Upselling is a strategy for promoting ancillary products and services, upgrades, extras, a little slice of luxury. An airport that offers a valet service to a customer using its long-stay car park is upselling, so is a hotel that gives a discounted upgrade to a returning guest, or a coffee shop employee who tempts with marshmallows on your hot chocolate for an extra 20p.
It means offering an extended warranty, a bigger or higher-spec version of the product or an ongoing subscription instead of one-off purchase.
In digital marketing, upselling can involve upgrading a one-off sale to a long-term subscription. It’s a timely suggestion that there might be something nicer, better or more appropriate available, and a great way to earn more money from existing customers.
Across the board, as a sales strategy, upselling increases revenue by between 10 and 30%, and is 68% more affordable than winning a new customer.
This idea may come loaded with uncomfortable connotations. Nobody likes a pushy salesman. But with the use of focused data this technique is more than a cynical sales drive. While it’s true it can improve revenue, it can also significantly add to customer happiness and loyalty.
Successful upselling requires as complete, and holistic picture of the customer as possible, and this is where airports have fallen behind online retailers. When passengers purchase flights, parking and other extra services directly through their airline, vital passenger data remains with the airline. As a result, the airport has little to no idea of its customer demographic. However, if this can be addressed, it’s worth noting that you’re 60-70% more likely to sell to an existing customer compared with the 5-20% chance of converting a new prospect, and 50% of customers are more likely to buy from your airport again if they receive personalised offers.
Cross-selling vs Upselling
To use cross-selling and upselling techniques effectively it's important to realise the difference between the two, and the advantages they each offer.
Upselling involves offering upgrades to an existing product. The aim is to help the customer to have the best possible experience. For example, once the customer has booked parking, they can be offered an upgrade that buys them a space closer to the terminal building.
In ecommerce marketing, upselling has fewer restrictions than in retail. In retail, if a customer is interested in buying a certain product, upsells must be closely relevant to that product. However, online, products only need to be loosely relevant, and are often non-essential ancillaries.
Be careful to make your upsells appropriate and transparent, ensuring that the customer understands the implications of buying a more expensive product. It is not uncommon for online upsells to involve bad practice (such as leaving a box checked which means the customer is entering into a recurring payment every month). This kind of deceptive tactic is likely to put customers off rather than build brand advocates.
Cross-selling, on the other hand, is where the customer is offered items that compliment their purchases. On retail sites we often see categories such as ‘Recommended for you’ or ‘You might also like’. For an airport, cross-selling might involve suggesting that the customer books parking at the same time as their flight, to ease their stress before departure. Or maybe a hotel room so they can rest the night before.
In cross-selling, products or services that are not necessarily directly related to the first product are brought in front of the customer. Instead of offering an upgrade, an extra product is suggested. A much-used example is the McDonald’s server: “Would you like fries with that?” This technique is employed to increase revenue but it can also be used to build a brand-customer relationship by analysing buying habits and offering products that might be of genuine use or interest to that person. If you think about it, it’s actually quite nice to be shown things that interest you and tempted to treat yourself.
Imagine it's someone's first time booking from an airport. They might not be aware of everything that's on offer, so upselling options at the different stages of the checkout process may help them to find things they wanted, or things they didn't realise were available but which are of value to them.
For example if a customer is buying items that indicate they're booking a family holiday, a bundled offer that includes tickets to local attractions could be presented to them. Offers in the context of a ‘Don't forget’ page could be promoted at a point in the buying journey where it looks like they might have forgotten something.
While upselling and cross-selling are two separate techniques, it’s never a case of choosing one or the other. Both should be used in tandem in order to maximise profits and give your passengers the best experience possible. Nor is it the case that you can only make these offers at the checkout. The opportunities begin before the customer has even made a purchase and continue long after their return journey.
Understand your potential
As far back as 2014, data collected by Consumer Technology and Transaction Specialist NCR indicated a growing acceptance of ancillaries in the travel experience. The research highlighted the willingness of passengers to purchase upgrades and extras both at a point of sale kiosk and on a mobile. Customers were keen to purchase products via smartphone before they even arrived at the airport, and the study went as far as to suggest that airports could build lucrative new sources of revenue by offering online sale of duty-free goods in advance.
Fast-forward to 2018 and airline ancillary revenue reached $92.9 billion worldwide, a 312% increase from the 2010 figure of $22.6 billion, which was the first annual ancillary revenue estimate.
Collect the data
Clean, fact-rich data is necessary in order to gain a rounded view of the customer, and therefore to market the upsell to the customer in a targeted way. Collecting and analysing data is one key to creating more efficient productive airports. For example, an airport website featuring integrated parking and travel reservation solutions is also a data goldmine. Software systems such as those at Rezcomm integrate seamlessly into the airport website, allowing customers to book fare bundles, parking and flights through the airport, not the airline, and collecting, analysing and optimising the data for the best results.
Make it personal
Today’s customers expect a seamless online experience, and they expect it to be personalised. It’s now almost 20 years since online retail giant Amazon pioneered a system of individual recommendations for customers based on actual data of browsing and buying behaviour. And studies show that personalisation plays a significant role in customers’ purchasing decisions with 35% of Amazon purchases and 75% of Netflix viewing choices stemming from product recommendations. Websites featuring phrases such as, ‘You might also like,’ or, ‘Recommended for you,’ directly engage the customer and increase customer loyalty.
Increasing customer awareness of relevant products and services enhances the travel experience and is in line with customer expectation, yet airports have traditionally fallen behind other commercial sectors in reacting to changes in consumer behaviour.
From the moment a flight is booked there are opportunities to upsell. Offer upgrades to airport lounges, parking promotions, cross-sell with hotels, car-hire companies and attractions, engage the customer with the in-terminal retail. Give customers an opportunity to research and pre-order products with mobile payment functionality.
When quality data is combined with effective analytics, insights into customer preference can be generated that allow the right products to be displayed to the right person, and at the right time.
For returning customers this means targeted items based on their buying habits. Introducing something with a phrase like, ‘We thought you might like this,’ and then presenting the customer with a choice of product, inspired by things they've previously purchased, can make the upselling process more personal. In the case of a long-haul flight this could be a meal based on the customer's dietary preferences.
Build customer relations and grow lifetime value
For any consumer market, the real profits are not in the first sale, but in the ongoing customer relationship that leads to a lifetime basket value. Brand loyalty leads to customer retention, and as you get to know your customers, the opportunity to upsell, or cross-sell can benefit your brand with increased revenue at the same time as offering value for money and a great, personalised experience for the customer.
There’s also the useful down-sell technique…
Whenever a customer abandons their cart or clicks away from a purchase, the down-sell can be used to offer a cheaper product with the aim of converting. In many cases, the lower cost option has a higher chance of being accepted.
The goal here is customer acquisition. The value of the initial sale is somewhat sacrificed for the purpose of getting that customer on board. Once a relationship is established, that customer’s value is likely to increase. In this way you can bring new customers into your backend sales funnel and up-sell to them at a later date, once you have built up trust and interest.
Also relevant to down-selling, the ‘contrast principle’ is based on the idea of showing the customer a higher-priced product first. This strategy makes the price of the less expensive option seem like more of a bargain, and can leave the customer feeling they have been offered a better deal than if you begin by upselling from the lower to the higher-priced item.
This point highlights the fact that marketing is very much about perception, whether that’s of a good deal, a trustworthy company, a quality product or service. Offering relevant, personalised upsells, down-sells and cross-sells can be a great way to increase sales and to engage the customer with a satisfying purchase experience. Provide your customers with good-value solutions to their problems, but never try to trick them into spending with deceptive marketing techniques. Remember: Loyal, happy customers will become an invaluable asset as brand advocates, driving long-term success.
This is important when you consider that the most trusted source of advice is that of other travellers, with 62% of marketers agreeing that word of mouth is the most effective channel. Think of upselling as the start of a self-feeding cycle that turns customers into advocates, which in turn helps to attract more customers and generate more sales.
Having a system for leaving ratings and reviews is essential for creating advocacy. All upselling should be aimed at improving a customer's travel experience because the better the experience they have the better the feedback they will leave.
The importance of data
Quality insights from big data are becoming increasingly important in the airline and travel industries where they're being put to use across all operational activities.
As we already mentioned, the biggest problem until recently was that airports had little or no access to customer data because passengers were booking direct with airlines. However, with a system like Rezcomm, airports can gather their own data, mine it for insights into customer behaviour, and use those email marketing airports insights in a way that will generate a significant ROI.
This data can then be combined with ecommerce to open up exciting new revenue streams via social channels and targeted marketing.
Email marketing and the upsell
With an ecommerce platform like Rezcomm it's easy to upsell to customers via email campaigns.
Once you have a customer or prospect’s email address, and the correct permissions to contact that person, you are also likely to have some clues about their shopping habits. Even if the customer left their purchase incomplete, you’ll have some insights into the products they browsed, and this is a good place to start when sending targeted messages.
You could consider sending out a campaign that promotes products or services similar to those in which the customer has already shown an interest, but which have a higher profit margin. The predictive analytics in your Rezcomm dashboard should make it easy to see which products are likely to attract each customer.
Another way is to target customers with upselling offers related to things they've already bought. This could be a chance to buy priority boarding or add valet parking to their long-term parking reservation.
There are many points in the customer journey that can be used to upsell and cross-sell:
Pre-purchase communications can include well-timed pop-up windows and pages that simply list alternative options before the purchase is completed
Upgrade offers suggesting a better product for a clearly visible, minimal price increase can be integrated into the checkout process via a pop-up window to add value to the customer. The goal here is to educate the customer about the possibilities for an improved experience at the airport that are available, and only for a minor increase in cost. If the increase is higher than 25% then customers are likely to be turned off by the offer
Cross-selling could include notifications for the things the customer may have forgotten, such as express lane, lounge or parking. This not only improves the customer experience by adding a level of reassurance to their travel plans but helps the airport to raise awareness of the full range of products and services that are available. On Rezcomm's travel platform, cross-selling options appear as a list of extras within the booking journey. This is a gentle way of reminding customers about things that might help them on their journey.
After a customer has made a purchase, there is an increased sense of loyalty that can be nurtured through email marketing which upsells and cross-sells. Before departure there are many ways in which you send out offers designed to ease anxiety before travelling, and upon return you can use requests for feedback to provide inspiration for their next trip.
Use a series of holiday countdown reminder emails to upsell higher value products such a parking space that is closer to the terminal. Cross-sells could include complimentary products. Based on what the customer has bought (or not bought) these emails are automatically sent to each individual customer at the most appropriate time before their departure.
When the customer returns home from holiday an email can be sent to welcome them back. This email can also ask for feedback while making the customer aware of other things they can book from the airport or encourage them to rebook with a special offer. This cross-selling technique is friendly, helpful (because it ultimately wants to improve the customer experience), and can kick-start the booking process for the customer's next holiday.
Instead of making customers feel like they're being pushed into making extra purchases, upselling should raise awareness of products and services that are useful to the customer. Messaging should focus on improving customer experience, making for an easier, more relaxing trip. The key is to offer value, not push for the hard sell. In this way, your airport will win trust, advocacy and loyal, happy customers.
Rezcomm’s world-first combined omnichannel platform for airport sales, marketing and customer-centric analytics can help you build your airport’s long-term growth. We already partner with airports that serve a quarter of a billion passengers worldwide and are experts in developing the potential of ancillary revenue. If you want to find out more, contact us for a chat today.
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