s one of the easiest ways to find out what your your consumer base is interested in. And you know, if they’re searching, and you can get reports pulled on Shopify as well, I know there’s apps that can pull like the most commonly paired product when when more than one product is offered. And you can really, really utilize that data and hammer home your upsells cross sells and down sells, because if you’re not offering them now and you see a report where these two products are constantly bought together, you can increase the number of times they’re bought together by offering it as an upsell or cross sell based off of just shopping behavior data prior to you know, implementing all that. So that’s another key component right there. I’m glad you brought that up Tanner as well and you can from what
Tanner Larsson 34:42
We were talking about, you guys get since you’re if you’re using like one click upsell and it’s tagged based. You can have different upsell funnels based for different products. So you don’t have to have one generic upsell that everybody sees. It could be like they bought if they bought product A they see upsell upsell funnel one If they buy product B, they see upsell funnel two. And so you can have it very, very dialed in based on what people are buying. So if people the most people do though is that products A, B, and C, and they show upsell one to everybody. The thing is that may not be as tightly related, and it may convert great for products A and B, but the upsell doesn’t convert at all for product C, so you’re losing money on everybody who buys product C, because you aren’t showing them a relevant upsell.
James Backenstose 35:29
Right, that spot on, I’ve ran on, you know, client stores that we’ve had, you know, 35 different upsell funnels going at one time. Depending on how many products you sell, originally, obviously, you can’t have 10 products and you have 35 upsell funnels, it just doesn’t add up. But you know, if you get to 200 products on your store, you take those top 20 that you always know are going to sell, and you upsell and cross sell based on that original product. And that’s where you’ll find the best results. And then once you find that sweet spot, it’s almost like it runs itself, you don’t really have to adjust it that much. You don’t got to watch it and tweak it. I mean, obviously you want to split test here and there. We always want our numbers to go up. But, you know, if you have a 25% take rate on an upsell, and you’ve already got your acquisition costs taken care of from the original purchase. You know, I always say you know, if it ain’t broke, don’t fix it.
Tanner Larsson 36:27
Yeah, and that’s the thing, there’s always a, you know, if you’re getting it can convert really well, there’s a lot there’s, you know, there’s the Law of Diminishing Returns at a certain point, you keep trying to over optimize that upsell. And like it takes way more time than it’s worth. And you’d be better off going and focusing on either another upsell, another front end optimizing something else in your business, because it’s already performing at a very, very good rate.
James Backenstose 36:48
Right. Also, you can utilize, you know, I in this spoke earlier, as post purchase, you can hide that post purchase product from your store’s front end, and make it exclusive for the post purchase where you can offer that higher discounted rate without affecting your you know, your profit margins on the front end from your acquisition costs, cost of goods and shipping and stuff like that. So like, approach your upsell if it’s, you know, it’s this sense of urgency. scarcity, for that product only offered this limited time only reduced price offer available for today only whatever it may be creates a sense of urgency. And you can’t afford to discount the product rates at that point. Because like I said, You’ve already bought the customer they’ve already purchased from you and you’ve covered that acquisition costs.
Tanner Larsson 37:40
Yeah. And that actually brings up a point you can afford a discount. The other kind of common belief that’s not actually true is that upsells always have to be more expensive than the product that they’re buying. Now, in theory, yeah, you should, if you can do it, and it makes sense, then, yes, a more expensive offer makes sense. But if you have a product, let’s say they buy a $24 shirt, and you happen to have a $10 something that goes with it that has a really high margin. Why not if it’s super related, and people are going to buy it, and it has a great take rate, your take rates, obviously, the lower the price is, the higher the take rate will be. So if you’ve got a good margin, if you know and you can get a high take rate, it’s totally fine, like selling a $24 shirt or a $30 shirt and then offering them a $15 shirt as like a Bogo, as the upsell is totally fine, providing that the margins work out and then you have to do the calculations like okay, if I raise the price and my conversion goes down, does the increased price mean more profit even though the conversion dropped? Or do I need to keep the price where it’s at and allow the current version to be higher, there’s going to be a trade off you just got to find out what that you know, happy medium is for you. And since it’s on the back end, it’s not about acquisition of a customer we don’t care about that we’re literally at maximizing profit. So you can play with that and sometimes I know in one of our free plus shipping funnels that we used to do, we were selling a boresnake on the front end which is for a gun it was basically a gun cleaner that you pull through the barrel and the upsell was to get two more for half the price and our margins on them were phenomenal. And the take rate was huge. And then what we did is a second upsell Would you like a shotgun board cleaner because we were selling a rifle bore cleaner for for a two to three for ar 15 and then we offered them a 12 gauge bore cleaner or like a bundle pack or they can get a shotgun 762 and a 12 gauge 20 gauge and 716 it was like a full rifle bundle pack. And that so they in that whole upsell was nothing but boresnake it was the exact same product, just different variations of it. And in two upsells and the take rates were huge and it went Like for dollar 95 cent free plus shipping, you know, to I think $10 for the first upsell, and then $28 or $38, for the second upsell, it defies logic, but it converted like crazy. And the profits were great. So guess what? We broke the rules. And we read, because it worked. So, James, I know I kind of went off on a tangent there. But you were, as you were finishing up on that you sort of talking about take rates and stuff like that. So what what are some, you know, average or baseline take rates? And I know, it varies, but what kind of what do you want has been your experience in that kind of stuff for upsells downsells, cross sells things like that.
James Backenstose 40:42
So I know I spoke on to like the simple as upsell with priority processing offered, like on a product page
Tanner Larsson 40:49
As a checkbox, right?
James Backenstose 40:50
You’re right, it’s just a checkbox. The take rate on that is probably around 15 20%, I would say under overall overall users. But more importantly, when that item, you know, and when that priority processing is taken, you know, they’re converting, you know, upwards of 40%. That’s pretty high. I’m not saying that that’s normal, that’s probably on the high end. On an average, I’d probably say around a 10% take rate with a 20% conversion once that that’s taken depending on the offer, right? If you’re asking for priority processing, you have your product shipped 24 hours earlier for 2999, they’re probably not going to take it. Post purchase, though, that’s where you can really start seeing the big fluctuations between horrible take rates and out of this world take rates. Average though, for a post purchase upsell down sell whatever it may be around 25 to 30% I’ve seen. Usually the more people you send there. Go ahead finish your thought. I said, the more people you send into that funnel, your take rate is going to obviously go down right just like as you drive Blizzard traffic to your store, your conversion rates gonna go down, profit is going to go up. So not both of need arrive and things. It’s all about the margins at the end of the day.
Tanner Larsson 42:17
Exactly. Now what that’s where I wanted to go with where you were saying was, like, if you think about it, certain kinds of, you can’t compare upsell to upsell when they’re when they’re in different things. Like if we’re comparing a buy a shirt, and we’re selling them a hat as the upsell and that take rate is 28% or 30%. And then you have another upsell, which is your continuity program for your membership. And it’s its take rate is 6%. You can’t say oh man, that’s not good. Because here’s the thing 6% on a continuity, if that continuity is getting you new customers and your you know, your average retention rate of their continuity, and you do the math, it may be more beneficial to you to gain new continuity members at 6% than to sell a hat at you know, 28% conversion. And so people are like, well I gotta sell the hat cuz I want that now money but you want now money or do you want to build a business that’s going to start cranking? Me, I would take that if I knew my retention rate was good, I would take the 6% conversion all day long on the continuity customer and give up the other one. Now, not to say I couldn’t put that hat as a second upsell. But if I’m going to do continuity, it always needs to be the first upsell. And we’ll do that later episodes guys where we’ll get real deep into continuity to talk to you guys about that. But I just wanted to throw that out there that not all again, not all upsells are created equal. Just because it has a higher low conversion rate doesn’t mean it’s a bad upsell either or a good upsell. You could have one that has an amazing take rate. But if your margin sucks on it or if shipping costs increase or you know because remember they’ve already paid the shipping typically you’re giving them free shipping on the upsell for whatever you’re adding. So like if they buy like a travel first aid kit for free shipping and then you offer them an upsell of a hard sided luggage with free shipping as well Well guess what? You’re eating that shipping cost to ship that much bigger item with the smaller item. And even if the take rate was 70% if the price isn’t right and your profit and the offset of the shipping cost, you might have been better off just selling them a expand something little like party processing for six bucks and they’ve actually made more money with less hassle. So you got to kind of you know, think this stuff through it’s there’s a lot of right James has a lot of thought a lot of testing that goes into this.
James Backenstose 44:36
Yeah, with that being said on the on the hassle topic to that one thing that you know that needs to be taken into account too is these upsells and stuff like that the more you offer that stuff, your customer service is going to need to be a little more elevated as well especially with like priority processing and products aren’t getting out on time. Black Friday, Cyber Monday hits, you know, staging is going to increase on your ship times. So you got to be able to fine tune it more than just looking at it on it and making that sale. There’s a lot of stuff that happens after that sale, that’s got to be taken into account. People had to drop shipping terms, right? We’ve had party processing and processing on stores where we had like, 60% take rates, and we literally had to shut it off. Because we’re breaking the supplier to the supply chain, they just can’t get it out fast enough. I know we all want to bet that money, but you know, you got to keep your customer happy at the same time. Otherwise, What’s it for? You know,
Tanner Larsson 45:31
yeah, and if your products come from multiple, multiple manufacturers, or multiple shipping locations, that’s another problem too, like the best and they may have upset product A which comes from, you know, supplier a, and then product B, which comes from supplier B. So you upsell it. And now instead of incurring a marginal increased your shipping charge by bundling two together, you’ve incurred in completely new shipping charge, because they’re two different packages going from separate locations. So not only does logistics get more complicated, you’ve also got the technical aspect of routing those products, and then you’ve got the added cost that you’re eating. Yeah, what made the sale? But why don’t we have any money. And we’ve seen this a lot where people are drop shipping, or they’re using multiple suppliers, and they’re mixing and matching their upsells. And all of a sudden, they do their numbers, and they’re like, we’re losing money. upselling Why? Well, because they’re not tracking everything all the way through, right, so definitely stuff you got to be aware of. That
James Backenstose 46:28
that creates a customer service, issue two, when you start doing things just like that, when a customer, you know, orders a product, and they take two upsells, all of a sudden, they get three order confirmation emails with three different tracking numbers, because they’re gonna have three different locations. You know, they might not know that, and they’re gonna be confusing, they’re gonna be contacting a customer service teams. And they’re gonna be, you know, just pasting that around for a while. And is that really worth, you know, making an extra 10 bucks on that order and profit when you got to pay this person to handle this issue, right. So that’s why I got the big picture. And like Tanner said, the easiest way to do it is to offer something very, very simple, very easy for the consumer to add the product, upgrade the product, to additional products, wherever it may be, make it as easy and Homer Simpson life as you possibly can, as Tanner likes to say, shipping from the same location. So if you don’t want to make your job more difficult to make, you know, an extra 10 bucks on this one sale or create more hassle for the customer. Right.
Tanner Larsson 47:29
And the other thing is, with that customer satisfaction, aside from confusion, if they know that, like if they buy the shirt, the shirt shows up, but their hat doesn’t. Because even if they know it’s coming from another facility, it still pisses them off, they’re still not happy, they still get that or know that doubt like is it actually going to show up. So if we can avoid all of those things, that’s that’s kind of the ideal here. So you know, guys with that there’s a whole lot that goes into this as an action item. If you’re not using upsells right now, or cross sells, we’re moving like, as we’re recording this right now we’re moving way into q4, we’re very close to kicking off Black Friday, Cyber Monday. And in the holiday buying spree that follows that as well. I highly encourage you as an action item, go get a at least a basic cross sell setup set up gift wrapping, if you if you can set up priority processing doesn’t take much really to do. And this is the time of year when it really adds up. And you can you know 20 to 30 x your your you know AOV just through this time just by doing that, and you know, you’re gonna you can make a massive, massive, massive difference. And it doesn’t take long to do you can get a cheap little app to do it a free app, you could custom code it, you could do it as an upsell. If you’re already using the one click upsells anything, I can’t think of an upsell, cool use priority processing as the upsell use gift wrapping as the upsell use, hey, buy one, get one as the upsell, just do something simple. Get out there and start playing with it. It’s gonna make you more money. And then after you get your feet wet, then you can start getting more complex and doing more advanced stuff like James was talking about. But the most important thing is that you don’t just sit here and listen to us talk and say Oh, that sounds awesome. And then not do anything with it. Right? So James, it was awesome. We’re gonna do more of these obviously, guys for listening to this if you like what James had to say make sure you leave a review or a comment below on the either the YouTube video or iTunes or Stitcher or wherever you’re listening to it. And then also make sure you’re subscribed. Where we this is an iTunes podcast stitcher is all over the podcast world but it’s also on YouTube. So if you need links to make sure you can subscribe to both platforms. You want to go to build grow scale.com forward slash podcast. You can get the show notes there all the other stuff and see all the other episodes that you may have not heard of yet. Right. So with that, guys, thank you for listening, and we’ll see it in the next episode.
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Want us to do an Audit on your e-commerce store and show you how you can make some quick changes that will dramatically increase sales and profits without increasing your traffic?