Contributions to Profit How to Boost Your AOV
By Jim Gilbert
In a business model where many of us strategically lose money when acquiring new customers, cross-selling and upselling are critical to managing that loss. And these marketing techniques, if done right, can help speed your return on investment of acquiring that buyer in the first place.
Cross-selling entails selling a product that's complementary to what a customer already is buying from you — something he or she also would have a clear affinity towards. Offering a customer a complementary item at the time of purchase is an art and science that can greatly enhance your average order value (AOV), increase your margins and help pay for the expense of generating that order.
Upselling entails convincing the customer to add another product to the order, or take a special offer (e.g., a discount, free shipping) just for increasing the order size.
Technology can simplify the cross-selling and upselling processes for you. Many order-processing and e-commerce software packages have a cross-selling/upselling component built in. If you don't presently have it, check with your vendor, as this functionality could be included in a software update or sold as a separate module.
Cross-selling via the Contact Center
If you find that your software already includes cross-selling functionality, it may just be a matter of turning it on — that is, associating what products go together and then writing customer service rep (CSR) scripts. Rule of thumb: The closer the cross-sell item is to the original product, the more likely it is to be purchased. Have your merchandising staff select appropriate items, and test product offerings until you find the right combination. Once implemented in your contact center, the system will prompt your CSRs with built-in software scripting as part of the ordering process. With training, CSRs can become adept at gently steering customers toward cross-sell items.
Beyond programmed cross-selling, I like to train CSRs to think on their feet, not just recommend specific cross-sell items. And I give them some leeway to recommend any item that fits in the call's context. This type of out-of-the-box thinking can lead to giving the customer a more personalized shopping experience and can increase AOV. Hire reps who can work this way, and then mentor and monitor them on an ongoing basis.
Upselling is another powerful tool that can be taught in CSR training sessions. Before your CSR ends the call, have him or her ask something akin to: "By the way, Ms. Jones, if you purchase an additional item today, I'm authorized to provide you an x percent discount. Is there someone you know who could use it?" That's the basic upsell script. This simple tool can add greatly to your bottom line, and you can tweak the wording many ways to meet your company's sales goals.
Monitor and track your upsell and cross-sell conversion acceptance rates, and stay on top of call times. You don't want to overly lengthen the customer contact. As mentioned earlier, test and tweak these programs as you would any direct marketing program until you find the combinations of product/offer that provide the highest AOV.
Also analyze acceptance rates both in aggregate and on a per-rep basis. Naturally, some reps will do better at upselling and cross-selling than others — meaning some reps will need more training.
* If you have a favorite upsell or cross-sell technique you want to share, send it to me, along with ideas and suggestions for future columns, to my e-mail address below.
Jim Gilbert is the former vice president of operations and direct marketing for a Florida-based catalog company, and is the president of Gilbert Direct Marketing, a catalog and DM consultancy. He's professor of direct marketing at Miami International University of Art and Design. Contact him at (561) 302-1719 or firstname.lastname@example.org.