Making Good Recommendations

In the previous post about cross-selling or upselling, my main concern was differentiating the two practices rather than lumping them together.   Along the way, thoughts bubbled up about how to approach each task effectively.   Rather than making the original post insufferably long (or "more insufferably long" given my tendency to ruminate), I've extracted those passages and am presenting them as a separate entry:


In General

The decision of whether to cross-sell or upsell can be made based on an understanding of the buying process: cross-selling offers additional products once the decision is made to purchase a specific one, whereas upselling interrupts the decision process to suggest a different item that is better suited to the shopper's needs.   This distinction should be made before either practice is attempted.

Once the approach has been chosen, there is a separate decision as to which specific products to offer in a cross-selling or upselling attempt.   This is a significantly different decision that cannot, or should not, be made according to the stage of the buying process, but instead requires a more careful consideration of the needs of the individual shopper as assessed by their characteristics and behaviors.


Cross-Selling

Effective cross-selling requires careful selection of the suggested products.   If it makes sense that the shopper will require the additional products to accomplish the goal for which they selected the main product.   An item may be an appropriate cross-sell because the primary item is of little use without it (batteries for a flashlight, filters for a coffee maker) or it may be an item that is used in the course of performing an anticipated task in which the main product is used (trash bags with a rake, oven mitts with a banking pan).

It should not, in any case, be without a plausible connection to the primary product.   Poor cross-selling occurs in instances when no apparent relationships exists between the main product and the suggested product (because you bought a coffee pot, consider buying motor oil).  If the relationship between the items is not evident to the shopper, he develops the sense that the seller is pushing random merchandise with no regard for his needs or interests ... because that's exactly what the seller is doing.

The problem that arises when sellers attempt to fill in empty space with product promotion is that it undermines the value of suggestion.    Where there is a logical connection between one product and another, shoppers become conditioned (in the Pavlovian sense) to recognize that suggested items add value to the primary item.   Where there is not a logical connection, they become conditioned to recognize that there is no logic to the cross-selling, hence no value to themselves, and they learn to ignore it in future.

With that in mind, design should be undertaken with the goal of producing an interface that can accommodate suggestive selling, but does not require it.  In the latter case, there is the temptation (which is often irresistible) to fill the void with random and unrelated products.  Such practices not only result in a low take-rate for a specific offer, but in diminishing effectiveness of the cross-selling program in general.


Bundling

Effective bundling also requires careful selection of the bundled products.   As a subset of cross-selling, it still means that the shopper should need the additional products to make use of the main product, but it must be far more stringent in considering whether an additional product should be bundled.   In particular, bundling should be limited to items without which the primary item will be useless, rather than items that might be needed in case the shopper is performing a specific task.

The benefit of the bundle is that it enables the shopper to purchase multiple items at once - but the drawback is that the shopper may have the perception that they have no option to buy the original item without the suggested ones - and will opt to purchase neither from a given vendor.   For example, a store that bundles trash bags with a rake (and does not allow for the purchase for the bags without a rake) will sell fewer trash bags to shoppers who need that item only and do not wish to purchase a rake.   Such shoppers will take their business elsewhere - and there's a risk of their doing so immediately, without investigating the possibility of buying the items in an un-bundled fashion.

The solution is fairly simple: to offer the shopper the option of purchasing any item in a bundle rather than making the additional purchases mandatory, such that he may add only the main item if he so desires, or take advantage of the bundle if he so desires.   Also, when items are offered in bundled fashion, provide a prominent and unmistakable affordance to purchase them separately.

Badly conceived bundling has the same flaws as badly conceived poor cross-selling: where there is not a clear relationship between the main items and the bundled items (and for bundling, it must be very clear) the shopper will reject the bundle and shop elsewhere.  He will in future ignore your suggestions without giving them much attention and, if you bundle extensively, he may decide not to shop your store or site at all.


Upselling

Effective upselling is different, in that it requires careful selection of an alternate product not in reference to a specific product, but in reference to the shopper's needs in a more general sense. That is to say that suggesting they by Deluxe-A instead of Standard-A should be based on the knowledge of the shopper's desired outcome, and the confidence that the additional cost of acquiring Deluxe-A will be justified by additional benefits the shopper will receive for having chosen it.

It's also worth noting that upselling is not limited to a "deluxe" version of a given product, but may involve selling a different product altogether - rather than a deluxe broom, the customer's needs would be better served by a vacuum cleaner.  To do this, you would need to know the customer's needs (they are seeking to clean a carpet rather than a hard surface) either by inquisition or inference.

(As an aside, it occurs to me that this may not always be an "up" sell to a more expensive item, but could be a lateral or downgrade to a more appropriate but less expensive item.  This does entail sacrificing short-term sales because the original item was more expensive for the seller, but my sense is that it is a better long-term strategy for earning trust and loyalty - but that's likely a separate and longer meditation.)

In order to upsell well, a seller must know his shopper well.   Shoppers are leery of up-selling and distrustful of merchants who are constantly trying to get them to pay more for an upscaled product whose additional features offer them no benefit - as such the practice of showing a "deluxe" version creates instant mistrust that must then be dispelled by explaining the value of the additional features to the shopper.

In general, standard products generally outsell deluxe products because most shoppers do not really need the added features.   Too many sellers take the attitude that shoppers don't understand the value and need to be educated about the product - the irony of which is that in such situation it is the sellers who do not understand the shoppers needs and need to educate themselves about their customers.

It's also worth noting that product customization is often a species of upselling, at least in instances in which the customer has the ability to make changes to the product for an additional price.  The same problem of assumption occurs, and it is incumbent on the seller to educate himself about the shopper's needs rather than the shopper's to learn about the value of the product in order that the shopper will be amenable to paying a higher price.

Poor upselling makes the general assumption that Deluxe-A is a better alternative to Standard-A for everyone - and it very often is not.   As such, attempting to upsell a shopper whose needs are served by Standard-A will not only fail, but it will cause the shopper to regard the seller as untrustworthy and ignore their suggestions in future.


Sometimes, Your Best Option is to Do Nothing

Grandmotherly advice for social interaction is that if you can't say something nice, then don't say anything at all.    This dictum is equally worthwhile to consider from cross-selling or upselling that if you can't suggest something appropriate, then don't suggest anything at all.

Marketers are too eager to blabber at shoppers in order to make a sale, and designers and developers are too eager to set a "default value" when designing and building applications because the page would look odd with an empty space and it's easier to cram something into the hole than design an interface that works equally well without a selling module.    This has led to a serious problem for cross-selling and upselling systems, in that if the system is unable to determine (based on rules created by the marketers) which products would be appropriate to suggest, there must be some product to use as a filler even if the product is wholly irrelevant and inappropriate to the shopper.

It should be obvious this is an extremely inadvisable solution - as has been mentioned in the previous content, suggesting inappropriate items trains customers to regard your suggestions as worthless and the general level of trust that shoppers are willing to place in the brand will be diminished - such that the harm in making bad suggestions is that any future suggestion will be disregarded, even if it is carefully made and well considered.

A likely reason that the marketing profession is covalent on the notion of suggestive selling is that some shoppers appear to like it and others appear to hate it.   But I would posit that it is not the difference between shoppers, but the difference between sellers.    A salesman or store clerk who is adept at understanding the needs of his customers is valued, and even loved, by those customers - not only for making valuable suggestions but for refraining from trying to "push" when no suggestion is appropriate.   One who is not adept at understanding the needs of his customers is annoying and obnoxious - he is not merely "not loved" but over time becomes to be distrusted and even disliked.  It is, in essence, the difference between being regarded as a helpful salesman or a pushy salesman.

Said another way, if you have found that cross-selling and upselling have not worked out for you, it is likely because you are doing it very badly and entirely too often - and rather than dismissing the value of cross-selling and upselling in general, humbly accept that you have acted inappropriately, and making a concerted effort to change your behavior - or just as humbly recognize that you are no good at it, and stop pushing.