dVox Design

By A. Butters

Buying online? There are several different stages that a customer experiences during the buying cycle. According to the Census Bureau of the Department of Commerce, the total estimate of U.S. retail e-commerce sales for the second quarter of 2009 increased significantly to $32.4 billion from $11 billion in 2001 (U.S. Census Bureau, 2009). Today retailers realize that customer-centricity is a necessity for survival, and the internet is no exception.  Companies can no longer rely on recognition alone, as internet competitiveness increases and online shopping becomes even more accessible through the use of smartphones and the adoption of tablet devices, such as Apple’s iPad. Companies are feeling insurmountable pressure to adopt creative online strategies sooner and at lower costs.

The internet offers customers the convenience of tapping into the buying cycle at any stage; research, analysis & comparison, buying, and post buying stages. There have been many advancements in suggestive advertising to focus on the early stages of the buying cycle when a customer has certain keywords or products in mind, such as Pay-Per-Click ads featured in search engines, subscription websites and social media outlets. However, there is a greater emphasis for companies to maximize their profits while a customer is still in the buying stage. Engaging the customer’s interest at this stage maximizes a company’s opportunity to up-sell products.

According to Gulati (Harvard Business Review, 2009), “Best Buy discovered that 55 percent of its customers were women, and that for the most part they loathed their shopping experience at the retailer. Men look for a specific product at a discount price. Women want not just a digital camera, but a printer, cable, and other accessories–and they care far more about these things than price. Equally important, they want help with installation, while most men prefer to try to put things together themselves.” Best Buy adopted a customer-centric focus by cross-selling products when customers were purchasing online. For example, a customer purchasing a 42″ flat screen plasma TV will be offered complimentary products, such as HDMI cables, TV wall anchor, Blu-ray disc player, and extended warranty package. Best Buy offers a one-stop solution for customers and takes it one step further by increasing post-purchase confidence with other great services such as the installation by their in-house Geek Squad.

In May 2009, Gap took a similar one-stop shop approach by uniting their online-only shoe store PiperLime and its three major chains - Gap, Banana Republic, and Old Navy, into one simple Web platform.  “The move, Mr. Lenk said, almost immediately increased Gap’s overall Web traffic by 8 percent and increased the number of items sold per transaction by 10 percent.” (Stone, 2009) Other companies that have followed suit including Sears, with Land’s End, Kmart, The Great Outdoors, and Business Outfitters.  Some of the features online retailers are using to enhance consumer confidence and convert shoppers from the research stage to the buying stage are reviews, suggestions, complimentary merchandise, and cross-selling services.

With 16 percent of the internet population accounting for 80 percent of online ad clicks, retailers must find a way to keep customers engaged once they land on their sites (Blossom, 2009). A key factor for successful up-selling is price sensitivity. When complimentary products are offered during the buying stage, customers expect to invest an amount that is significantly less than the original product chosen. “Research shows that 58 percent of successful up-sell offers cost less than 20 percent of the original price amount, and 31 percent of them are 12 percent or less than the cost of the original item.” (Halperin, 2010) According to the U.S. Small Business Administration, suggestive selling can result in sales uplifts from 15 to 150 percent  (Halperin, 2010).

So why should companies cross-sell products to customers online during the buying stage? Cross-selling is one of the most profitable and least risky endeavors a company can undertake. Companies can produce considerable sales increases and improved online ad ROI, while avoiding higher advertising budgets. Since retailers are forced to depend on a smaller internet population to click their online ads, a need to maximize customer purchasing thresholds with suggestive selling exists. Suggestive selling can increase sales significantly by delivering the most relevant and effective messages about products and services to each customer, by factoring in data about previous customer searches, complimentary products, and other environmental considerations. This proactive approach provides customers the added convenience of a one-stop shop experience. Companies that fail to implement an effective cross-selling approach, actually do a disservice to their customers and consequently leave the opportunity open to their competitors.