Catalog and Direct Selling: Don’t Leave Money on the Table
Techniques that increase response, average order and overall profits
Many direct marketers unwittingly leave money on the table with every transaction. One transaction at a time, it may not seem like much. Collectively, it could mean thousands of dollars robbed from the bottom line.
Here are five techniques that not only will increase your average order and add to overall profits, but in many cases also increase overall response. All five should become part of your all-around merchandise and creative strategies.
Cross-sell Before the Checkout
Most successful direct marketers already know the value of cross-selling on the telephone or online, but few take advantage of this successful technique early in the buying process. Always employ a merchandise plan that strategically cross-sells on a general basis or with specific products.
• An example of a general cross-sell: Wolferman’s English Muffins extends the offer “add a preserve to any gift for only $4.99” throughout its catalog.
• An example of a specific offer: If you are selling a coat, offer the matching gloves as a value proposition, “for only $14.95.”
For some of your customers, the added incentive might tip the scale and encourage the initial sale. The caveat here is that this technique only will work if the cross-sell offer is intrusive in its creative presentation. Make it stand out.
Play the Margins
If you are selling similar products within the same category, always push the product with the better margin. This technique is especially successful if the product has features or benefits that can be played up in the creative presentation. This might include a more effective headline, captions or callouts that draw the eye in and sell.
This also applies to your house brands that almost always have better margins. Even if you can sell the house brand at a slight discount, as long as you sell it more effectively, you should add more profit dollars to most transactions.
Work With Key Price Points
Always elect to use a consistent .95 (or .99) over a lower amount (.70, .50, etc) at the end of your price points. The customer typically does not recognize the difference, and the additional 45 cents to every sale really can add up. One rule of thumb: .99 says low price and .95 says “value.”
One cataloger calculated the additional dollars it might earn if all price points ended with a consistent .99. It learned that almost $40,000 could be added to gross sales! The other benefit of this technique is a reduction in data entry errors, since it provides consistency for your call center.
Another price point technique is the rule of known “price thresholds.” Price thresholds are numbers such as $14.95, $19.95, $24.95—the price just below units of five or 10. Typically a $19.95 price will sell better than $21.95, or a $49.95 will sell better than a $52.95. Conversely, if you are selling a product for $28.95 you most likely could sell it for $29.95. Even if the product currently sells for $46.95, using the right creative presentation and benefit copy, you could sell it for $49.95.
Most merchandisers understand key price points in which they can effectively sell specific products. But have you tried to move customers up to a similar product with a slightly higher price point? Again, this involves a creative technique that puts the higher price points in a hero position and uses upselling techniques that really sell the additional value received. For example, if a popular price point for a gift basket is $34, show a similar gift basket for $39 (with more in it), but give it more space, a headline that screams “more value” and photograph the basket showing the extra “abundance.” The additional $5 is not that much, and if customers decide against the upsell you still offer the comfortable $34 price point.
If you’re a multichannel marketer, don’t get too caught up with equal pricing between retail and direct. Most people purchase from these two channels with unique goals in mind. A catalog shopper often is interested in the convenience of shopping via direct channels, especially if they are sending a gift. So, in some cases you can inch the prices up slightly. It might be worth a test.
Present Plenty of Options
Product and price options are extremely important when selling via the direct channel. Never assume you know the exact products that will most appeal to customers and prospects. This especially is true for your more popular categories. If you do well in the outdoor furniture category, offer customers a broad enough range of designs and price points so something will appeal to them. Then, take it one step further and upsell the whole outdoor set, not just a couple of chairs. Techniques such as bundling the set at a discount (in addition to selling each piece individually) or offering a free sun umbrella when they buy the table and all six chairs can only increase the average order.
Typically, smaller catalogs (fewer than 32 pages) don’t perform as well when mailing prospects, because there are not enough options within multiple categories. The same goes for a single-focused direct mail offer; don’t just make one offer, take the opportunity to add a product, feature or service that not only will add value but also will increase the average order.
Show Them the Money
Most of the above techniques will work, but only if your design team understands the pricing goals and can effectively sell them through its creative presentation. Show customers the value of products. If you are not able to effectively present features and benefits with a single photo, use other attention-getting techniques like captions, bursts or a second photo to explain the value of the product. Otherwise, the price point may not make sense to the reader.
This holds true for offers such as bundles, selling two similar products at a discount, adding a product at a value or other upsell techniques. Make sure customers quickly see and understand the offer. Never hide the cross-sell or upsell in copy or as a line item after the initial pricing. Make sure it stands out, or it simply won’t work!
Are you leaving money on the table? With a little merchandise and creative planning, you can succeed with these proven techniques that other direct mail companies have employed to increase average order and add thousands to the bottom line.
Lois Boyle is president of J. Schmid & Associates, Shawnee Mission, Kan. You can reach her by e-mail at firstname.lastname@example.org.