The social network says acquiring Gnip will help companies better understand what consumers and other brands are saying across Twitter.
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Utilizing the tracking and analytical capabilities within Coremetrics 2005, the company has begun to spot less likely accessories, such as a pressure washer, but which are just as appealing to customers. About 3% of customers click on suggested cross-sell items, Miller says. Northern Tool predicts this capability will help it generate $3 million in additional sales annually. "We are taking the guesswork out of the cross-selling process," he adds.
Other Internet retailers report improved performance from using the new generation of analytical cross-selling models. Footsmart.com, a Norcross, Ga.-based multi-channel retailer of foot and lower body healthcare products, for example, has boosted the sale of suggested accessories from 1.56% of total sales to about 3.6%. The company attributes the increase to its ability to track sales of each item and to know how well it sells when paired with another item. It then uses that information to create other cross-sell suggestions.
Analytics reports supplied by Coremetrics helped Footsmart.com spot opportunities to adjust prices, improve product pairings and even presentation of merchandise on its site, according to company officials. Anecdotally, industry experts say that other multi-channel retailers have successfully used the new generation of cross-selling applications to develop separate merchandising strategies for their web site, stores and mail order/telephone order business.
L.L. Bean, for example, altered the merchandising strategy for seasonal clothing in its outlet stores and web site after discovering demand for products such as swimsuits started more than a month earlier on its web site than in its retail outlets located throughout the Northeast. "Retailers can find variants in data that identify trends of how people shop between the web site and the store," Fry says. "Overlaying customer data with purchasing data for individual products in each product category can lead to more actionable cross-selling decisions."
Trouble is that Internet retailers use less than 1% of the data they gather, according to Fry. The primary reason is that gathering the data is easier than disseminating and interpreting the data, even when using the latest generation of cross-selling applications. Northern Tool`s Miller says decisions on which products to pair for cross-sell opportunities are based purely on raw sales tabulated by Coremetrics. "We are probably using about 75% of the capability," he concedes. "We intend to get all the way there, but we are taking it in steps."
Miller adds the step-by-step approach has been dictated in part by the company`s decision to improve the navigation capabilities of its site, which was relaunched in October.
Learn as you go
Such diversions aside, most Internet retailers are only experimenting with cross-selling applications, if that. One reason is a lack of resources. Many Internet retailers are small companies with limited resources. Their natural inclination is to deploy a cross-sell application and let it drive the decision process. Only after a few weeks or months of examining daily or weekly reports is the retailer likely to begin tweaking its cross-sell strategy. "A lot of retailers are learning as they go," says Amy Hiatt, senior data analyst for Fry. "There is a lot of testing of trends identified by the reports, but there is also a tendency to rely too heavily on the reports when making merchandising decisions."
As a result, there remains a substantial gap between what cross-selling applications can do and how they are actually being used. "There really are no best practices yet and retailers need to take the time to think about the sales environment they want to build," says Coremetric`s Squire.
If nothing else, cross-selling applications can open the door to a continual dialog with customers. Squire says opportunities exist for retailers to pitch non-merchandise, such as extended warranty plans on electronics or monthly newsletters aimed at enhancing customer loyalty. The data gathered by the application can even be used to create customized promotional mailings that can drive traffic to the retailer`s web site. "If a retailer can offer the customer information in which they have an interest, there is a better chance the customer will think of that retailer as a first choice for shopping," he says.
Without a doubt, consumers tend to favor retailers who provide a more satisfying sales experience, especially when it comes to suggesting accessories. Satisfied customers also tend to have a higher average ticket and generate repeat business.
The promise cross-selling applications hold for combining statistical analysis with human intuition can go a long way toward helping Internet retailers increase overall sales while improving customer loyalty and satisfaction. But so far, Internet retailers have shown more inclination to rely on the raw data supplied by the application in devising their cross-selling strategy than utilizing the technology`s fullest capabilities. Until that changes, retailers will merely be chasing a promise, instead of cashing in on reality.
Peter Lucas is a Highland Park, Ill.-based freelance business writer.