Insight

Would you like fries with that order?

Imagine you are at a Big Box store in the electronics department and you overhear a salesperson talking to a customer,
"That's a great flat-screen TV. Shall I add an extended 3 year service contract for $149 ?"

That is the classic example of an up-sell, introduced as you purchase new electronics.

Instead buyers often agree to a lower-priced offer, such as a 1-year service contract for only $39, technically a down-sell. However, it costs the seller almost nothing and provides a large profit margin. Most electronics failures occur within the normal warranty period, which are covered by the manufacturer. (Kushner, 2012)

Some items are frequently bought together. Just stop by the baking section of your grocery store and see Karo syrup near the pecans – two ingredients in pecan pie (with the recipe prominently displayed on the bottle). Shop for caulk at the hardware store and you'll find caulk guns nearby. This is cross-selling. But cross-selling on-line is more complicated. For example, if a customer buys a plaid shirt, they might also be interested in khaki slacks. Stock related inventory in the same fulfillment center. You'll save on shipping and picking costs, important issues for customers (see Reducing Shopping Cart Abandonment).

These techniques work on-line as well as in person. We've all seen them. Product details include package deals; buy this item and a related item for a special price. Buy a printer and see an offer to buy ink cartridges.

A newer concept is up-shipping. During the gift-giving season people are more likely to select faster shipping. Amazon, eBay and WalMart are experimenting with same day delivery, though not everyone in New York City or San Francisco can afford to spend an extra $10 for this service. You may have seen some catalogs that say, "Order by December 22nd and receive your gifts by Christmas. Guaranteed." That requires expedited shipping, which comes with higher margins. Let your customers know that this is available.

However, all these techniques only encourage the shopper to put items in their virtual cart. Checking out is often terminated early when shoppers abandon their carts.

Reference

Kushner, Aviya (2012) Consumer service plans: Worth the cost? http://www.bankrate.com/brm/news/advice/customer-service/20050815a1.asp

Fairfield Professionals is a boutique consulting firm specializing in the food safety, consumer products and healthcare industries. Fairfield's services include business intelligence, user experience research and design, product management, project management, process improvement and software selection and implementation.

Business Intelligence

Business data organized, analyzed, and presented strategically helping managers to make intelligent decisions faster.

User Experience Design

Making computer interfaces easy-to-use and fast to learn.  Reducing costs, speeding adoption and increasing conversion rates.

Product Management

Building and marketing technology products that people love supported by market and data driven organization and processes.

Project Management

Initiate, plan, execute, control, and close the work of a team to achieve specific goals within given constraints.

Process Improvement

Reducing costs and preparing for growth by identifying and implementing blue collar and white collar improvements.

Selection & Implementation

Needs analysis through roll-out. ERP, warehouse, order processing, order entry, fulfillment, retail, merchandising.

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