[MUSIC PLAYING] Welcome to module 3, lesson two. And in this lesson, I want to talk about optimizing your visual merchandising, the way you present your products, your cross-selling, and your upselling. It can have a significant impact on multiplier to your AOV. In 2006, Amazon reported that 35% of its revenue came from cross-selling and upselling. What are those two things? Cross-selling is when you invite customers to buy a related product or a complimentary item.
Think of McDonald's, do you want fries with that? That's a classic cross-sell. Upselling is when you encourage customers to purchase a comparable but higher-end item. You upsell a substitute product. In this example from Apple, you can see both cross-selling and upselling at work. You can upgrade the memory and upsell, and you can add on separate items like the display, which is a cross-sell. As my dad would always say, this is how they get you.
I never knew what that meant, but now that I'm teaching cross-selling and upselling, I do know what that means. So when do you use either technique, as a general rule of thumb, cross-selling is more effective in the cart. Upselling is more effective on the product page. And this intuitively makes sense, if I'm on your product page, I'm still deliberating whether I want your product. You might be able to convince me to buy a better version, but once I've added it to my cart and I've sort of committed to it, now it's time to show me what else might go with that item that I'm committed to.
When you think of your cross-sells it ourselves put yourself in the mind of your customer. What can he or she afford? What mistake I see a lot of companies make is that they try to cross-sell items that are significantly more expensive than the item the customer is looking at. What would the customer value? Help them out here. The apparel retailer ASOS, a billion dollar retailer, does a great job here. They know when they're female buyers are looking at dresses, they want to complete the look.
They want to see the shoes and the bag. So ASOS makes that really easy. Now, I can already hear it. Some of you run single product companies. You don't have a wide variety of skews to cross or upsell. I can hear you whining all the way from here, in midtown. I hear it. Well, the solution I recommend for you is what I call a premium service cross-sell. It's a great idea. Just come up with a service offering that pairs well with your product.
A Skype implementation call, or an advisory consultation, or done for you, or assembly, these are all services that you can create quickly and cross-sell to your buyers. You might even partner with a service provider that's already doing this. Just last week, I was doing diligence on an auto parts business, and I noticed that when I look at car batteries on Amazon, Amazon is trying to cross-sell me on the installation service. Amazon has just partnered with some local providers.
I love this idea of premium service cross-sells. I delve into how to deploy them at nerdmarketing.com/26, they work. And you can implement them really quickly. As was the case with your cross-selling in your upselling, you want to put the customer first. Realize that customer demands of power curve. What I mean by that is whatever price you're charging right now, there are a handful of customers out there who would happily pay 10 times as much if you presented them with the right offer.
Consider Dollar Shave Club, I enter the funnel, sold on this idea of $1 shave, right? But they upsell me on the executive, which is 10 times as much. Does everyone take the upsell? No, of course not. Do enough? Yes. So ask yourself, what does your premium power-law customer really want? That 20% of your customers that would happily pay a lot more, what do they desire? Give it to them in an upsell.
Ultimately, you want to develop a post-purchase cross-sell, upsell funnel. You know how at GoDaddy when you buy a domain, you're hit with like 1,000 offers before you check out? That's the funnel. The funnels work because they initially capture and authorize a credit card for a transaction, and only then, does the customer see a series of upsells or cross-sells. Because this all happens post-purchase, there's no risk of abandonment.
You already have the customer's credit card, an initial item. As you would expect, it's hard to implement something like this. You should use software wherever possible. For Shopify, an app called OneClickUpsell from Zipify allows you to build out post-purchase funnels really easily. The software takes time to configure, but once running, you'll see an immediate uptick in your AOV. And I give you a link to this in the show notes. To recap this lesson, I talked about visual merchandising, cross-selling and upselling, and how you can increase your average order value.
An ideal solution if you can implement it, is a post-purchase upsell, cross-sell funnel. But in the next lesson, I'd like to walk you through a campaign that we use the Karmaloop to generate over 3 million in incremental revenue and profit, largely, through cross-selling and upselling.