Most people are familiar with the terms cross-selling and upselling from online retail. Cross-selling and upselling are strategies used to increase sales through additional or higher-value offers. Prompts such as “Customers who bought this product also bought” or “Similar items from this manufacturer” are now standard in many online stores. In 2015, Amazon generated 35% of its revenue through cross-selling. Although no current figures are available, it can be assumed that the strategy is similarly successful today. After all, Amazon is one of the most valuable companies in the world. Before we begin to explain how you can leverage this potential in Dynamics 365, it is important to distinguish more clearly between the terms cross-selling and upselling.
What is cross-selling?
Cross-selling refers to the practice of suggesting additional products to the buyer that complement the item in their shopping cart. These are typically products that enhance the item in the shopping cart. For example, a laptop bag might be offered to go with a laptop, or a headset to go with a smartphone.
What is upselling?
Upselling involves offering a higher-quality—and therefore more expensive—product within the same category. In the case of a television, this could be the next-best model with Smart TV capabilities, or the well-known “Maxi Menu” at a fast-food restaurant. However, it’s important not to scare customers away with an upsell product that’s too expensive. The rule of thumb is that the upsell product should be no more than 30% more expensive than the product the customer is interested in.
Creating product relationships in Dynamics 365
First, you need to manually establish the relationships between products. Currently, there is no algorithm in Dynamics 365 that automatically recognizes these product relationships, as is the case with Amazon, for example. Therefore, careful maintenance of the products offered is a prerequisite for cross-selling and upselling in Dynamics 365. However, we can assume that Microsoft will eventually implement such an algorithm in Dynamics 365 as part of its AI strategy. Until then, products must be linked manually.
To do this, open the desired product and add a product relationship.
Our product is theDynamics 365 for Sales Professional license. We link this product to the Dynamics 365 for Sales Enterprise license. Since this is a higher-tier Dynamics 365 for Sales license with a higher price, the sales relationship type is "Upselling."
There are two different options for the direction:
- Unilateral
- Bilateral
"Unilateral" means that the sale can only take place in one direction. It is possible to offer the Enterprise license as an alternative to the Professional license, but not the other way around.
"Bilateral" means that the sale can go in either direction. If "Bilateral" is selected as the direction for an upsell, the user will naturally receive an error message. After all, the purpose of an upsell is to sell a higher-value product, not the other way around.
Next, we would like to add a cross-sell relationship to our product. To do this, we select an Office 365 Business Premium license as the linked product. In this case, we can select the "Bilateral" option. Both products are standalone, but they are closely integrated within the Microsoft ecosystem and complement each other by adding new features.
Using Cross-Selling and Up-Selling in Dynamics 365
To include cross-selling or upselling products in a quote, they must be listed in the price list attached to the quote. This is because the same products can be offered at different prices. The price list specifies how many products are available and at what price they are offered.
If this condition is met, the product can be selected and the previously created product relationships can be displayed.
If we add a cross-sell product, the offer will be expanded to include another product.
Summary of Cross-Selling and Upselling in Microsoft Dynamics 365
The benefits of cross-selling and upselling are clear. Acquisition costs can be drastically reduced because the customer has already expressed interest, thereby overcoming a major psychological barrier. For regular customers, cross-selling or upselling can also help nurture the customer relationship.
However, some customers find cross-selling or upselling attempts annoying. Therefore, a certain degree of tact is required when using these two sales techniques.
