July 1, 2003, 12:00 AM

Data-driven cross-selling doubles conversions at Northern Tool

Coremetrics analytics find the best-selling related products for 3,000 items and Northern Tool puts them on offer, projecting a $3 million gain. Finding the same data manually would have taken a merchandising staff months, Northern Tool says.

 

Northern Tool & Equipment Catalog Co. doubled conversions on its web site in a one-month test and projects an annualized online revenue increase of $3 million since it implemented data-driven cross-selling with the help of Coremetrics Inc.’s Marketforce analytics.

Coremetrics gathered historical data on 3,000 products previously purchased on the web site and cross-matched that with the seven top-selling related products that sold with each one. Northern Tool used that data to create and populate a horizontal bar at the bottom of each of the 3,000 product pages, placing the cross-sell suggestions there, if they weren’t already presented elsewhere on the page as a product accessory.

“I was expecting an increase, but was surprised conversions doubled,” says Nate Miller, e-commerce manager at Northern Tool.

Northern Tool has worked with Coremetrics for about three years and receives regular analytics reports from the company, but it was a custom report requested by Miller and marketing analyst Jessica Fowler that helped expand cross-selling on the site. In the regular reporting that the company gets from Coremetrics, “There was an existing cross sell section. We thought, what if we could go deeper and use it in our promotions,” says Miller. He adds that a custom report was needed because of the volume of data being requested, but says the cost was low, given what it helped achieve.

“Coremetrics did all the analytic work, while our web designers spent a couple of days building the framework for it. When we got the data, having built the framework, we were able to populate it with cross-sell products with the flip of a switch,” he says. “Our alternative would have been to pick cross-sells manually for the 3,000 products. That’s 21,000 products. It would have taken a team of people months to do that.”

Not only did shoppers exposed to the data-driven cross-sells convert at a rate twice as high as average, but they had an average order value 5% higher. Northern Tool calculates that if the customers were not exposed to the cross-sells in this way, they would have generated potentially $300,000 less in revenue than they did during the 27-day test period in April.

Northern Tool is keeping the cross-sells up on the site and expects to update them a few times a year with data from Coremetrics. The company also is considering expanding the data-driven cross-sells beyond the original 3,000 products, Miller says. Miller will not say how much Northern Tool paid for the Coremetrics service, other than that the cost was “low.”

 

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