The Low(est) Hanging Fruit: Cross-Sells

Everyone knows it is easier to sell more to your existing customers than it is to get new customers. But, how do you sell more to your existing customers?

Do you want to look like an analytic superstar with great growth opportunities? Here is a step-by-step on how to run a quick cross-sell analysis to identify growth opportunities.

First, determine the sales cycle time period you want to work with. In most instances, annually is a good start – but if your business has a shorter sales cycle, feel free to use whatever time period is appropriate.

Next, identify the purchase buckets you want to use to segment your customers. This will largely depend on the nature of your business. If you have five skus, this is pretty easy; each sku will represent a purchase category. If you have 100k skus, this becomes more complicated; but based on logical groupings (product similarities, product presentation proximity, etc.), create product categories.

Then, run a customer level sales summary by category. If your ERP can’t provide this report canned, it’s easy to create. First create a table that links your skus to categories. (Obviously, the more skus you have, the more complicated this is.)

Run a vlookup to add category information to your transaction file. From there, you can pivot out a customer level sales summary by category. From here, assign a category permutation code to each customer.

As you see in the above example, this category permutation code is easily created by assigning a letter variable to each category the customer purchases from using an (ifcell>0,”A”,””) function. Then, catenate the category code letters together.

From there, run a summary of the number of customers and total dollars spent by each category grouping.

Common knowledge states that the more categories a customer purchases, the greater their overall value as a customer will be. But, what we can see here is that not all incremental category purchases are created equal. Granted, our example is a very small sample set, but we can identify some areas ripe for opportunities.

Of the customers that purchase from two categories, the customers that contribute the most annual revenue are those that buy both bananas & grapes. In fact, by getting customers who currently purchase only bananas to also buy grapes, you can nearly double their annual revenue. Similarly, the incremental revenue contribution from two categories to three categories increases most dramatically when customers who currently purchase apples & grapes also purchase pears.

Spend some time with the data; more than likely, several of these opportunities will jump out at you.

From here, create your your targeted channel plans and watch your revenue grow.

Textbook Roulette: Volume I

I saved a fair number of my textbooks from both my undergraduate and graduate management careers. Since I haven’t moved since I graduated, there hasn’t really been an incentive for me to get rid of them. I thought it would be fun to take a look back and see if any of what I learned has been applicable in the almost six years since then. Thus, Textbook Roulette!

Book: Marketing Management: Eleventh Edition
Author: Philip Kotler
Course: MGM602, MBA Intro to Marketing (best guess)
Page Randomly Opened To: 202-203, we’ll look at pages 200-207 for the sake of topic continuity

Synopsis of Pages:

Under the heading of ‘analyzing marketing opportunities’, this section of text discusses the buying decision process including buying roles (initiator, influencer, decider, buyer, user), types of buying behavior (complex, disonance-reducing, habitual, variety-seeking), and stages of the buying decision process (problem recognition, information search, evaluation of alternatives, purchase decision, post-purchase behavior).

Is it relevant? Have I used it?

(I promise that the page flip was completely random.)

Yes! These are concepts that I use on a near daily basis, particularly in the B2B marketing world that I have been employed in. As a database marketing manager for a large, multi-channel B2B entity, I spent hours of my life thinking about the nuances between influencers, deciders, buyers and users and how that impacts mail/other channel contact strategy. Who is most important between those four groups? Catering to which group gets you the highest $/book return? What is the right balance of contacting each of those audiences?

In my current role at a different B2B supplier, I spend so much time working with/thinking about working with our sales organization on the steps to a purchase decision. As we’ve discussed previously, how do you increase the conversion percentage on each step of the funnel? These purchase decision questions are just a different way of structuring the funnel.

I am, honestly, kind of shocked that right out of the gate, textbook roulette has validated my education by proving that there are useful, applicable concepts in these books.

Textbook Roulette Cumulative Score: 1/1

Personalized Marketing: You’re Doing It Wrong

We all know that in today’s world, superstar marketing goes way beyond the simple segmentation that may have worked in years past. Today’s consumers are special flowers and, frankly, we all demand to be treated as such.

We’ll talk more about both segmentation and personalization later, but today, I want to show you an example of how personalization done wrong can really erode your brand’s equity.

My second year of MBA school, I was president of the MBA student association. (Aside: It was a really fantastic experience.) With that role, I was given the opportunity to develop relationships with a variety of staff at the university, including the Dean of Alumni Relations. She & I worked together on several projects; she even acted as a reference during my post-MBA job search.

I hadn’t heard from her in a while so I was thrilled when an email from her showed up in my inbox. It was (no subject) but began “Hi Jennifer, I hope…” and talked about a program at the university to bring former student leaders back to campus to network with current student leaders. I read through it and thought, “Hey, that sounds interesting – so nice of her to think of me; I’ll have to check my schedule.”

Four minutes later, I received the same email with a subject line “Dear Former Student Leader” and opened with “Dear , I hope…”

And, just like that, I was turned off from the program, disappointed to have gotten a marketing degree from somewhere that couldn’t execute a simple email name merge, and lost pretty much all interest in the program.

So, let this be a cautionary tale. Marketing is as much about data as it is creativity or intuition. And, if you’re going to do personalization, you have to make sure you do it correctly. It seems so simple, but executing a name import merge correctly can mean the difference between your customers feeling special, being engaged with your brand, taking an opportunity to build brand equity and proving to your customers that they are just meaningless numbers.