Technology Today: 6.30.2010

Posted by TED Magazine on Wednesday, June 30, 2010

Recession Buster:  The Electronic Inside Salesman

How Suggestive Selling Software Systems Can Increase Sales

How much money are you leaving on the table because you are not doing suggestive selling for additional products?  Would you like to know?

Recently I ran across a software application that can show distributors how they can increase sales and order size with automatic merchandising.  The analytics engine is based on the buying behavior of customers.  They’re called On-Demand solutions, and the one I learned something about is from Emcien, and can provide the following:

• Automatic "This Sells with That" Analysis
• Cross-Selling & Up-Selling
• Merchandising / Bundling
• Pattern Trend

When a distribution customer comes to the counter, the counter personnel can look at what is being purchased and recommend other items that the contractor might want to purchase. Not all of these recommendations will be accepted, but those that are represent additional revenue. The recommendations that are made depend on the clerk’s knowledge and experience. The profit margin on suggested items is very high, because you are leveraging a customer who is already in your store.

If you have a web storefront, the software can also automatically monitor what is being placed in the shopping cart, and can make recommendations based on items already in the shopping cart—think Amazon.

You might be wondering how software can make recommendations for electrical products.  The answer comes by the analysis of earlier sales that allows for the discovery of which items are typically purchased at the same time. 

Electrical contractors buy products for projects on a job basis.  Analysis of the sales data will reveal items that are typically bought together for the job allowing you to know which items are purchased 90% of the time when item A is purchased. In some cases, employees are already doing this, but a reminder to do so can’t hurt.  This is a clear way to make sure the suggestions are made to the customer, shows that you know how customers use your products, improves customer service and increases sales.  A win-win, as everyone likes to call it.   

Distributors typically sell tens of thousands of unique items across hundreds of thousands of transactions.   A quick analysis can reveal customer buying behavior and trends that every distributor can utilize to increase sales.  When suggestive selling is based on actual buying patterns, the suggestions are more plausible, and customers trust them.   It is very believable when you can say “ 90% of the times this ballast is bought with this lamp and fixture.”  

Such recommendations are sensible, simply because they are based on the actual buying behavior. And, if you havea newer employee, this type of application can simulate the years of experience necessary to know what gets sold with Product A or Product B.  In addition, sensible recommendations are critical because irrelevant recommendations annoy customers and may, in fact, reduce sales.

To illustrate the potential of suggestive selling, here are some actual numbers from an auto parts distributor. ACME parts store carries 41,155 unique items. An analysis of 232,500 orders showed that 61% of these baskets would result in at least one additional recommendation.  When the store implemented the suggestive selling, sales increased by 3% in the first 4 months.

Product recommendations have been used very effectively by companies that have reported an increase in sales by up to 30%.  Surprised? 

Here is the impact to your business - adding one more item to 10% of orders can increase overall sales by 5%!

After seeing the system in action and discussing it with the company, Emcien is offering a free analysis on your data to demonstrate the upside potential of suggestive selling to your business.  Please feel free to contact me to learn more.

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Stacey Pandeloglou is the president of Distribution Technology Group and writes twice monthly here.  Reach him at 757.491.4978 or Stacey@dtgworldwide.com.