How to Use Data Driven Marketing to Cross-Sell to Your Customers - dummies

How to Use Data Driven Marketing to Cross-Sell to Your Customers

By David Semmelroth

Closely related to data driven marketing upselling is the tactic of cross-selling. Upselling is about getting the customer to buy better stuff. Cross-selling is about getting the customer to buy more stuff.

Market-basket analysis is an analytic technique designed to identify groups of products that are typically purchased together. It forms the basis for many cross-sell campaigns.

Imagine visiting a grocery store, the cash register prints out a handful of coupons with your receipt. These coupons are generated based on your purchases. If you buy a particular brand of tortilla chips, for example, you might get a coupon for that same brand’s salsa. The coupon is an attempt to cross-sell you products based on your current purchases.

How to use data driven marketing in cross-selling online

Like data driven marketing upselling, cross-selling can be particularly effective online. You can design your online sales engine to offer additional products at the time a customer makes a purchase. These offers are based on what other customers have typically done.

Virtually every e-commerce site follows the grocery store model. They all use a shopping cart metaphor that allows the user to shop for and select multiple items before checking out. Data about the items in past shopping carts forms the basis for cross-sell recommendations that appear while the customer is still shopping.

Whenever you buy a book online, other books by the same author appear as suggested additional purchases. If you like a book, you typically go search for other books by the author anyway.

But what is helpful is that you also get a list of book by other, similar authors who write in the same genre. These suggestions often lead you to discover good books that you might not have stumbled onto otherwise.

Websites that sell clothing do a lot of cross-selling. For example, imagine you recently bought a new pair of golf shoes and were offered a deal on golf shirts. When you buy slacks, you typically get offered dress shirts. A scarf purchase leads to an offer on gloves.

In addition to exposing the consumer to related products, another technique is commonly used to get them to buy more stuff. The technique is to offer some incentive for purchases that are above some dollar value. That incentive could involve free shipping or a free upgrade to overnight shipping. It could involve a discount on a future purchase.

When implementing an offer based on a purchase threshold, conduct some analysis on how much your customers typically spend. If most of your products cost between $30 and $45, then a threshold of $50 won’t strike the customer as unreasonable. And if they continue to shop, they’ll probably buy another $40 or so item that will get them significantly over the threshold.

How to use data driven marketing for bounce-backs

A bounce-back offer can be an effective cross-sell tool as well. They idea is that you want to generate repeat business. If a customer has recently bought a product from you and liked it, they may be willing to give you more of their business.

Recency is the frequency, monetary (RFM) models in marketing. These models, which are popular in the catalog and retail consumer goods industries, focus on three measures of the customer’s purchase patterns: how recent, how frequent and how much.

Ideally you’d like to have customers that score high on all three measures. Bounce-back offers are born of this view. You’ve got the recency part down. Now you want to address the frequency and monetary part. By giving the customer an offer that incents them to make another purchase, you’re inching them along the path to loyalty.

You experience a simple example of a bounce-back offer almost every time you buy clothes online. Shortly after your purchase, you get an e-mail or direct mail message that you’ve earned a discount off your next purchase. Typically this involves some code that you can enter online when you decide to buy.

Creating a sense of urgency is important. If your bounce-back offer doesn’t come with an expiration date, it’s more likely to be put in a drawer for later consideration. And for most people, for later consideration generally means to be forgotten about.

The offer code you include with your bounce-back message serves two distinct purposes:

  • The code facilitates the transaction. It allows your e-commerce site to process the discounted transaction.

  • It allows you to measure your campaign’s success. You can count the number of transaction that was made with that offer code, and that count forms the basis for understanding your response rate.