Retail Spotlight: No Longer an Afterthought1 Dec, 2011 By: Kirsten Saladow Response
Upsells don’t only help your direct sales numbers. They can also become powerful standalone products at retail.
Adding value or an upsell to a product can be the easiest or most difficult way to grow your brand and increase your bottom line. According to the latest studies, upsells added 15 percent to 29 percent to direct response TV orders.
Being able to utilize customers’ names, addresses, ages, gender and phone numbers is a key way to hone in on what the customer is looking for — how much money they are willing to spend and what types of bonus products will benefit their lives. Upsells, bonus products and add-ons can take on a life of their own and become main products or they can create new, related products that can be sold as part of your brand.
Transitioning an upsell to retail shelves can be a unique challenge that takes plenty of research to make sure the upsell can stand on its own in a competitive market. Some marketers continue to package their upsells with their main product on retail shelves, while others have had success by making the upsells one-off products. Most marketers that Response spoke with agree that bundling products creates the most seamless and successful retail products, but the retail environment is always changing — research is showing that upsells can do quite well in several different packages and environments.
“The easiest way to have an upsell take off and create large financial gains is when the upsell is a very natural extension of the product,” says Denise Kovac, founder and owner of Full Service Marketing Inc. “Deluxe versions of the product, chef’s kits, fitness videos, bundling product kits and how-to books are all successful ways to create upsells that customers want and will pay for.”
Kovac, a member of the Response Editorial Advisory Board, emphasizes that upsells vary by category of product — skincare, housewares, intellectual property and fitness all have a strong opportunity to create successful upsells in DRTV campaigns and retail campaigns — but they are all marketed differently with one key thing in common.
“An old boss taught me that the most important thing in having a successful product, be it a main product or an upsell, is to name your product properly. The name of a product really, really matters. The name of an upsell really, really matters. Brand your product carefully and make smart decisions,” says Kovac.
Testing Sells Retailers on Your Upsell
Considering the call center is a key point in selling DRTV products, your product name and branding is one of the most important aspects to a successful main product and upsell.
“How successful an upsell can be in a DRTV campaign can heavily depend on your telemarketing salesperson. Like any other As Seen On TV campaign, your call center script is key as is having a closer as a telemarketer. Typically, your call center salespeople have 10 to 20 seconds to upsell your customer. The name really matters — it has to make sense to your customer and fit in with your product line,” says Kovac.
Kovac has never had an upsell that has outsold a key product, but she has had very successful upsells, including one that doubled the value of the Pancake Puff by creating an upsell deluxe kit. She also worked on a skincare line with a bonus product that “didn’t outsell the key product, but the sales were very, very substantial,” she contends.
Kovac has spent 27 years working in the DR industry and believes that upsells can be key throughout different categories and channels of the industry. When Kovac was working in the fitness category, she created a product and upsell videos that centered on the product. In this scenario, all 16 fitness videos that were upsold were also available on retail shelves.
“Another way to test if your upsell will be successful on retail shelves is on live television. Use the home shopping networks to build your upsells in real time and use a live audience as a test to see how your upsell will fare on the retail shelves,” says Kovac.
In addition to home shopping channels, testing the market for upsells online is a way to show retailers that your upsells have demand and will be successful in their stores. Campaign online by having a product-driven website where consumers can see how other products (upsells) can contribute or add to their purchase.
Creating upsells that work within the retail market is all about working with the retailer to find out what works for them. Kovac worked on a skincare line that branded a deluxe kit and was sold at Target for $30. Target asked the marketer to shrink the boxes to fit on shelves. The smaller box added more than 30 percent in revenue to the shelf space — a win/win for both Kovac’s brand and the retailer.
Packaging and Placement Boost Upsells as Standalones
“Given that the product’s permanent home is on the shelf 365 days a year, packaging is key, and the strategy is on delivering packaging that is as flexible as the broad range of retailers it is sold in,” says Steve Heroux, CEO and founder of Hampton Direct. “The average mass-market consumer makes a decision to buy a product after just 30 seconds spent at the shelf, so the packaging needs to be effective from its design to the graphics employed on each box.”
Heroux, a member of the Response Editorial Advisory Board, adds, “The brand identity and graphics clearly communicate compelling features and benefits to the consumer, and the package can be pegged, shelved or merchandised in shelf-ready trays or ‘PDQs’. This way, no matter how a retailer chooses to sell the product, the packaging will be working to drive sales at the register.”
Hampton Direct, a finalist for the 2011 Direct Response Marketing Alliance (DRMA) Marketer of the Year award, sells to 65 retailers nationally, equaling more than 80,000 doors in United States alone, including Wal-Mart, Target, Bed Bath and Beyond, Walgreens, CVS, Lowe’s and Staples.
Hampton Direct employs several different sales strategies when working with retail stores, ranging from print ads to in-store displays as well as a key presence in the modulars. For retailers with a large store footprint, pallet displays are highly effective.
“Free-standing corrugated displays work well with smaller retailers and grocery stores. Like pallets, they drive incremental consumer awareness as well as product purchase,” Heroux says. “The lift in velocity at the shelf can be quite substantial when the product receives secondary placement. In addition, print ads remind the consumer that the As Seen On TV category is found within this retailer, and drives traffic to the stores during the timeframe of the advertisement.”
Securing ads in the retailer’s main circular is a key strategy; November and December circulars are the most important, followed by other holiday advertisements.
Heroux believes there is absolutely a market for upsells on retail shelves, and Hampton Direct does plenty of product and consumer research to prove that point. They take advantage of testing various upsells or bonuses once their campaign is in rollout.
“In today’s challenging media environment, upsell and continuity programs are necessary in maximizing your media buys during rollout. Additionally, testing value-added upsells or bonuses allow us to test market acceptability for a certain product and offers us insight on whether we should consider the item as retail branding strategy,” says Heroux.
While Heroux believes retail is the easiest way to increase your company’s sales dramatically, he believes the best sales prospect for an upsell is a product that’s already converted on television or retail.
“We’ve experienced several successful launches with items that were first introduced and tested as upsell offers and then were introduced into a retail as a line extension,” he says. “A perfect example is our Total Pillow commercial. We teased the Jumbo Total Pillow and added it as a deluxe option on the backend. The Jumbo Total Pillow proved to be a successful upsell offer. It’s been added as a line extension to our Total Pillow retail lineup. This also occurred with our Twin Draft Guard item: we currently have 12 different SKUs in retail and, initially, three of those were upsell offers. Currently we’re testing an offer with our PajamaJeans campaign, and it’s proven to be an excellent line extension to our retail branding strategy.”
Don’t Forget Continuity
Another key opportunity while creating upsells is creating continuity programs for customers that purchase DRTV products. Continuity programs can be an excellent way to generate profit and additional revenue.
“We find that about 25 percent to 30 percent of customers that buy an As Seen On TV product are upsold into a continuity program,” says Robert Lumpford, Director of Partner Marketing and Business Development at Transamerica Life and Protection.
While a continuity program is completely separate from a bonus product, widget or traditional upsell, it’s still an upsell with the added benefit of having customers repeat payment for whatever service they purchased. Continuity programs offer flexible revenue-generating programs that integrate seamlessly within marketing sales strategies.
“We work with both generic programs like shopping discounts for smaller companies and for larger marketers, we try to find a product that fits with their customers’ demographic profile. We pull research and comprehensive analytics to leverage sales and profits. About 10 percent of our offers are specific to what is being sold. We have the capabilities to make our continuity programs really targeted for a fairly large market,” Lumpford says.
The best continuity programs are created around necessity and customer demand. Transamerica created its Everyday Bargains continuity program a few years ago that centers on benefits and services that customers could use everyday (www.upsellwithintegrity.com). Customers that opt to join Everyday Bargains receive significant savings on shopping, dining and entertainment.
“When the economy went sour, this continuity program became really appropriate and sales grew accordingly,” says Lumpford.
Despite the challenges of the economy, response rates are comparable to what they were three to four years ago. The same number of people are purchasing continuity programs — however people are not buying memberships for as long as they did in the past. Still, the continuity program business has grown due to several new clients and larger partnerships.
Transamerica’s continuity products are not inside retail stores just yet. But, they are hopeful that they will roll out in-store continuity and loyalty programs by first-quarter 2012.