What is Up-Sell in the Age of the Recommendation Engine?

In the age of Amazon, up-selling a customer has become tantamount to suggesting more products during checkout time. In fact, Amazon’s recommendation engine is a relentless upseller and its success has spawned a breed of companies dedicated to building recommendation engines that they license to online storefronts. The truth, however, is that good upselling seeks to harness a larger percentage of the customer wallet over a longer period of time.

While Amazon and other storefronts are undoubtedly suggesting some of the best items to customers when those customers are at the point of purchase, this type of selling also has the feel of the chewing-gum rack at the grocery store checkout counter, attempting to capitalize on customer impulse. Checkout-time recommendations are great if you’re a grocery store and selling a product that is quickly consumed. But what if those checkout-time items have a shelf-life? More likely than not, you’ve saturated your customers for the foreseeable future. If you’re not selling a consumable, upselling with shopping-time recommendations is tantamount to cannibalizing future revenue from that customer.

Think about it. If someone adds a third t-shirt to their purchase because they react impulsively to an upsell recommendation, are they likely to buy a t-shirt from you two months later? The risk of checkout-time up-selling, of course, is that while you do sell more in that instance, adding one more needless box to an already-tipping armload, you are not delighting your customers. Worse yet, you may give them a sense of buyer’s remorse, an association that your company most definitely does not want.

To truly delight your customers, isn’t it better to give them what they want when they likely want it, not when you feel they are in a captive position? In other words, truly satisfying your customer doesn’t mean compelling them to engage in impulse buying. Instead, your company should be seen as a trusted advisor that brings the right information at the right time. Oftentimes, this is not when they are on your website. Let’s take the case of a customer who purchases yarn. Would you rather sell them so much yarn - in colors that they may not ultimately want - at one time that they feel buyer’s remorse? Or would you like to be there with an email right around the time that our theoretical knitter runs out of yarn? Which approach do you think will turn that customer into a loyal customer who buys at your store again and again?

This is the customer service side of marketing that seems lost with checkout-time recommendation engines. I believe that the data mining behind recommendation engines is unquestionably the future of marketing. In fact, as a co-founder of Istobe, I bank on it since our specialty is helping to understand customers - and their buying patterns - based on their purchasing history and their demographic information.

Up-sell today is not necessarily what up-sell will be tomorrow. As customers become more savvy in their online purchasing, bridging the gaps between site visits will be increasingly necessary to establish a relationship with your customers and to signal to the customer that your company is a trusted advisor not a relentless upseller.

Tags: Amazon, recommendation, upsell

Add Personalized Product Recommendations to Your eCommerce Site

Istobe is a powerful recommendation engine that makes it easy to add recommendations to your eCommerce site. How powerful? Shoppers who click on Istobe recommendations spend 20-50% more than the average visitor.

This entry was posted on Thursday, June 12th, 2008 at 7:17 pm and is filed under Amazon. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.