July 2009 – Super Size It

How upselling and cross-selling are giving
DR revenues an added boost

By Leo Gorcey

Do you want fries with that? Wanna super size your order today? Care to try one of our new cranberry scones with your latte? Let’s look at some earrings that would go great with that skirt you just bought. If you’re going to protect your new, car you really need undercoating. I’ll just go ahead and include that for you. It’s only $100 and we can do it while you wait. Hey, let me show you some really nice carrying cases for your new laptop. And while we’re at it, I would highly recommend the extended warranty protection.

If you’ve purchased anything in the last 20 years, chances are, you’re well aware of upselling.

Banks, cell phone companies, retailers, credit card companies and restaurants, to name just a few, are all taking the art of the upsell and the cross-sell to new heights. Grocery store checkout lanes and gas stations now sport video screens to upsell and cross-sell you while you wait to pay for your groceries or stand idly pumping your gas. All to the tune of multiplying profits.

For the purpose of this article, I’ll focus on upselling, as many of the principles I discuss here are common to both upselling and cross-selling save for the fact that a cross-sell is generally an outbound call or e-mail contact (a two-step process) and, for that reason, merits a treatment of its own.

SUPER SIZING REVENUES THROUGH UPSELLING
Upselling got a big boost in the DR world with the arrival of 800 numbers and gathered a good head of steam through the ’80s and ’90s. Now, in the new millennium, you’d be hard pressed to purchase any DR product without being offered anywhere from one to six upsells (Rush Shipping is now a commonplace upsell earning marketers a nice incremental profit). If you’re among those who count continuity, full-pay conversion attempts and third-party live revenue reads as upsells, then add a couple more upsells to the mix.

According to some direct response white papers, marketers will close a staggering 1.2 billion upsells this year. With the average upsell ticket estimated by some sources to be around $50, DR forecasters are estimating that upsells will add over 30 percent to DRTV (and other direct media) orders in 2009.

For some campaigns, the main offer barely covers the cost of product, media, call center and fulfillment. The upsell is the profit center. In short, upselling increases your average order value on a lead you already paid for.

On the other hand, we are all too aware of the challenges presented by upselling and cross-selling. As marketers face these challenges and inquire together into creative solutions, they can look forward to even more profitable DR campaigns.

WHAT MAKES A GOOD UPSELL?
A good upsell or cross-sell product is a useful accessory (or more fully featured model) that adds to the original purchase in some value-enhancing way and goes further toward creating a satisfying and complete solution to the customer’s problem. An effective upsell complements the main offer and makes it work even better.

“You like that blender? You’ll enjoy it even more with the six additional party mugs!”

A good upsell is also an irresistible bargain. “Those six party mugs are a $30 value, but if we go ahead and include them in your order today, I can give them to you for $14.95. That’s an instant savings of 50 percent. And, of course, the mugs are covered under our money back guarantee. I’ll just go ahead and add those to your order today.” Good upsell products make it easy for the customer to say “yes” without too much thought.

A POUND OF CURE
One of the biggest missteps I’ve seen in upsell scripts over the years is the failure to tie the upsell to the main offer. I’ve seen some first-position upsell conversions double, and sometimes even triple when this error was corrected (talk about leaving money on the table).

Sometimes, increasing your upsell conversions can be as simple as adding a probing question before the upsell.

A question like, “How much entertaining do you normally do?” is a great lead-in to the party mugs mentioned above and ties the upsell to the customer’s emotional ‘hot button’ of wanting to show off her new magic appliance to her friends.

Another common error in upsell scripts is the failure to re-connect with the customer after the main offer purchase is complete, making the upsell appear as an afterthought. A simple remedy for this is either a probing question to re-engage the customer or a simple transition phrase like, “I’d like to take a second to recommend you take advantage of our deeply discounted additional weights for your exercise machine…” and go into the upsell from there.

Using the word “because” has been shown to increase upsell conversions. “Because you told me earlier that you entertain a lot, I recommend we go ahead and include the extra set of color-coded party mugs because I can save you 50 percent by including them in your initial order. Will the set of six or the set of eight work better for you?”

Another ‘pound of cure’ for flagging upsells is to shorten them up. Your customer’s trust may have skyrocketed after that main purchase, but his patience can wear thin and he’ll just tune you out. Remember, an upsell is not a product the consumer was planning on purchasing. So keep the upsells and cross-sells brief and assumptive.

EFFECTIVE UPSELL POSITIONING
I’ve heard upsells read both before and after the credit card information is taken.

The results speak for themselves. Customers tend to say, “yes” two to three times more often when the upsells are presented after the credit card information is collected. This is because it’s practically effortless for a trained call center agent to make incremental sales in a “By the way” assumptive manner after the work of making the initial sale is done.

Even if your main offer is a lay-down, trust increases 400 percent after the caller plunks down that credit card. Trust is the No. 1 reason people buy. It also helps that your customer has made a strong psychological commitment by handing over the credit card and that every decision after that is easier to make.

How you position your upsells can make a big difference in conversion. It generally works best to put your most expensive upsell in the first position. Typically, the first position upsell will close highest. Then put the rest of your upsells in descending order by price. Free shipping on upsells is an effective tool for increasing upsell conversions.

Bundling upsells is another way to increase average order value (AOV). Take a couple of your mediocre or low-performing upsells and bundle them with a price point that’s less than what the customer would pay for the items separately. Many customers just can’t resist the “bundle bargain.” If the customer says “no” to the bundle, you can downsell incrementally. Bundling also cuts down the number of upsells.

Finally, the well-worn maxim of DR: “Test, test, and then test some more,” applies to upsell and cross-sell positioning in a huge way. Monitoring your upsell and cross-sell calls and metrics daily and proactively testing new and different upsell and cross-sell products–as well as different positioning, price points, premiums, scripting, configuration and training strategies–will ensure the highest and best results for your upsell campaigns.

CONTINUITY AS AN UPSELL
Many offers now include upsells with continuity (the exercise machine with a Protein Powder/Auto-Ship). The continuity upsell requires more skill than many call center staff members are equipped to impart to their agents. Having said that, the growth opportunities are considerable and revenue can be enhanced measurably with script editing and agent coaching.

An entire article could be devoted to the subject of continuity conversions.

Suffice it to say that the focus of the continuity conversion and the continuity upsell needs to be on the customer’s needs (quality, value and convenience) and on how we word conversations about continuity. For example, many marketers have replaced the phrase “auto-ship” with the softer “auto-delivery” and introduced phrases like “Smart Shopper Discount” and “locked-in low prices” to create additional value in continuity programs.

DOWN-SELLING
No conversation about upselling would be complete without a few words about down-selling. Down-selling is a great strategy if you offer RFTs with continuity, high price-point main offers (as in the case of high-end exercise equipment), continuity upsells or high price-point upsells.

For example, some campaigns now downsell from negative option continuity programs (where continuity is a part of the main offer). A typical negative option downsell will add 20 percent or more to the cost for a one-time shipment of the product thereby encouraging the caller to “…go for the continuity offer and save the 20 percent since you can cancel any time.”

This downsell, when handled skillfully, kills two birds with one stone. It serves as a second attempt to the main offer and an effective strategy to keep your caller from walking away empty handed. Another example is the downsell from a high-end exercise machine to a reconditioned model or floor model–typically for about half the price.

Good downsells can keep your agents from leaving money on the table and get your product out to the customer who is interested, but needs a lower level entry point to take action.

THE BOTTOM LINE
Upselling is easy when you remember that your main business is helping the customer. As you focus more on the problems your customers bring to you and what it really takes to offer the most satisfying and complete solution, you can open up avenues of growth and design strategies that will deliver the most desirable results for everyone. Marketers will enjoy more profitable campaigns, vendors will experience happier clients, call center agents’ jobs will be made easier, Customers will receive added value and convenience, and the electronic retailing industry will be better poised to reap the fruits of the new economy.

Leo Gorcey is a direct response performance specialist with background and expertise in training call center teams, crafting profit building call center scripts, coaching DR leadership teams and partnering with direct marketers to increase revenue. He can be reached at (541) 531-7419, or via e-mail at leogorcey@leogorcey.com.