Improve Your AOV with Targeted Upsells and Cross-sells

Jul 15, 2008 1:06 AM  By

Upselling and cross-selling are often ignored by mailers, or given no more than last minute consideration. The most important advice regarding upselling and cross-selling is simple: Do it, and manage it.

Upselling/cross-selling can add 5% to 25% to your average order value (AOV) for minimal incremental cost. If you’ve ever had a customer segment where increasing the AOV by that much could take you from loss to profitability (and who hasn’t?), it’s not hard to understand the value of implementing upsells and/or cross-sells on your inbound calls and web orders.

Management of upsells/cross-sells is what makes the difference in the percent of increase to your AOV. Managing what is being sold to whom, to both increase the value of upsells accepted, as well as the frequency with which these offers are accepted.

What percent of buyers will accept an upsell/cross-sell offer varies: Try nothing, get nothing; Try something that is appropriate for your audience but not customized or targeted and get 15% to 25% acceptance; Customize and target your upsell offers and get 25% to 50% acceptance.

Of course examples of the difference between merely appropriate for your audience and customized and targeted. A tea cataloger offers discounted cookies as an upsell and increases their AOV by 20%. A sporting goods cataloger offers a membership club with instant savings to those not already members and gets nearly 50% conversions.

Making the most of upsells/cross-sells means constant and never-ending improvement. Making offers, reviewing detailed phone and web results, listening to recorded calls, revising scripts, web copy, offers, etc.

With this approach, one brand increased AOV from 17% over the base AOV to 24% over the base AOV over a 6-month period. If the base AOV is $100, this means going from $117 to $124 AOV by paying attention to details and managing the process. All for the same cost per order. How many other marketing tactics can make this claim?

What kind of upsell/cross-sell value should you consider? 20% to 25% of the base AOV is a common goal, but relevancy is more critical to customers than the exact amount. I’ve seen success with 60% of the base AOV.

Beware: Try to move items no one wants and you won’t be able to give away $5 items, no matter the discount. Using upselling as a means of liquidating unwanted merchandise is a waste of time.

To truly make the most of upsells and cross-sells, use technology to your advantage and employ segmentation techniques. Offer a different upsell to first-time buyers than for long-term customers. Think about what buyers of certain product categories are likely to want, and let your system ensure upsell offers are made in accords with the category purchased.

The key to success with upsells/cross-sells is make offers that are relevant to as many unique customer segments as feasible. If you do this and manage the process with an eye for continuous improvement, you’ll find ways to upsell and cross-sell your brand to greater profitability.

Shari Altman is President of Altman Dedicated Direct, a direct marketing consultancy specializing in customer acquisition, catalog, continuity, DRTV, and loyalty marketing. She can be reached at SAltman@AltmanDedicatedDirect.com.