India appears to be the initial test ground for HP Fashiontronics, a new initiative to make personal computers and their accessories into fashion statements. Here are a few excerpts from a report on the site MoneyControl.com:
Hewlett-Packard India unveiled a unique & interesting concept at the HP Pavilion "Fashiontronics" show held in the capital today. Showcased was HP's vision of a seamless fusion of fashion and electronics....
[HP] partnered with Suneet Varma, the country's leading fashion designer, to design and create some exclusive accessories. Suneet Varma has created five designer PC Skins and two special edition designer notebook bags, one for men and one for women, for Fashiontronics. These notebook bags are created from fine quality leather and would be available in a wide range of colors and textures....
Satjiv Chahil, Senior Vice President - Global Marketing, HP Personal Systems Group, Hewlett-Packard added saying, "For us, the PC is not just a functional device anymore. It is an important element of who we are. It is a reflection of our personality, an expression of our style. Fashiontronics is yet another extension of 'The Computer is Personal Again' campaign. We have products which reflect your style. And now we have accessory solutions which enable you to make a personalized style statement."
Fashiontronics has a Web site, but as of this writing, it's just a single page with mouseovers.
Cross-selling is usually associated with increasing a company's revenue. However, it's also possible to target cross-sells with an eye toward reducing costs.
For example, it's good news when a cross-sell is successful, resulting in a multi-item order. But if the primary product and the cross-sell product are warehoused in different locations, the extra shipping eats away at the profit.
To avoid this scenario, a retailer can target its cross-sells so that, for any given primary product, the cross-sell choices are always available in the same warehouse as the primary product. For categories in which there are plenty of good cross-sell choices, and thus the conversion rates among the top choices are similar, the real profitability driver is the ability to ship the full order from the same warehouse.
To this end, Intelligent Cross-Sell supports targeting by factors such as inventory level and warehouse location, which can be employed in combination with revenue-oriented targeting factors such as popularity and profitability.
Motorola has introduced "InstantMoto": a 21st-century vending machine designed for placement in malls, airports, and similar public locations.
The makers of the technology, Zoom Systems, prefer you call it a "robotic store." Zoom already has similar systems offering iPods and products from Sony Electronics.
Motorola announced that an InstantMoto installation will have 12 phones and 18 accessories such as headsets and chargers. However, the photo above suggests 12 phones (in blue packages) and more than 20 accessories (in green).
For more, see this article in the Chicago Tribune
DMNews has an article about the increasing importance of "transactional messaging": emails that are a direct result of a customer transaction. Examples include emails for purchase confirmations and shipping notifications.
From the article:
Transactional e-mails in the United States are treated differently than promotional e-mail by CAN-SPAM Act regulations. In order to qualify as transactional, an e-mail must be directly related to a transaction with the sender; it must have a valid “from” address, and it must not have a misleading subject line. Unlike promotional e-mails, no opt-out notice and mechanism are required.
The Federal Trade Commission has provided greater clarity on the “primary purpose” of an e-mail that differentiates commercial and transactional relationship purposes. In particular, the FTC ruled that transactional e-mails can contain marketing information, but cannot have a promotional subject line or any marketing content at the top of the e-mail body. As a result, marketing offers should only be displayed at the side or bottom of the e-mail message in order to qualify as a transactional e-mail under CAN-SPAM.
With a transactional message, customers expect less salesmanship and more service. Thus, general marketing offers are not necessarily welcome. However, if the message is about a product just purchased, retailers have the opportunity to cross-sell in a helpful way—for example, "Don't forget extra batteries for your new digital camera."
By targeting from the just-sold product to relevant accessories, the retailer can not only stay within the letter of CAN-SPAM regulations but more important, the retailer can honor the spirit of the law, avoiding least-common-denominator offers that 99% of customers will ignore after a few seconds of wasted attention.
[The full DMNews article is here.]
For those of you attending Gartner's Fall RetailVision 2006, August 28th to 30th in Denver, we'll be there too.
Stop by and see us at Booth #8 in the Levin Consulting Pavilion, Centennial Ballroom.
ICS is featured in "Finally, Merchandising Tools for Metadata," an article on ClickZ, one of the best Web sites for news and commentary on interactive marketing/commerce.
In the excerpt below, columnist Jack Aaronson relates ICS's capabilities to his past cross-selling work at barnesandnoble.com:
Having spent several years as director of personalization at barnesandnoble.com, I can immediately think of easy applications. When my team created the "People who bought this product also bought..." functionality, we very carefully analyzed the importance of metadata over various book categories. The publisher is very important to techies buying books on programming, for example. The author is very important to people buying fiction. Genre is very important to people buying nonfiction. This method of weighing metadata enabled us to create lists of cross-sells that were much more targeted based on the kind of book in question than collaborative filtering or simple statistical analysis could provide.
If we could have imported that information into CNET Channel's rules-based engine, I suspect the process would have been greatly simplified. We could have also created internal lists of New York Times Best Sellers, Oprah's book lists, award winners, books currently in the news, and the like and weighted recommendations based on that data. We could have added business rules on top of that to harness even finer metadata (such as not recommending books that are too heavy and would therefore increase shipping costs to the extent where we'd risk losing the sale).
Read the whole article here.
In many retail establishments, the highest volume item in the store is the one closest to the cash register. Such items are low-cost, "impulse" buys that people grab while waiting during the checkout process.
With the advent of self check-out in some stores, an unintended consequence is occurring. Consumers' new responsibilities in the self check-out process are distracting them from the impulse buys.
StorefrontBackTalk, a blog by Evan Schuman, the retail technology editor for eWEEK.com, reports on a recent study:
The core of the problem is simply the way consumers interact with self-checkout systems. Typically, they have to pay much more attention to choosing a lane and to watching their products and scanning them, thereby leaving almost no time for browsing magazines or otherwise being tempted.
"Things like chewing gum and breath mints, chocolate candy, chips and salty snacks, soda and water. We're seeing a tremendous change there, drops of 40 percent overall from people who say they buy it in a standard lane but do not buy it in a self-checkout lane," [Greg Buzek, president of IHL, the consulting firm that did the study] said.
An interesting question that arises is, what if the self check-out screen itself offered impulse buys—"Do you want to add a package of mints?"—with the fulfillment being a vending-machine-like mechanism?
For more, see the full StorefrontBackTalk article:
Self-Checkout Killing Impulse Items
How important is cross-selling to financial services?
"The ability of our talented team to earn more of our customers' business enabled us to achieve another quarter of outstanding financial results -- new records in cross-sell in both Community and Wholesale Banking, solid double-digit growth in revenue across many of our businesses, and double-digit growth in earnings per share," said Chairman and CEO Dick Kovacevich. "It now takes two hands to count our company-wide cross sell ratio. We're so confident in our team's ability to continue generating strong results that during the quarter we announced a dividend increase for the 19th consecutive year and our eighth stock split in 47 years."
That quote is from Wells Fargo's Q2 2006 earnings release, which mentions cross-selling seven times.
Advertising- and marketing-services provider Vertis recently released its Customer Focus 2006 Home Electronics study, which surved 3,000 adults about shopping intentions and preferences.
A large portion of Vertis' business is related to advertising circulars, and thus issues related to that topic are prominent in the study. However, it also includes intend-to-buy data for several categories, as well as demographic breakouts.
For example, this table compares the 2004 and 2006 studies' results for the percentages of people who intended to purchase each category over the following 12 months:
| 2004 | 2006 |
|---|
| Notebook, Laptop or Desktop Computer | 21% | 28% |
| Digital Camera | 20% | 18% |
| Large Screen or HDTV | 14% | 17% |
| Home Theatre | 11% | 9% |
| Satellite Dish | 7% | 5% |
A summary of the study's findings, in PDF format, is here.
A recent ClickZ article by Jack Aaronson, "Effective Cross-Selling Online," makes a useful point about cross-sells on the shopping-cart page:
[The shopping cart page] should include items that can be easily added to the cart, as they're more or less impulse items. This implies accessories are more important than complementary items because accessories are part of the same purchase decision. They're linked to the product the user is already buying. Complementary products [e.g., peer products that go well together like a DVD player and a stereo receiver], on the hand, require a whole new purchase decision process. This could deter the user from his original purchase.
Even within the spectrum of accessories, this point applies. While it may make sense to feature a relatively high-end leather case as a cross-sell on a notebook computer's product page, it may equally make sense to substitute a less expensive, more impulse-oriented cross-sell on the shopping-cart page. A few reasons: First, a significant percentage of buyers will have noticed but not clicked the leather case on the computer's product page; knowing that, do you want to try pitching the leather case again or go with something else? If you try the leather case again and it catches the buyer's eye, per Aaronson's point, will it require enough consideration to take the user back out of the shopping cart and thus risk derailing the original purchase?
Having the flexibility to cross-sell different items for the same product, depending on the context, is a key feature of Intelligent Cross-Sell. The scenarios above suggest why it's an important capability to have.
The full ClickZ article has cross-sell examples and commentary for several online retailers. Aaronson is the CEO of the Aaronson Group, a strategy and design firm focused on customer retention and loyalty.
