UPSELLING, CROSS-SELLING AND SWITCH SELLING: WHAT ARE THE OPPORTUNITIES?

In past issues of National Liquor News I’ve discussed the relative scarcity in the offpremise of simple cross-selling techniques such as mixers for bottled spirits. Below is a short discussion of upselling, cross-selling and switch-selling – what they are, the differences between each, and some examples in offpremise liquor.

UPSELLING

Upselling is about persuading the customer to buy a more expensive or upgraded item from the one they intended to buy. Upselling can also be based around product size and Average Weight of Purchase (AWOP). Convenience stores do this when you’re paying for the bag of chips or bar of chocolate by suggesting that you can get two for $X or the bigger option for $Y.

In liquor there are opportunities based around understanding the customer’s occasion. For example, if it’s a BYO wine for dinner and the customer is out to impress friends you may be able to upsell them to a higher quality product, such as upgrading them from a $15

Sauvignon Blanc to a $30 bottle such as Craggy Range. Or if it’s for a cocktail party, upsell them to a premium vodka from a mainstream vodka, again for the impress factor. Or you could upsell the customer on size; they may need the 1L vodka for their party rather than the 700ml.

CROSS-SELLING

Cross-selling is effectively increasing basket size by selling products that satisfy additional, complementary needs that are unfulfilled by the original item. This is where the mixers for spirits come in. In convenience stores they try to sell you something at the register, such as ‘X is on special today, would you like some’.

Again, understanding the customer’s occasion before they get to the checkout may assist in selling them additional items. If you know they’re buying for a party, offer a bundle of beer, wine, spirits, snacks and ice for example.

In e-commerce, cross-selling may be utilised on product pages (‘people who viewed this also viewed…’, ‘people who bought this also bought…’), during the checkout process, and in lifecycle campaigns. It can be an effective tactic for generating repeat purchases and demonstrating the breadth of your product catalogue to customers. Cross-selling can alert users to products they didn’t previously know you offered.

In liquor this may translate for instance to ‘popular bundle buys’. This requires an understanding of your basket data – which products customers are buying together. (In a famous example, UK supermarket giant Tesco discovered the two most commonly co-purchased items were beer and nappies. The blokes were being sent to the store to get nappies and got beer while they were there. So they merchandised beer in the nappies aisle to take advantage of this behaviour).

SWITCH-SELLING

According to Wikipedia, “Bait-and-switch is a form of fraud used in retail sales but also employed in other contexts. First, customers are ‘baited’ by merchants advertising products or services at a low price, but when customers visit the store, they discover that the advertised goods are not available, or the customers are pressured by sales people to consider similar, but higher priced items”.

It’s not the same as loss leading, which is simply a traffic driving measure and customers are free to choose additional items to the advertised low price ones.

Switch selling is illegal in the UK and Canada and is the subject of lawsuits in the USA.

In Australia, according to the ACCC, bait advertising “takes place when an advertisement promotes certain (usually ‘sale’) prices on products that are not available or available only in very limited quantities. It is not misleading if the business is upfront in a highly visible, clear and specific manner about the particular product ‘on sale’ being in short supply or on sale for a limited time” (which is how Aldi stays on the right side of the law with its special buys).

Given the large range, quantities and price points of goods in liquor stores, switch-selling applies less in this environment.

Cross-selling and upselling are similar in that they both focus on providing additional value to customers, instead of limiting them to already encountered products. In both cases, the business objective is to increase order value and inform customers about additional product options they may not already know about. The key to success in both is to truly understand your customers’ needs and occasions, which involves getting staff out on the floor and asking them.

ABOUT NORRELLE GOLDRING

Norrelle has 20 years’ experience in the liquor industry and in retail, category, channel and customer strategy, marketing and research, working in and with global retailers, manufacturers and research houses. Contact Norrelle on 0411735190 or email norrellegoldring@hotmail.com.