educational

Cross Sales vs. Up Sales

Stephen Yagielowicz

One of the most tried and true methods for leveraging any sale is to capitalize on the timeliness of the customer’s willingness to buy — “striking while the iron is hot,” in an attempt to maximize the potential for earning additional revenues. There is an old saying that it is easier to make multiple sales to a satisfied customer than it is to find a new customer; and this is as true in the digital arena as it is in the brick and mortar world.

Legitimate examples are easy to find; buy a new set of wheels and get a deal on a new set of tires — and if you want a better set of tires, there is a small additional charge. Do you want chrome valve stems, or how about mounting, balancing and an extended warranty that covers tow service and replacement?

Changes in practices and the evolution of billing terms is putting an end to old-school cross sales, but up-selling is alive and well.

By the time the transaction is completed, the purchase price has doubled.

Another mainstream example comes from the world of discount airfare, where a quick search of available flights delivers prices all across the board and reveals that some airlines seem to charge around half as much money for the exact same flight — or do they?

Checking in at the Sacramento airport for a recent trip, this author was required to insert a major credit card into a kiosk in order to receive his boarding pass. Upon verifying my identity and itinerary, a series of screens presented me with a range of options: did I have luggage to check? There was a fee for each bag, including the first one. Would I like to have a seat with more legroom, priority boarding, travel insurance, or any of a handful of other options? Click “yes” or “no” to continue, with my credit card unexpectedly charged several hundred dollars at the end of the process — a process of which veteran domain registrar Network Solutions (NS) would be proud.

If you have ever purchased anything from NS, such as a domain name, security certificate or hosting package, then you know what I mean: the company presents an endless array of options, upgrades, add-ons and improvements, page after “continue” page. Moreover, if you do not pay close attention to the site’s payment page’s default “service term” slider settings, the total cost can sharply increase — as that single year registration you wanted is billed as a five-year registration.

It is brilliant marketing and may indeed even be cost-effective and “helpful” to some consumers.

This is especially true when one considers that the products and services offered are those that the company provides in-house, or offers on behalf of its trusted partners. Nothing is pre-checked, options are understandable and the “next” link is at the bottom of a long and offer-packed web page.

This level of disclosure and customer care is not the only way to do things in cyberspace, however, with scammers and shortcut artists taking liberties with consumer preference. These tactics include the use of pre-checked offer acceptance boxes — sometimes placed “below the fold” or under the page’s “enter” or “join” button, or the use of other, nonclearly defined offers and sales.

Of course, billing companies and regulatory agencies are increasingly frowning upon such practices.

Take for example the practice of marketing free sites or mobile apps, supported by service up-sells. This could take the form of offering cam, chat and dating services in order to monetize a free tube site. On the other hand, it could involve buying “Smurfberries” as an up-sell to an iPhone app.

While some readers may prefer a more “adult” example than an offer in a game which primarily targets children, this particular mobile up-sell example is at the heart of a case currently before the U.S. Federal Trade Commission (FTC). This case may indeed determine how and where online marketers, including those in the adult entertainment industry, are able to offer their wares.

Democratic lawmakers have petitioned the FTC to evaluate potentially deceptive trade practices used with some in-app purchases, particularly with those apps targeting children and Apple’s popular iOS. Representative Edward J. Markey (Mass.), and Senators Amy Klobuchar (Minn.), and Mark Pryor (Ark.), wrote a letter to FTC chair Jon Leibowitz, demanding an investigation following a recent story on in-app purchases by The Washington Post. The story cited parental complaints surrounding sales of virtual goods within free game downloads, including the story of one youngster who bought nearly $1,400 worth of virtual Smurfberries while playing the Smurfs Village game. Smurfberries sell in batches that cost $99 each.

While these purchases require a password, parents and public interest groups say this is not enough.

“I am concerned about how these applications are being promoted and delivered to consumers, particularly with respect to children, who are unlikely to understand the ramifications of in-app purchases,” Markey wrote in the letter to the FTC — with copies of it sent to both Apple and Google. “Companies shouldn’t be able to use Smurfs and snowflakes and zoos as online ATMs, pulling money from the pockets of unsuspecting parents.”

“The use of mobile apps will continue to escalate, which is why it is critical that more is done now to examine these practices,” Markey added. “I will continue to closely monitor this issue and look forward to the FTC’s response.”

Markey says that parents downloading games and other titles for their children, especially free ones, often do not realize that virtual items may be available for sale within the app.

This is not just an issue for children, however, making it certain that the FTC will address the growing problem at some point and provide impetus for industry self-regulation to forestall regulatory efforts.

According to Distimo, an App Store analysis firm, revenues from purchases within free applications targeting the iPad and iPhone more than doubled between June and December 2010, with in-app buys now accounting for half of iPhone developer income and nearly 30 percent of iPad developer revenues.

Back to the adult webmaster community, changes in practices and the evolution of billing terms is putting an end to old-school cross sales (although internal marketing opportunities still exist — you just cannot provide an outside company with your customer’s billing info), but up-selling is alive and well.

One lesson from the folks at Network Solutions: instead of making your default membership option the lowest available (i.e., a trial or monthly embership), try pre-checking the “three month recurring” box (with a bold, discount offer) and see how it impacts your sales — you may be impressed!

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