Page 135 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes 8. A …………………… is a structure that can be used to divide up a large collection of records
into successively smaller sets of records by applying a sequence of simple decision rules.
9. Cluster analysis is used in marketing for market …………………….
10. …………………… techniques make possible a different approach to segmentation, namely
cluster segmentation.

5.3 Cross Selling and Up Selling

Cross-selling and up selling are marketing techniques that are applied during the sales process
to increase the value of the transaction to both the buyer and the seller. Technically, they only
increase the value to the seller – but they should also be increasing the value to the buyer.
The key idea behind both cross-selling and up selling is that you are changing a transaction that
is already in process. You might think that marketing ends once buying begins. Not so. Marketing
is about getting the right message (buy something from us) to the right person (someone who
needs our products) at the right time (when they are ready to buy).

1. What better time to market than when someone is in the process of buying already?
2. Who better to market to than someone who is in the process of buying from us?
The trick then, is in sending the right marketing message.
Cross-selling and up selling only make sense in the context of an ongoing sales process. For an
eCommerce retailer (a company that sells a product online), that means that the customer
(technically, the prospective customer, also known as a prospect) is in the process of making a
purchase – either looking for the right product, evaluating a specific product, or having selected
(but not yet purchased) a product.
1. Cross-selling is defined as selling an additional product when the customer is purchasing
the original product.
2. Up selling is defined as selling a more expensive product instead of the product that the
customer was originally purchasing.
As a retailer, you have to know when to attempt to cross-sell, and when to propose an up sell –
and when to do both. To decide when to try and modify (and risk losing) a sale, you have to look
at the economic impact on your business of trying to change an ongoing sale. Cross-selling does
not help you make a sale that you wouldn’t already have made – although an up sell suggestion
may help a customer discover a “better” product for their needs, and close a sale that would have
been abandoned otherwise.

Notes To keep the language of this article easier to read, the word “product” is being
used to represent (traditional) products and services – anything a business would sell.

Economics of Selling

To evaluate the economics of cross-selling, you have to first establish the economic measures of
selling. When you sell something you have the following:
1. Price: The price the customer pays for the product being purchased. This is also known as
revenue.

2. Cost: The cost to the merchant to acquire or create the product being purchased. Also
known as “COGS” – an acronym for cost of goods sold.

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