I really hate getting nickel and dimed, especially when I believe that two items should come packaged together at no additional cost. For example, every time I go to McDonalds and order Chicken McNuggets, I get really annoyed. Back in the old days, McDonalds used to offer as many packets of sauce as you wanted for free whenever you ordered their Chicken McNuggets. But sometime within the last several years or so, they started charging you for extra sauce that exceeded their recommended quota.
Now if you order 20 nuggets, you are only allocated 3 packages of sauce. For a 10 piece, you get 2 and for a 6 piece, you only get 1. For me when I order a 20 piece nuggets, I need at least 5 packets of sauce. No doubt someone at McDonalds calculated the sauce usage for the average consumer and determined that 3 was the magical number. In any case, sauce packets now cost an additional 30 cents a pop at checkout.
I hate getting charged an extra 60 cents for something that used to be free (I’m cheap), so one day I decided to try a different tactic. Instead of telling the cashier up front that I wanted to order 2 extra packets of sauce with my 20 piece, I simply asked for 3. Then once the cashier had already swiped my credit card, I said “Actually I change my mind, could I get 2 more packets of sweet and sour sauce please?”. Sure enough, the cashier handed over 2 additional packets of sauce for free!
My Experience Shopping For Embroidery Machines
When my wife and I were shopping around for embroidery machines for our business, we were extremely price sensitive. After all, these machines cost anywhere from 5-15 thousand dollars and we wanted to only pay for as much machine as we needed. For such a large purchase, we shopped mostly at physical store locations and a variety of sales tactics were used against us.
Some retailers tried to present us with large package deals. Buy this machine along with an embroidery starter kit a one low price! Buy this package and receive free servicing for life along with all of the accessories you need! Other salespeople tried to sell us the base machine and then nickel and dime us for all of the extra accessories.
But the smarter salesmen read my wife and I like a book. Sensing that we were extremely cost averse, the sales person that we ultimately purchased the machine from didn’t try to sell us anything more than the base machine. He seemed conscious of the fact that we wanted to spend as little as possible and didn’t try to push anything on us at all. However, once we had settled on a price and were all ready to make the purchase, he casually walked us over to the accessories aisle and gave us a brief tutorial on additional items that we might need. And somehow, we ended up spending a good amount of extra money on these accessories and didn’t feel too bad about it either.
The Common Denominator
So what do these 2 stories about chicken nuggets and sewing machines illustrate? It’s that both customers and retailers are much more vulnerable once a commitment has already been made. And as I’ve already illustrated with the stories above, this can be used to your advantage.
As an online store owner, make sure you upsell an existing product or cross sell your customer with additional accessories and/or related items when they are ready to checkout from your store. For example if you sell cellphones you might want to present the customer with a variety of cases or a car kit just before checkout. If you sell shoes, hit them up for some socks or other accessories. If you want to see an extreme example of cross selling, go and try to buy something from GoDaddy.com. While I think that GoDaddy’s tactics are annoying and way over the top, it clearly works otherwise they wouldn’t be doing it.
As a consumer, you can extract every last value of your dollar by asking for additional concessions after a salesperson has already committed to helping you and you’ve both already agreed on a price. This tactic works especially well for larger purchases but ultimately depends on how desperate the shop owner is or how trivial your demands are.
The Secret To Increasing Average Order Size
The hardest part of sales is convincing your customer to choose your store. But once that decision has been made, adding a few extra items isn’t as big of a deal. In other words, they already like your company and your products so it then becomes a question of what to buy and not whether to buy. Therefore, it is crucial to get your customer to commit to making a purchase no matter how small the cost and then try and cross sell them with additional enticing items just before checkout.
As a shop owner, you should always use cross selling in conjunction with a draw in item that is priced very attractively. Customers who commit to buying your inexpensive draw in item will be vulnerable to cross sells because psychologically, they’ll feel inclined to spend what they had already planned on spending. “Wow I just saved 50 bucks! May as well blow this money on something else. After all, it’s practically free money!”
Many larger retail chains use this tactic all the time. Stores like Fry’s Electronics and Best Buy routinely offer ridiculously low priced items to get you in the door and as a result most consumers end up buying additional higher margin goods on their way out.
My wife and I increased our average order size by roughly 29% almost immediately once we started using draw in items and cross selling. We found that the easiest and painless way to do cross sells is to rely on prior sales data by pointing new customers to what others have already purchased along with what is in their shopping cart. It takes a bit of hand tweaking to make sure the recommendations make sense, but it’s well worth the time.
Another tactic that we’ve found useful for increasing average order size is by offering free shipping and discounts when certain purchase amounts are met. For example, customers can save up to 11 dollars on shipping for all orders over 100 dollars at our store. On many occasions, I’ve observed(in real time) customers looking for extra items to add to their shopping carts just to cross the 100 dollar threshold. These tactics work and are an effective way to increase revenues without having to increase foot traffic.
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