Increased online sales with post-cart double up-sell techniques09/02/2009
With the use of an web analytics programs like Google Analytics, Urchin 6.6 and ClickTracks, a great deal can be learned about web page exit points. I spend more than half my time these days using quantitative methods to increase retention and conversion for websites. I am continually surprised to find out how little, tiny elements in the online buying cycle produce significant losses.
There's the obvious stuff like the online checkout process being too difficult to complete, not enough payment options, the overly strict return policy, weak guarantee, shipping costs being too high, etc. Then there's the whole subject of the price elasticity of demand − something we test often.
Through extensive A/B testing across a number of client websites and dozens and dozens of online tests we've found that the cleanest simplest checkout process is almost always the best. This sounds intuitive. When a prospect is ready to buy online, the last thing to do is put up check-out road blocks. After all, the difficult part is getting the prospect to the buy decision. You'd think that checking out should be a walk in the park. Well, it's not. Almost 33% of online shoppers abandon the website during the checkout process. If your checkout process is flawed it will not matter what the user has done prior to checking out, they will not buy.
This blog post is about some recent up-sell and cross-sell learning for websites. Up-selling is a sales technique whereby a website attempts to have the customer purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. Up-selling implies selling something that is more profitable or preferable for the seller instead of the original sale. A different technique called cross-selling tries to sell something else in addition to the original sale. Amazon.com has shared with us that cross-sells were responsible for 35% of its sales in 2006! According to the 2009 e-tailing group's survey of 190 large e-commerce executives, 55% of retailers will include cross-selling and up-selling in their online merchandising activities this year.
Here are some more interesting facts from that e-commerce survey:
Cross-sell/up-sell through online shopping carts - conversion rates:
- Less than 1% conversion - 8% of retailers
- 1%-4% conversion - 16% of retailers
- 5%-10% conversion - 9% of retailers
- More than 10% conversion - 3% of retailers
- Don't know conversion rates - 44% of retailers
- Don't merchandise in shopping cart - 20% of retailers
Source: Internet Retailer
It does not surprise me that 44% of online retailers don't know their conversion rates. Measuring conversion rates for cross-sell/up-sell can be ridiculously complicated, and depends on what kind of cross-sell/up-sell solution you're using. Since we use custom in-house commerce platforms with database level sessions and page tracking, Dirigo Design is in a very good place for developing effective e-commerce solutions. We're swimming in actionable data. Typically, analytics packages (Google analytics for one) don't provide the depth and detail needed to manage a sophisticated cross-sell/up-sell program.
All too often, our job is to sell a single product or program (e.g. a $200 guitar lesson series on DVD). Granted, the product needs to be a good one to support a $200 price tag. That's a given. When e-commerce was new, the prevalent technique was to simply display these guitar lessons on the website. Lesson 1: beginners, Lesson 2: advances, Lesson 3: rock star… The prospect would add items to their online shopping cart and checkout.
The next iteration was to show the customer that people who purchased lesson 1 also purchased lesson 2 and 3. Sometimes a screen called the cross-sell page was placed between the cart page and the checkout process. This interrupter page or up-sell page would typically offer special incentives to entice the customer to buy more. For many of our clients, we've found that these style techniques actually depress conversion. Test after test show that the more clouded the checkout process the lower the conversion.
The next iteration was to show the customer that people who purchased guitar lesson 1 also purchased lesson 2 and 3. Sometimes a website window called the cross-sell page was placed between the cart page and the checkout process. This interrupter page or up-sell page would typically offer special incentives to entice the customer to buy more. For many of our website clients, we've found that these style techniques actually depress conversion. Test after test show that the more clouded the checkout process the lower the conversion.
Over the last several years we've moved steadily toward a technique we call the post-cart up-sell (or cross-sell) for our websites. Our first successful test of a post-cart cross-sell in 2007 added $1.2 million in revenue. Subsequent implementations have been all over the map: adding anywhere between $10 and $60 to the average ticket. Here's how it works:
After a prospect has been turned into a customer with as clean a sales and checkout process as possible, an incentive to purchase a little more is shown on the online receipt/order confirmation page. Since the customer has already decided that your product is worth spending their hard earned money on, they are usually open to buying more -- if the offers are solid. Since your online system already has the credit card number and transaction details, a single click is all that is required to cross-sell or up-sell. Because you've not gotten in the way of the original purchase, conversion typically increases. This is truly a spectacular online sales technique.
To use our example above, the prospect purchased guitar lesson 1. Once they've completed the online purchase, on the order confirmation page (after completing the sale) they're told that they could have lesson 1 and lesson 2 in a combination deal for only $350 – a $50 savings. In our example, 16% took the special offer. This adding $24 to the average ticket.
Now for the fun stuff. What happens when you ‘double down' on the post-cart up-sell? In our example above, 16% took the first up-sell. If they took the bait on the first up-sell, will they bite on the second? Hook line and sinker – the answer is YES. The offer: receive interactive computer lessons for another $50. Mind you, the total price difference between the first offer and the last is almost $200. We found that 44% of those people who took the first up-sell also took the second. This is a real example from a real website client. Over a year-long effort of testing, the numbers line up like this:
|Old interrupter page||$1,000,000|
|Simplified order process||$1,090,000|
|Post cart up-sell||$1,220,580|
|Double post cart up-sell||$1,239,861|
While there are many up-selling strategies, we've found post cart up-selling to have among the highest ROI. While the economy may not be at its best (here in September 2009), people with the money have a lot of it to spend.