Fingerhut Boosts Upsells by Focusing on Product, Not Customer

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ORLANDO - Tying upsells to products, rather than to customer purchase histories, has helped Fingerhut receive telephone upsell rates of 40 percent.

While there has been much testing in the industry of the concept of uncovering upsell and cross-sell opportunities that match customers' purchase histories, Fingerhut vice president of marketing James Wehmann told an audience in the opening general session of the DMA Telephone Marketing Conference here that the Minnetonka, MN, cataloger has found more success offering add-ons, such as extended service plans, to each product a customer buys.

"We will identify for each product the best three add-ons to complement it," said Wehmann.

As an example, Wehmann noted that for a VCR the company might offer an extended service plan, a VCR rewinder and a head cleaner kit.

While 40 percent of customers chose an add-on item, the company has even better success with extended service plans. Although most items are listed in the catalog with one SKU number for the product with extended service plan and another for the product alone, many customers who order the product without a plan from the catalog agree to buy one after being offered it as an add-on when they phone in their order.

"We have a 50-percent response rate to extended service plans, and these are people who have chosen not to buy one from the catalog," Wehmann said.

The company had tested the concept of matching upsells to customers' past purchase history and found that the offers were not always appropriate.

"Sometimes you make embarrassing mistakes when you match past purchase histories," Wehmann said, noting that the company had uncovered instances where customer matching programs suggested offering an appetite suppressant as an upsell to a large meat and cheese basket, or an extension cord to accompany a cordless drill.

Other telemarketing techniques the company found success with included telemarketing bouncebacks, in which customers who purchased an appliance such as a coffee maker, may receive a free item such as a skillet. Two months later, a telemarketer could call the customer and offer a special on the rest of the pieces to complete the skillet set, Wehmann said.

The company also leverages its telemarketing programs to draw more profit out of other catalogs it enters into affinity partner relationships with.

The company receives 40 percent of its orders over the phone, with the rest coming through the mail and e-mail, and makes 10 percent of its revenue from active telemarketing programs, Wehmann said.

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