Tag: suggestive selling
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Top 3 Survival Tips for Manufacturing
1. Have visibility into what is selling
2. Streamline your product offering based on sales
3. Customize your supply chain to your product offering and demand signal (Read as “educate the supply chain of the product based on sales”)
A manufacturing operation that is disconnected from sales is bound to have high inventory and poor capital utilization – both being extremely detrimental to profitability. continue reading »
“This Sells with that” for Aftermarket Parts
The SKUs (stock keeping units) in an aftermarket business is nothing but the various components of an automobile, tractor or backhoe. Every new model that comes into the market sees an addition of 2,500-3,000 parts to the existing master list, while the addition of every variant adds another 500-1,500 parts. The last forty years has seen a phenomenal growth in the number of aftermarket parts. This phenomenal growth has been fuelled by the liberalization of global players resulting in thousands of models of cars, tractors and other machines.
Frequent launch of new models has reduced product life cycle and has negative implication on the aftermarket supply chain. The implication of shorter life cycle of automobiles on the aftermarket business is faster transition of parts from runners to repeaters and soon fading into obsolescence. The revenue from parts of a new model are typically low in the first two years after launch, increasing in the third and fourth years. The sales only stabilize if the model continues in the market. Unlike other businesses where a product is discontinued if it does not yield revenue, in an aftermarket parts business the part needs to be supplied even if the model has failed. This tremendous volatility impacts the number of parts the aftermarket business has to support.
For example, if an OEM introduces a new model and two variants each year – this results in about 3,000 parts. In six years time the parts proliferation in the aftermarket business of this OEM will be least 30,000 parts. This explains the relevance of having a SKU management for the aftermarket business in order to track the movement of parts till it reaches obsolescence.
Levering “this sells with that” Intelligence from Invoices
The challenges due to inventory and assortment planning for the aftermarket parts are significant. Traditional forecasting methods that treat each part as an independent entity are outdated. For aftermarket parts, the performance of traditional forecasting methods is dismal, and hence not all the parts can be forecasted. In fact, only five percent of the master list can be forecasted with an accuracy of 75 percent on a monthly basis. This results in bloated inventory, incorrect parts assortment and lost sales.
OEMs, distributors and retailer have realized the importance and complexities of the spares business and have initiated measures for assortment planning and SKU management. This requires sustainable methods as the market grows and competition gets fiercer. Every OEM has mentioned how the downturn has reflected in increased sales for the aftermarket/service parts. A part of the business that was typically ‘a nice to have’ has become a focus for improved customer service and profit.
"This Sells With That" For Aftermarket Parts
The aftermarket business deals with SKUs in tens of thousands. Unlike soft goods, in this business customers buy parts for projects and jobs. The invoices reflect that, and are comprised of parts bought by maintenance and repair shops to get a job done. Hence, the affinities in the sales transactions reveal what parts that are bought together for repairs/jobs.
The sales transaction data for the aftermarket businesses is very rich with parts affinities and trends. That’s because the data reflects the buying patterns of repair shops and mechanics. This represents a significant opportunity to leverage the transaction patterns for assortment planning, inventory management and of course, ‘suggestive selling’.
Emcien offers analytics that reveals patterns in sales transactions, producing a complete data map of the item affinities for ALL parts. This intelligence can be input into traditional warehouse planning and retail assortment planning systems. The affinities data can be used to make traditional systems smarter as the sales patterns change, parts change and market shifts.
The current sales patterns and item affinities in planning systems are input manually using manufacturer recommendations and gut feel. These recommendations get stale very quickly and are rarely based on actual sales invoices. The value of analytics driven affinities is that the relationships are always up-to-date, backed by actual sales transactions. Emcien’s analytics produces affinities data for all parts in the supply chain eliminating the need for ‘hard coded’ rules that quickly become obsolete and are a nightmare to maintain. This enables aligning parts inventory with with sales/model changes/parts utilization based on actual invoices. The affinities data can also be use for suggestive selling to increase customer service and order size.
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S.P.Richards Shows Dealers the Keys to Succeed
Just got back from S.P.Richards’ Advantage Business Conference (ABC) in Miami. It was a fantastic week packed with networking opportunities, learning experiences and fun. The HP sponsored Buccaneer Bash was amazing in scale and attendance, engulfing the Fontaine Bleu in a big party atmosphere. The next morning was a great keynote by Larry Winget, who says it like it is!
SPRichards’ Advantage Business Conference (ABC) in Miami
Apart from being lots of fun, the conference was great learning venue. With thousands of dealers and manufacturers, the key questions revolved around “How do we sell more to our customers, increase customer service and profits!”
S.P. Richards works hard to make their dealers successful. Their latest value-add is automated up-sell/ cross sell capabilities on their ecommerce web site. This capability is very powerful and could not come soon enough for the dealers. Many of them expressed their views. Here are a few:
- If we can sell on more item to a customer, who is already buying from us, the impact on sales is dramatic. (Quoting verbatim – “it’s a no-brainer!”)
- My customers want me to suggest relevant items that they can buy, while I have them on the phone! I want every sales rep to have that capability.
- It is so much easier to sell more to existing customers than to try to get new ones. So we embrace all the help we can get to service our existing customers better.
All the manufacturers agreed with this view because it’s a win-win if the dealers can sell more and more efficiently. The list of dealers at the conference was very impressive…including companies like ReStockit, Village Office supply and GiveSomethingBack.
Congratulations SPRichards! A great 2010 conference. Look forward to attending next year!
About S.P. Richards Company -
S.P. Richards Company, one of North America’s leading business products wholesalers, distributes over 30,000 business products to a network of over 7,000 resellers in the United States and Canada from a network of 44 Distribution Centers. S.P. Richards Company is a wholly-owned subsidiary of Genuine Parts Company, (GPC:NYSE)
Tips for Suggestive Selling to Increase Order Size
An online presence is considered a necessity for business today and the Internet is perceived as a significant revenue generator. However, most e-commerce websites, with the exception of Amazon and Proflowers, have not reported great sales. The disparity between the number of clicks received and the actual number of customers is stark, proving incredibly low conversion rates. Therefore, along with determining the revenue targets and projecting growth plans, you have to master strategies to increase order size.
Suggestive Selling: The Best Way to Increase Order Size
Developing online trust and enhancing a visitor’s shopping experience might gear visitors toward a particular website. However, attracting traffic and converting them into customers is not sufficient. You have to focus on increasing the order size to drastically improve sales. The most effective way to achieve results is suggestive selling.
Increase Order Size By Suggesting Highly Relevant Items
Although suggestive selling or up sell/cross sell is greatly dependent on the products being sold, the following are some tips that can improve e-commerce sales:
Positioning of up sells and cross sells: Place up sell and cross sell offers in as many product pages as possible. While big merchants will be at an advantage in this regard (since they have a larger inventory), smaller merchants have to exploit every single opportunity to increase order size. However, placing suggestions at strategic points is crucial. Remember that you want to:
• Firstly, educate the visitor about every related item available
• Secondly, inform them about the depth of your collection
Trust impulse sales at the last minute: The E-Tailing Group survey states that 38% of all e-commerce websites place up sells in the check-out page, which the customer visits after putting all items in the shopping cart. Placing seductive offers in this page works wonders. However, there are a few rules to be remembered:
• Offer a variety of price points
• Low-dollar products make for more probable impulse purchases
• Ensure that the most relevant items are offered, for example, a shirt or belt with pants
Include up sell and cross sell offers in post-order e-mails: Inclusion of additional products in all customer e-mails can boost sales significantly. Many e-commerce websites do not follow this strategy, believing that goading customers into purchasing products reduces purchase scope. However, this tactic cannot be termed as ‘goading’ since the recipient is a customer who has previously purchased from your website. Therefore, including cross sells in support or product enquiry e-mail replies and post-order e-mails is a practical solution.
Not more than three products supplementing each purchase item: The old saying ‘less is more’ proves true in this regard. Overwhelming customers with too many offers is not a good idea. To catch a shopper’s attention, there should be an average of three cross sell suggestions.
Category-bundle techniques: Package deals are one of the newest trends in e-commerce. Follow the brick-and-mortar store technique and position complementary products in such a way that consumers feel that buying the entire ensemble will serve their needs. This can be done with all items – plumbing products, electrical products, auto parts, office products, furniture, sports gears and so on.
In addition to this, you can consider hosting automated expert recommendations based on customer buying patterns and trends. This has great potential when it comes to raising sales. Automated suggestive selling ensures that the suggestions are always up to date! This is key as retailers today offer hundreds of thousands of items that are constantly changing. Manual methods for updating complementary products are just not feasible.
Grow Your Business with Value Upsell and Cross-sell Strategies
Grow Your Business with Value Upsell and Cross-sell Strategies
Gearing traffic to your website can prove quite difficult, and converting even two-thirds of the visitors into customers can be a challenging task in itself. Most e-commerce conversion rates fall between 2% and 3%, unless you are selling at Amazon (9.6%) or at Proflowers (14.1%)! Therefore, when you manage a hard-fought victory, capitalize on it through aggressive upselling and cross-selling strategies.
Benefits of Upsell and Cross-sell
When a customer enters a shop searching for a specific product, a salesman comes to their aid, provides them whatever they need while suggesting alternatives and complementary products. Perceptive suggestions by the salesperson enhance the store’s image in the eyes of the customer, since it reflects a level of thoughtfulness on the part of the store. Suggestive selling online can serve as a practical method of increasing profits.
Cross-selling and upselling have great value for e-commerce as well, since they increase:
- Average order value
- Conversion rates, since they guide consumers to select appropriate alternatives in case they are looking at the wrong product or one that does not complement the product in the shopping cart
- Exposure to high margin products
- Customer satisfaction through the recommendation of related products that will supplement the product as well as the user’s experience
- Deeper awareness about the product you are offering
Upsell and Cross-sell: Tips and Tricks
The following are certain ideas that would definitely improve your opportunity to upsell and cross-sell:
Suggest the obvious: Several cross-selling and upselling opportunities arise all by themselves. For instance, if you are offering tennis racquets, suggesting balls, bags and other tennis accessories is natural. You can also consider mentioning a few other related products and services that you provide.
Relevant suggestive selling works wonders: Overloading customers with unrelated suggestions can only serve to exasperate them and hamper purchase scope. If not immediately purchased, it will definitely eliminate chances of developing a recurrent clientele. Therefore, product suggestions should be as closely related as possible.
Expert recommendations help: Another way to facilitate upselling and cross-selling is by offering recommendations by professionals, field experts and customers. This could be anything – from a chef’s suggestion on a particular menu to a doctor’s recommendation on drugs. This is a strategy followed by Amazon.com.
Timing is crucial: The best time to cross-sell or upsell is when the customer is trying out some item. For instance, if the customer is looking for a low-priced camera and seems disappointed with a particular model’s features, the person may not mind buying a higher-priced model with more advanced features. Or, suggesting a belt when the customer is trying on a pair of trousers is quite fitting.
Offer products of a different price range: The supplementary product suggestions should be across a varied price range. If three items have been suggested, it is crucial that all three offer a welcome mix of different price points. Most often, the item that costs the least will be chosen. However, it will leave a good impression in the minds of the customers, increasing the chances of future sales from the same client.
The secret to successful cross-sells and upsells is complete focus on customer needs and requirements, instead of concentrating on increasing sale. As they say, Take care of the pennies and the pounds will take care of themselves.
How Suggestive Selling Can Increase Sales
In the hard goods industry, purchases are need based. Customers buy items for their job and projects.
When a customer comes to the checkout counter, the counter man can look at what is being purchased and recommend other items that the customer might want to purchase. Not all of these recommendations will be accepted, but those that are represent additional revenue. The recommendations that are made depend on the sales person’s knowledge of the products and experience on how they are used. The profit margin on suggested items, when they are bought is very high, because you are leveraging a customer who is already in your store!
Suggestive Selling is a Recession Buster!!
In a virtual environment such as a web-store, there is software that monitors what is being placed in the “shopping cart” and make recommendations based on the individual items or on collections of items. As in the real store, a few of these recommendations will be accepted. But the net effect will be to increase the average number of items in a shopping cart, and therefore revenue.
You might be wondering how software can make these recommendations. It is accomplished by analyzing earlier sales and discovering what items are typically bought together. Emcien’s analytics on the sales data will reveal items that are bought together for the job. For example – 90% of the times item A is bought with item B and C. If you know the items that go together (for a job), why not make suggestions to the customer? This shows that you know how customers use your products; it improves customer service and increases sales. A win-win all the way through!
Distributors typically sell tens of thousands of unique items across hundreds of thousands of transactions. Emcien’s analytics quickly reveals customer buying behavior and trends that every distributor can utilize to increase sales. When suggestive selling is based on actual buying patterns, the suggestions are more plausible, and customers trust them. It is very believable when you can say “ 90% of the times this ballast is bought with this lamp and mounting.” These recommendations are sensible, simply because they are based on the actual buying behavior of your customers. Emcien’s analytics can simulate the years of experience that’s normally accumulated by working in a store for years. I need to point out that sensible recommendations are critical because irrelevant recommendations annoy customers and may reduce sales.
To illustrate the potential of suggestive selling, here are some actual numbers. ACME hardware store carries 41,155 unique items. An analysis of 232,500 orders showed that 61% of these orders would result in at least one additional recommendation. When the store implemented the suggestive selling, sales increased by 3% in the first 4 months.
Product recommendations have been used very effectively by Amazon and reported to increase sales by up to 30%. Surprised? Here is the impact to your business – Adding one more item to 10% of the orders can increase sales by 5%!
How much money are you leaving on the table because you are not leveraging suggestive selling for your products? Would you like to know?
What is Pattern Based Analytics?
Emcien's Pattern Based Analytics Automatically Reveals Choice Combinations and Trends in Sales Transactions
A fast emerging area of business analytics is Pattern Based Analytics (PBA). This has been launched due to the very large amounts of data and need for analytics that can reveal meaningful patterns that businesses can act on. A typical reaction to the large amount of data is “If I had seen this coming sooner, I could have acted faster, decreased my risk and enhanced my opportunities for growth. Pattern Based Analytics typically requires focus on a business areas, e.g. Sales, Marketing, Finance, etc. The key to Pattern Based Analytics is automatically revealing intelligence that is hidden in the data/information.
This is a fast growing area because of key value points:
Instant Use - The inherent nature of Pattern Based analytics is that it does not require models and it accepts unstructured data. Hence, one of the greatest value points is Instant Use!
Accepts unstructured data – A key value point that drives down implementation time, barriers and cost, and dramatically increases applicability of the analytics. The ability to detect patterns in unstructured data makes it very easy for applications from sales data, marketing data, to twitter strings.
Big Problems are easy – Problem size and data size are not an issue with PBA. On sales data, Emcien’s PBA will easily solve buying patterns on 250,000 to 500,000 SKUs in a few minutes. This offers the ability to solve problems that were too large/expensive to solve previously. This is a game changer, when the closest alternate solution requires complex models and has serious size limitations of a few hundred SKUs.
Works on problems big and small – On problems big and small, PBA is a natural fit. PBA dramatically lowers the price of analytics, enabling smaller companies to gain immediate value from business analytics.
No data-models, No data-cube, No set-up – This is one of the single biggest value points for PBA. This eliminates the need for specialized analysts, statisticians and technical staff to interact and maintain the system. The ability to accept unstructured data and not require a model means No Setup. This also means you can go live now! No more 18-month implementation cycles!!!
Intuitive for non-technical users – Pattern Based Analytics can present results naturally in a very intuitive way. This is because the patterns that are pop are typically the top categories that need attention. There is not need to drill down and ask questions – the ultimate bain of every BI user.
When Pattern Based analytics is pointed at sales data, the patterns that pop are “what are the top selling items”, “what is the pattern of choices combination”, “where is this happening”? Any non-technical business user can use this report to stock better and drive more sales.
Always up to date – Patten Based Analytics does not use models and cubes. Hence there are no cubes to maintain and update. Even as time passes, the analytics are always up to date, due to the ability to input non-structured data.
Gartner has rightfully established Pattern Based Strategy as the next frontier for capitalizing on large volumes of data and deriving value fast and continually.
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BI is for IT, But Analytics is for the Business User!
I’ve just come out of a meeting with a business user who is passing up on a well-known BI software package. “It takes too many IT resources to implement. My IT guys love it but I cannot afford the cost/time,” he said.
As companies drown in data, BI is a very expensive route to try and gain value from the data. Mark McDonald, head of research for Gartner Executive Programs, has a very nice article titled Without the Business in Business Intelligence, BI is Dead!. Sounds like – “The King is Dead. Long Live the King.”
BI has been built for the IT community. It is an old-school solution built on the heavy weight model of technology. That model rests on the acquisition, installation and operation of technology based on a significant upfront investment that is earned out over a period of time. This has been the investment/implementation path for enterprise ERP/SCM/CRM/PDM software packages. BI is in this class of software solutions, and results in an expensive and less responsive solution. Mark McDonald calls this the “old ‘heavy weight’ model of technology”.
The top two categories for Gartner’s predictions for 2010 are Cloud Computing and Analytics – these are both directions that are a far cry from the old world of heavy/expensive/pay upfront software. BI in its current form is completely out of step with these predictions and where the market is heading. So, why did Gartner renamed BI to Analytics? In doing so is BI going to magically transform from its old heavy weight form to a new lean enterprise 2.0 form? Long Live the King?
Emcien offers pattern-based analytics that easily takes sales data in any form to reveal customer buying patterns and trends. The technology has completely eliminated the need for data models, structures, mapping, etc. Emcien’s pattern based analytics technology was created explicitly to overcome the ‘old heavy weight model of technology’. Pour your sales data in, and watch the customer buying patterns. “Like Google analytics for sales data”, our customers told us.
Mark McDonald has prophecy for BI that I think is dead-on (pun!?). “On a radical note, we are seeing some early signs that companies are looking to use social media/web 2.0 technologies to address business issues that were previously assigned to BI.
Lighter weight technologies handle tacit information and semi-structured process support better than BI solutions that rely on structured and standardized information.
Our customers completely agree with Mark McDonald. Quoting a VP from a Fortune 500 company, “We have lost the appetite for million dollar software and long implementations that consume IT resources”.
However, the need for harvesting intelligence from data is not going away. On the contrary, it has never been more important than it is now. The data hides jewels of intelligence that companies need to act on NOW. But that is only possible if Business Intelligence is not a technology but a capability for the enterprise. Long Live the King!
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Demand Intelligence Among IDC’s Top 10 Retail Predictions
Just read a great article by Amanda Ferrante based on an interview of Leslie Hand, Research Director at IDC Retail Insights for Retail Touchpoints. The interview focused on providing new strategies to optimize the value of IT in 2010, as IDC Retail Insights unveiled its Top 10 Predictions for the retail industry. The IDC report explored several hot retail topics, including social commerce, mobility and how demand intelligence is driving inventory management.
In the interview for Retail TouchPoints Leslie expanded on the IDC predictions. The first set of points were around the impact of social networks and it sizeable impact in retail. Everyone is talking about social networks, and we all know it is like the iceberg that sank the Titanic. We see a small piece and there is a big chunk underwater! (bad analogy!) But no ones knows the true financial value of this. I guess the analysts counsel is to chase this bubble it and stay on top of it, so that when folks figure out how to monetize it, you are positioned well. Just hope that we are not standing there with a load of tulip bulbs!
The interview mentions Demand Intelligence as being critical. Leslie says that retailers with capabilities for sensing demand were able to fine tune assortments, reduce demand forecasts and adjust prices and promotional programs to maintain margin expectations given expected product sell-through issues. On the flip side, many retailers were left holding the bag, as they did NOT have the capabilities to adjust to the changes. As consumer spending shifts and demand fluctuations grow, Demand Intelligence is mandatory to run a a profitable business.
In Leslie’s words “Many of the retailers who were not able to adjust expectations soon enough, because of the timeliness of demand data or insufficient analytics, remedied the situation by investing in better forecasting and planning tools in 2009. Part of the success this past holiday season can be attributed to merchants sticking to the plan, with an understanding that the data and the analytics and planning tools that were used to develop the plan were smarter and more agile than human experience alone. We believe this was a tipping point for many retailers, who may not have been fully invested in demand intelligence before.”
The predictions also touch on the importance and trends of mobile applications, and connecting customer behavior and purchase data for more insight. However, to me, the second one sounds like lots of data, long implementations, ……
On that note, I would like to add that a key factor for applications to be successful in this economy is quick proof points and fast implementation. As competition heats up even more, retailers needs tools that can quickly demonstrate proof points and deliver value. Solution providers and software vendors need the capability to quickly implement their solutions, without lengthy and costly implementation cycles. This is even more important for the small and medium retailers. I guess the bigger guys would say … why leave me out! :))
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Making Analytics Actionable
I just read an article titled “Making Analytics Actionable” by Michael Vizard. He makes two good points – predictive analytics is not new and analytics needs to be actionable. I could not agree more.
On the first – predictive analytics has been around for a long time. We used to call it forecasting. It was difficult then, and it is difficult now. Forecasting gurus, or should I say Predictive Analytics gurus have thrown every mathematical trick at the data to predict the future. It reminds of a quote by the CEO of a Fortune 500 company, who said “No one knows how to forecast. If they did, they would be in a different business.” I think by different business he meant forecasting money on Wall Street. But we all know that has gone! And now may be the quants on Wall Street would agree with him as well.
On the second point – yes, analytics should give you actionable information. As I hear from our customers, time and time again, they do not need more data. Companies are drowning downing in data. (maybe “downing” is the right word!!! We are downing in data! It is a downer!!!) In the name of Business Intelligence, they now have the capability to slice and dice this data, creating more data! The purpose of analytics is to convert all that data into something meaningful and actionable. If the analytics does not accomplish that, it is just another BI tool.
As you investigate analytics for your business, here are a few best practices:
- The analytics need to be focused by business function.
- The analytics needs to answer the question “What do I do with this?” and “what is the business value”.
- The analytics should make your job easier, and the recommendations should want you coming back to it over and over again.
The answer to the question “What do I do with this?” should be actionable tasks that a business should be able to run with. That is called Business Analytics. The reason the third point exists is because you, the user, would only come back to it over and over again if it made your job easier. That is the key to business analytics. “Take all that data and convert it into actionable tasks and make your job easier”. How is that for a tag line!
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