Cross Marketing Articles - Personalics

Three Tips for Cross-Selling and Upselling to Help Your Business Efficiently Maximize Revenue

Ohad Shperling — Wed, 12 Jul 2017 12:53:27 +0000

You may not realize that every consumer engages with cross-selling and upselling on a regular basis. Say you are buying a new TV. The retailer would cross-sell the TV with an add-on, such as a cable box or surround sound audio system. Sometimes it’s necessary to purchase the complimentary items in order to utilize the TV set, other times the add-ons just heighten the TV experience. A retailer may upsell the TV with a package that includes premium HD channels—at an additional rate—beyond the standard channel offering.

Both marketing strategies match customers with recommended products that enhance their experience in multiple ways. From the consumer side, they gain access to additional features and deals that they may not have been aware of. From the brand’s perspective, they increase sales opportunities through educating about business offerings.

Although the two terms—cross-selling and upselling—are often used interchangeably, there are subtle differences that are essential to recognize so your business can implement them effectively. Let’s start by breaking down each strategy.

What is Cross-Selling?

Cross-selling is a technique that suggests supplementary products to compliment a customer’s initial purchase. A classic example of cross-selling is the phrase “want some fries with that shake?” The sales representative intends to heighten the consumer’s experience—fulfill their needs—by offering an add-on product that compliments the initial product. Rather than guessing the products that may be of interest to consumers, Personalics digs deeper. Using behavioral data, we detect specific products that are complementary and are likely to end up being purchased together.

What is Upselling?

Alternatively, upselling is less concerned with offering an additional product, and more concerned with generating larger commissions. Instead, you are marketing a premium version of the original product the consumer wants to purchase. For example, many apps will offer free downloads and use of standard features; however, if they want access to higher-end features, they must pay a premium. The strategy here is to give users a taste of the experience, and once they invest attention in the product and understand its perks, they will be more incentivized to upgrade. Personalics uses upselling techniques by curating the recommended higher-priced products to suit consumers’ authentic/actual preferences.

Here’s a trick with upselling

Psychology shows that no matter what your actual opinion is, people tend to pick the middle option when given a scale. We fear standing out by choosing an option on the lowest or highest end, so we conform to the middle because it’s safe. How can we incorporate this into upselling strategies? We simply make the middle option what we most want people to buy. This way, customers feel like they are choosing the most reasonable offer. Practically, the offer must be realistic for the consumer while still inviting increased sale opportunity for the brand.

Knowing the Audience is Everything

In order to effectively market to an audience, you must understand what the customer values and responds to. Customers are more likely to make purchases if the items suggested to them are relevant to them, which will ensure more loyalty and trust in the brand. Personalics algorithms tap into this behavioral data to create an efficient and productive buying experience.

Amazon successfully implements a personalized model of cross-selling in their sections such as “customers who bought this item also bought…” or items “frequently bought together.” Within a large eCommerce retail site, customers feel like they are engaging in a 1:1 experience that is personalized for them. This enables their trust in the brand by satisfying particular needs and willingness to buy premium items that are recommended to them. Increased AOV (average order value) begins a domino effect of more revenue.

Understanding Two-Way Benefits

Cross-selling and upselling are essential because they create immediate benefits for both the business and customer.

Business:

Educates customer about products or services they may not have known are offered
Appeals to new and existing customers
Balances low and high margin products or services
Increases AOV, and thus revenue

Customer:

Expands choice of products and service
Convenience: seeing their options upfront without digging for them
Extra deals through packages or promotions
Encourages better customer service through relationship marketing

Implement Strategy

Include at check out, in receipt, and follow-up

Some great opportunities to include cross-selling and upselling techniques are at check out, in receipt, and through email review. Before you check out on an eCommerce retail site, you may be notified about a deal in purchasing two supplementary items or a discount for buying the premium product. Suggesting more options before completing a purchase always requires A/B testing. Sometimes creating more options during checkout sways the user away from completing the purchase. Or maybe in a personalized email receipt for a new laptop, the brand may recommend extra laptop features, such as a keyboard and a mouse, or upgraded insurance services. Another opportunity exists in a follow up email—usually a few days after purchase—where the brand inquires about the customer’s experience and prompts them to complete a review. The email review may: feature an image of the purchased product, ask the customers how they like the product and if they have feedback, as well as offer additional products of interest.

Be realistic when upselling/cross-selling

Respect your customer’s budget and consider the price of original item. According to research by Forbes, a business shouldn’t upsell or cross-sell items more than 25% of original order. You aren’t manipulating the audience, but rather an advocate for them.

Don’t bombard customers

Keep recommendations filtered and limited. Prefer quality and timeliness over quantity. More options won’t increase sale opportunity. You want to appeal to the audience, not pester them and turn them away.

Follow these tips and your business will be one step ahead of competitors because of increased revenue from proven cross-selling and upselling tactics.

The post Three Tips for Cross-Selling and Upselling to Help Your Business Efficiently Maximize Revenue appeared first on Personalics.

Personalization 2.0: How the Best Online Retailers Are Winning With Personalization

Ohad Shperling — Sat, 20 Aug 2016 20:56:52 +0000

In today’s online retail environment, it is hard to overemphasize the importance of personalization as a means to improving shopper experience, which in turn helps increase customer lifetime value. When done right, personalization creates a user-centric experience, leading to more meaningful and effective interactions throughout the customer journey. Personalics recently hosted a live webinar detailing the concepts and tools required to achieve successful personalization strategies.

Customer Journey

While each shopping experience differs by the type of products and services offered, and by customer segment, it is possible to break down every such experience into a progression of discrete steps, known as the customer journey. The top priority for any successful personalization strategy is to deliver the right message at the right time for each shopper throughout this journey.

And so, for example, anonymous visitors can be shown a personalized version of the website, based on third party and cookie based data; Users about to leave, can be offered special promotions; Abandoned searches can trigger a search abandonment email, and so on.

Abstraction of a few steps throughout the shopper journey

The Omni-Channel Experience

Today’s online shopper is exposed to branded and commercial content across numerous channels, such as brand websites, social media, email, and mobile, and with each comes a different behavioral pattern. Consequently, successful personalization strategies should take that into account and deliver the right message, at the right time, on the right channel, creating an all encompassing “Omni-channel” experience.

Standard personalization implementations may be able to send messages across multiple channels, but these might all be identical messages, that fail to take advantage of the channel they’re viewed in. A true omni-channel strategy, on the other hand, will provide shoppers with customized content that fits right in with the channel it’s on and tailored based on all other messages already exposed to the user. A great example of a retailer that provides users with such an experience is Amazon, which perfected this model.

While other brands are limited to specific channels or send out the same message across all channels, Amazon provides a true customer centric experience

Getting Started: Personalization Basics

Implementing a successful personalization strategy naturally comes with a set of challenges: ROI is unclear, time to implement is a factor, connecting data sources might be difficult, and resources (both budgetary and human) may be limited in house. Therefore, we advise focusing on the 80-20, where significant results can be achieved even on limited budget and resources.

Every personalization strategy should follow a few standard steps:

Use data from multiple sources from within or outside the orgaanization
Maintain a profile for each shopper
Implement algorithmic models that predict each shopper’s preferences
Based on those, automatically generate personalized messaging
Communicate those messages at the right time, to the right channels

Advanced Tactics

Once a working personalization strategy is in place, the results should start showing. However, it is imperative to keep maintaining and evolving that strategy on an on-going basis, by layering in advanced personalization tactics.

There are numerous such tactics that can be applied to online retail, and individual results will vary. Here are a few top examples:

Visual Storytelling – visually appealing product recommendations, based on automatically curated personalized shopping journeys. To read more about visual storytelling, click here
Automated email triggers – messages sent after specific behavioral events
Social media personalization – messages based on engagement patterns and interests of targeted audience segments

Following these guidelines, constantly iterating and improving, is key to implementing a sound personalization strategy and improving your bottom line. For much more on these concepts, including real-life case studies and a lively Q&A session, the full recording of this webinar is available here.

The post Personalization 2.0: How the Best Online Retailers Are Winning With Personalization appeared first on Personalics.

15 ways discounts cause irrational shopping behavior

Ohad Shperling — Fri, 20 Nov 2015 10:06:42 +0000

Everybody loves a bargain – or rather, the feeling and perception that they’re getting a bargain. Smart discounting doesn’t automatically mean “deep” discounting. It takes understanding shopping behavior. Changing the presentation of an offer changes how shoppers perceive its value and respond – often in irrational ways. Big retailers and suppliers use these insights about shopper behavior to their advantage. To compete, you must be just as skillful.Otherwise shoppers may miss your unique value because your product presentation is unappealing.

In the last few years, psychological analysis of shopping behavior has gotten popular. Authors such as Dan Arieli (Predictably Irrational), Daniel Khaneman (Thinking Fast and Slow), and partners Richard Thaler and Cass Sunstein (Nudge) present academic research about shopping behavior in easily readable books for general audiences.

Here are some of those insights about shopper behavior and discounts. If you are a retailer, these can help you grow sales and ecommerce with discounts without cutting deeply into your bottom line. If you are a shopper, understanding how marketers take advantage of these patterns of shopping behavior could help you make more conscious purchasing decisions.

1. Use the Pleasure Principle: The pleasure principle is simple. People seek pleasure and avoid pain. Knowing that you missed out on a discount is usually a pain you want to avoid. We’re afraid of making mistakes, being at a disadvantage, or having less than others, says Emory University professor of psychology Drew Westen.

We also want to gain advantages. Our brains are programmed for behavior that gives us an edge, says Westen. When we make shopping decisions that we perceive as beneficial – such as getting a big discount on something we want – dopamine is released in our brains. And dopamine makes us feel good.

2. Create a sense of urgency. One reason discounts change shopping behavior is the sense of urgency. Discounts expire. This urges us to act fast or feel the pain of missing out. Avoiding loss motivates us more than the possibility of achieving gains, according to Nobel Prize-winning psychologist Daniel Khaneman. We feel the pain of losing much more than the joy of winning. Thus, the fear of missing out on a sale increases the impulse to buy.

In his book “Influence,” social psychologist Robert Cialdini describes a study of the effect of time limits on shopping behavior. Researchers found that when the length of a sale was limited, participants bought three times as much as they did when there was no time limit. Telling participants that only a few people knew about the sale increased this effect on shopping behavior. Limiting how long the deal was available, and how many people knew about it, caused shoppers to buy six times as much.

3. Avoid inviting customers to comparison-shop. We see it all the time: “Compare our prices to the name brand.” But this can easily backfire. Shoppers can decide that the no-name brand is riskier and the name brand is safer. In a 2005 study, Itmar Simonson, Sebastian S. Kresge Professor of Marketing at Stanford GSB, found that negatives weigh more heavily on shopping behavior than positive advantages. In one of Simonson’s examples, a camera retailer asked shoppers to compare low-end, mid-range and high-end cameras. The shoppers chose the mid-range camera. The study also reported that asking shoppers to compare in online auctions caused them to deliberate more, wait longer and make fewer bids.

4. Offer more product for the same price. People prefer getting 50 percent more of something for the same price than saving 33 percent – even though the unit price is exactly the same. Most consumers perceive a 33 percent price discount and 33 percent more quantity as the same value proposition, according to one study by the Journal of Marketing. But the discount price is the better value. This is a textbook example of irrational shopping behavior, because more quantity has a higher price-per-unit.

5. Give multiple discounts. People are more likely to buy when you offer an additional 25 percent off on top of a 20 percent discount, instead of a single 40 percent discount – even though both add up to the same dollar amount.

6. Give percent discounts instead of dollar discounts. A larger percentage discount influences shopping behavior more than an absolute dollar discount. For example, 10 percent off a $100 product will be perceived as more valuable than $10 off a $20 product.

7. Take advantage of ‘Free.’ Shoppers are more likely to respond to a price reduction from $1 to free, than from $2 to $1 – even though the dollar decrease is exactly the same, according to behavioral economist Dan Ariely.

8. Use “Get” for promotion-focused shoppers, and “Save” for prevention-focused shoppers. Research shows that words used in a promotion – “get” vs. “save” – affects shopping behavior differently. Some shoppers are more focused on avoiding loss – prevention-focused – while others focus on gaining advantage – promotion-focused – reports Psychology Today blogger Alain Samson. This is called ‘regulatory focus.” Shoppers are more likely to respond to an offer when the message matches their regulatory focus. When there’s a fit, shoppers buy more in general – not just the discounted items.

Promotion-focused shoppers are more likely to respond to an opportunity to “Get $1.” The opportunity to “Save $1″ appeals to prevention-focused shoppers. Regulatory focus can change depending on the situation and a person’s state of mind.

9. Use “Get $ off” for indulgences such as chocolate. When the product is a treat instead of a necessity – ‘hedonic’ products – offering dollars-off has a more positive effect on shopping behavior.

10. Use “get” or “buy” for new customers. Samson also reports that using “get” or “buy” is most persuasive to shoppers without established buying routines.

11. Sell “time.” A 2009 Stanford research study found that shoppers appreciate time — sometimes more than money. This is because time is a scarcer resource than money, and “time says so much more about who we are.” Messages that empahsize the value of time significantly affected shopping behavior — attracting more engagement and favorable opinions on the product than an emphasis on money.

12. Place expensive products next to discounted ones. When Williams-Sonoma showed a $279 breadmaker next to $429 appliance, sales of the cheaper model doubled – even though practically nobody bought the higher priced item. Positioning a product next to a nearly identical but twice-as-expensive one makes the cheaper item look like a gotta-have-it bargain, says author William Poundstone in his book “Priceless.” Because we often don’t know the real cost or value of many things, we look for cues that will tell us. Differences in price tell the story – the cheaper breadmaker is 40 percent less than the other model – and provide a basis for buying – it was a great deal!

13. Take 1-cent off whole number prices. We’ve all seen these prices: $9.99, $19.99, $199.99. But why? Those 1-cent off prices are called “charm pricing.” We perceive the lower number and round down to the next unit rather than up to the closer one. Thus, you perceive the price of a $1.99 pack of pencils as $1, not $2, even though the price closer to $2. We’ll go out of our way for perceived “deals” like this to get the dopamine reward I spoke about earlier.

In “Priceless” psychologist William Poundstone dissects eight different studies on the effect of charm prices on shopping behavior. He found that, on average, they increased sales by 24 percent over their nearby items at a ’round’ price point.

However, shopping behavior changes when sale prices emphasize the undiscounted ones. Then buyers are more likely to choose the “round’ sale price over the ‘9’ price in a split test, In the image below, the $40 reduced price won over the undiscounted $39:

In this case an even number has more impact on shopping behavior even though it’s the higher price. However, combining $39 with a price reduction beats an undiscounted $39:

14. Don’t Let Discounts Become the “Real” Price. Unless your business is discounting, too many discounts may let customers get used to not paying full price for anything in your store. Your price integrity will erode. Unconsciously, a sale price is a statement of what shoppers should really pay for something. So why would shoppers believe your full price if they know there will always be a big sale?

15. Don’t Compete Just on Price: Is price really your only advantage? Even retailers that are synonymous with discounting promote other features such as selection, style, or special services. The original designer outlet, Loehmann’s had good insight into irrational shopping behavior. The store cut the labels off its heavily discounted designer clothing. That made a trip to Loehmann’s into a competitive adventure. Shoppers not only got deals that they could brag about. They also took home the feeling of superiority that comes from the ability to distinguish between a $1,000 Chanel suit with a $100 price tag and a $200 suit selling for $100.

Don’t let your differentiation and positioning have a negative effect on shopping behavior. Your product’s perceived effectiveness will be reduced. This is especially true for cosmetics, prescription drugs, and over-the-counter health products. This Nielsen survey shows that shoppers actually favor value – bigger, higher quality – over price.

In summary, there’s no shortage of research in the psychology of pricing and discounting on shopping behavior. I’ve just skimmed the surface here. Of course, as with any marketing tool, the foundation is clarity about your target customer and your value proposition.

If you’re a discount supermarket, your customers expect to see a prominent list of weekly specials. Even if those discounts are only a few cents, as we saw, shoppers are more likely to buy and buy more – two loaves of artisan bread for $6.79, instead of 1 for $3.49.

If you’re a high-end specialty grocer, your shoppers expect an experience – not just artisan bread, but getting to know about the baker who made it, the recipe she uses, and her special technique. Your discounting strategy is “this week only” it’s on sale for $6.79 – instead of $6.95 – a loaf.

What discounting strategies have you tried? How have they affected shopping bahavior?

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