News Stay informed about the latest enterprise technology news and product updates.

Wind up for one last sales pitch

Don't let your customers walk out the door without trying one more time. Peppers & Rogers found ways to cross sell and up sell at the point of sale in order to beef up revenue at a time when you need it most.

Would you like towels with that?

The answer is "yes," and while far from achieving critical mass, we will start to see more of this trend soon. Large customer-focused retailers understand the value of this type of strategy and are working toward that goal.

For instance, according to the Feb. 11, 2002, issue of the weekly newsletter Delaney Report, Sears is trying to bring its customer strategy to the next level, specifically focusing on the connection between marketing merchandise and the in-store experience. Sears wants to deliver customer insight to customer-preferred touchpoints to cross-sell and up-sell there. And while the details are confidential, "A handful of leading top-tier retailers are planning similar tactics," reports Lane Michel, managing partner of Peppers and Rogers Group. The right strategy for you?

The foundation for effective cross-selling and up-selling comes from the use of customer insight derived from capturing and remembering your customers' behaviors and preferences. Those behaviors include past transactions, but even more valuable are the many inquiries your customers make through multiple channels (Web, contact centers, sales and service associates and marketing). Developing customer memory requires deployment of enabling technologies at the point-of-sale (POS). But using these new POS tools creates an equally difficult challenge: shifting the mindset of the workforce.

Employees interacting with customers at the point-of-sale must provide a customer experience that seamlessly generates cross-sell and up-sell offers. If your company has a customer-service mindset at the point-of-sale, then be ready to sustain this investment over an 18- to 36-month time frame. If you have to build this culture, it will take a well-orchestrated effort; but you still can get better returns than if you do nothing.

How POS cross-selling/up-selling works

POS terminals execute targeted cross-sell/up-sell offers dynamically by reaching into a database to identify customers and instantly analyze their unique purchasing histories. In addition, many POS software solutions can profile customer transactions based on product affinity and predict a likely next action. That data is quickly compared to a set of rules-driven business strategies, which prompts a personalized offer in real time.

"The POS is a critical customer-service point," emphasizes Rick Schultz, VP of industry marketing at Atlanta-based Teradata. "Anything that slows down the POS environment becomes a customer disservice. You want to make offers available in a seamless and unobtrusive way to speed the throughput," he says. Teradata, a division of NCR, sells AdvancedStore@GeneralMerchandise and competes with IBM in the point-of-sale terminal market.

Crafting offers and delivering them to the customer -- either by prompting the check-out clerk or by printing messages on sales receipts -- depends on the service strategy of the retailer and the store environment. "Product affinity, or figuring out what to up-sell, is a fairly straightforward process when you have either a limited number of products or a limited menu, such as McDonald's, even when the customer is anonymous," says Anthony Power, chief scientist at analytics software provider Alterian, Inc.. "A limited assortment or natural set of complementary items, coupled with the fact that the customer has to wait for delivery after placing an order, present a risk-free up-sell/cross-sell situation."

For a bookstore with millions of titles, for instance, the cross-sell/up-sell process is infinitely more complicated. But it can still be employed by using a market-basket analysis at the POS, Power says, to figure out the items that other purchasers of that item have also bought (if a customer buys this, then there's a strong likelihood he'll also like that.) "The recommendations that the POS system makes in real time are governed behind the scenes by management strategies based on defined business rules," explains Power. "For example, what customer segments should be rewarded? Buying only sale or promotional items is probably not the behavior retailers want to reward by offering additional deals."

Historically, a lot of retailers haven't pooled individual transaction data from each store in a centralized data-warehouse system, according to Power. But in the last couple of years, that has begun to change. "Technology has caught up with [the large amounts] of data [being captured]," he notes, "but the challenges loom large. [Retailers] want to present personalized information to customers when it has the most value -- when they're shopping. Is it too late to give them an offer when they're checking out? It's a complex problem, which may be why some retailers are taking time to think it through."

Kiosks: Cross-sell/up-sells made easy

Food-service clients of Radiant Systems are increasing revenue per order by installing customer self-service (CSS) kiosks, according to Evan Grossman, executive VP of business development. Why? One client, who preferred not to be named, determined in a study that 20% of the time, human order takers simply didn't bother to ask.

Kiosks provide up-sell opportunities to every customer in a non-intrusive way. One convenience food store, for example, uses an on-screen message that asks customers who order turkey sandwiches at its kiosks, "Do you want bacon with that?" Sales of bacon for this proprietor have increased by triple digits. "We have another client who, when comparing kiosk orders to those taken by a clerk, experienced a 500% increase in people electing extra meat on their sandwiches," says Chuck Mallory, Radiant's product manager of CSS.

The transaction flow for ordering a sandwich at a kiosk typically includes three or four up-sells, and "An up-sell is selected 30% of the time it is offered," says Grossman. "As an incremental item on a sandwich that's already being made, it typically represents a 70% to 80% gross margin."

Beyond that, the kiosk offers cross-sell opportunities, as well. In the non-kiosk environment, a customer waits in line to order a sandwich and waits again while it's prepared. At a kiosk, the customer orders on-screen, gets an order number, and typically browses the store while waiting, providing an additional opportunity to increase the average ticket size.

Retailer investments vary, but $50,000 to $100,000 per location for two to four kiosks integrated into a full-service solution is a fair estimate. "We've seen cases of ROI in less than a year and up to 18 months," adds Grossman. "At the end of the day, the per-device cost is very low compared to the increased item sales and gross margins."

More newfangled ideas

Kiosk "listening" stations in home-entertainment stores or departments aren't new, but there are new opportunities in that type of environment for a person to be prompted with, "Would you like to purchase the music you're sampling? Press 'one' now."

Working with IBM partner Retail Store Systems, Inc., Virgin Entertainment, Inc. has set up listening kiosks in several Virgin Megastores, where customers can scan a product's bar code to preview or sample any of the 300,000 CDs, DVDs, or games in stock. In a pilot program in Dallas and Los Angeles during June 2002, Virgin reports that MegaPlay kiosks were occupied two-thirds of the time and got 32,000 page views per week. Virgin recently added 20 kiosks to its Times Square Megastore in New York City and 15 to its Boston/Newbury store.

The kiosks also provide a venue for cross-selling and up-selling by recommending other albums from the selected artist and similar music by other-and especially new-artists. "[Ordinarily], a very small percentage of new releases get sold, because the public doesn't know about them," says Dan Hopping, IBM's consulting marketing manager, based in Raleigh, N.C. "This is a way to sell more artists and more releases."

How popular are these kiosks? People line up even when employees are available. "Why? Perhaps it's because the kiosk delivers instant information on all kinds of music, whereas employees may be expert in classical but know little about R&B," says Hopping.

AccessVia, a Seattle company that made its name in shelf-edge printing, has also expanded into display-based kiosk technology to help its retail clients communicate directly with their customers. Although purchase behavior can play a role in determining the offer, pilot projects focus primarily on current shopping trips. Deployment is expected in 3Q 2003. One of the first clients the company has announced is Safeway, Inc. but details of the implementation are not yet available.

Taking on cross-selling and up-selling tactics at the point-of-sale adds muscle to your sales capabilities at a time when you need it the most. The returns for capturing and then unlocking customer insight at the point where you have purchase or service interactions with your customers is very attractive. While you have the attention of your customers, do what they want: Meet more of their needs and they'll give more of their business to you.

To read more articles like this one, visit Peppers and Rogers Group's Web site at

All materials copyright 2003 Peppers and Rogers Group - 1:1 Marketing.

Dig Deeper on Sales technology

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.