Saturday, April 08, 2006

The Art Of The Upsell

Yesterday, I was in a Blockbuster store and I heard the manager talking to his associate. The manager said, "The store looks pretty good, but you guys need to do more upselling at the cash register .... popcorn, gift certificates, whatever ... you need to do it." Unable to resist, I asked the manager how much additional revenue he brought in through the upsell. I got a polite, "I can't really say", but I'm not sure if he even knew. When I told him that in fact, I found the upsell so annoying that I would avoid stores that do it if I had a substitute, he thanked me for my advice. I doubt he spent last night building an excel model to balance the lifetime value of a customer versus the value of the upsell.

I really dislike the upsell around ubiquitous, commodity products. If I wanted popcorn, I probably could have gauged and responded to that desire on my own. I only appreciate the upsell when it is a value play for the customer where the customer either
  • saves money (e.g., supersize this) or
  • where the product has some unknown or confusing features (e.g., sommelier who says try this pinot noir instead of that one because it better matches the food, even though it is more expensive) or
  • where the customer doesn't know about an option (e.g. navigation system on a car)

When the upsell is only around making more money for the business, it is so blatant that I could actually see it driving some customers away ... it has a negative impact on the brand. I think this principle is probably true no matter what you are selling .... cars, movies, enterprise software, whatever.

The old saying, though, about never projecting your own thoughts onto the whole customer base holds true. I'd be curious to see some numbers on this to determine if there is sizable revenue bump from the commodity upsell. Maybe more people than I think actually appreciate being reminded to buy popcorn.

1 comment:

DR said...

CBDR,

Never heard the upsell highpoints put so succintly. Seems upsell fits into the general category of short-term cash bump vs. long-term value. Unfortunately even in non-blockbuster situations with "expereinced, professional" management that battle is too frequently decided wrongly.

DR