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Foreign.
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You're listening to Perpetual Traffic.
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Hello and welcome to the Perpetual Traffic podcast. This is your host, Ralph burns, founder and CEO of Tier11, alongside my amazing.
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Co host, Lauren Eep Trullo, founder of Mongoose Media.
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So glad you joined us here today. And it feels like it's been like months and months since we've done a show, just us kids, you know, we've had guests, we've had guest stars, but no Lauren and Ralph. Just solo. That's what we're doing today.
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No, Ralph Lauren.
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Ralph Lauren, that's right. I like my name being first. That's. I always sort of like that. Although I lost out on when my kids were born. They're called Serenity Hyphen Burns, by the way. I don't know if you knew that. A little more detail about my personal life. But anyway, so here we are, Perpetual Traffic. We're going to be talking about yet another mpi, which we have never talked about. And we've referred to it. We've talked about it a little bit.
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In depth.
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You mean in depth.
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At length.
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At length. We've referred to it and referenced it, I think is probably a better way of saying it. And that is none other than NAOV and Loren I. Petrulo. I know you know what NAOV is.
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Your net new average order value.
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New average order value. That's right. Net new could be. That would be nn, I suppose. But yeah, new average order value.
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We just have it like naov, naov.
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AOV is your average order value of your returning and your new visitors. Right. Because there's either that's blended. So you can look at this a number of different ways. I mean, there's no one way to do it. But how we look at things is we look at ncac, which we've done many shows on this, and we'll leave links in the show notes. We just did one that I was on another podcast on, specifically on ncac, how to calculate ncac. Don't know how to do that. Definitely go back and listen to those shows. Like I said, we'll leave those links@perpetualtraffic.com, but the sister, the brother to NCAC is Naov in a lot of ways. It's like once you get that new customer to buy at a certain price or certain CAC cost to acquire a customer, that makes sense for your business. And there's a whole calculator that we can do for this. It's over at tier11.com forward slash NCAC. I believe perpetual traffic.com NCAC as well. The point is, is there's a calculator. You can figure all that stuff out. But the other part to this is like once they buy, how much are they actually buying? Are you making money? Are you profitable on the first sale? Are you break even? Are you gross profitable? Are you net profitable? There's all of that. So naov, it's yet another marketing performance indicator that we use to measure inside tier 11 data suite. You can do this in a lot of the different attribution softwares. Google Analytics doesn't really do this all that well. Point is, is like we want to find out how much are new customers, what are they buying and how much are they buying. And that is naov. So how you enhance that is what today's show is all about. So anything to add to that? Are we clear here? You understand what the whole deal is for today's show? Lauren E. Petrillo.
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Oh, I'm super excited about it because it's a neglected number out the gate and I think we're in such a trap of going after new, new, new, new, new, new, new, new new customers all the time. Which is great because if you want to grow your business, you want to attract new individuals to your business, but if you don't understand the level of profitability or lack thereof, you have to then double down on your second, third and fourth time purchases to ensure that you compensate back for that initial customer acquisition with their average order value. So if you're able to, at least by the end of this episode, identify how you calculate your net new average order value or your new average order value, then you can start making more informed decisions on how you can increase that average order value, which I know we're going to be talking about more specifically. But it's one of those numbers that is really easy to ignore because everyone's like, oh my gosh, my tcpa. I want my target cost per acquisition to be X. But you actually could have an increased target cost per acquisition, which allows you a more competitive bid in the various auctions that you're running your paid ads from if you increase your net average order value for your new customers. So there's just, there's a lot of strategies. So listen to this and you'll get to see how you can play chess while everyone else is playing chess.
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Yeah, I mean there's examples all across. I can think of different clients that we have. We have a client that their NCAC goal is 200 to acquire a customer. It's in the Pet supplement space. Use this example a lot with John Moran. But their naov is actually 50 bucks. 50, 60 bucks in that range, sometimes 100. Depends like I think the average is about 50 to 60. It depends on which product we're specifically selling. Point is, is they know that that customer typically buys multiple times, multiple products once they buy that first product plus they get on their continuity program. So they know their lifetime value. Their ltv, which we're not going to really talk about as much here on the show today because we're going to talk about naov is about $600. So if they acquire that customer for 200, they know, because they know their numbers, they're going to be profitable on the lifetime value of the client. But they also want to know like what that NAOV is. And one of our pushes with them right now is to enhance naov, like don't wait, you know, the four to five months to make that money back if you can enhance your NAOV with some of the strategies that we're going to be talking about here today. There's actually two different strategies that we use and a lot of people confuse them and there is some overlap for sure. And I think it'll be interesting to get your take on this because you haven't seen this presentation by the way. So this is the first time Lauren's hearing it as well. But basically there's two ways to do it which is cross selling and upselling. Cross selling, upselling. So we'll talk about each, the differences between the two. So taking a step back, if you think about cross selling or cross selling is the most obvious example. I know you probably don't go to this restaurant and I don't either. Especially because I went vegan for like the last 90 plus days.
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I know where you're going with this. My 12 year old self ordered every single day a McChicken and a McFlurry. That was my immediate meal as soon as I got off the train.
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Yep, McChicken. So what do they ask you after they you buy that?
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McChicken, would you like fries with that?
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There you go. It's the classic cross sell. It's not an upsell because you're not selling them more. Now an upsell in that case would be would you like to supersize that? So you're saying I want more of the same. Now you also get fries, you get a drink, you get everything.
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Or like in the supplement category for example is buying a 60 day supply.
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Or you know, you're buying one bottle hey, you get three for 30% less and six for 42% less, which is often in bundling.
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But it's bundling the same product to get more of that initial purchase.
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Right? So that is upselling cross selling. The interesting part of this is that, and I actually verified the numbers on this, it's about 15 to 40%. It sort of depends on like, if you look at different, you know, financial forums and so forth, 15 to 40% of McDonald's annual profits come from cross selling 15 to 40% because the cost to make fries, like fries are basically like, they get them for next to nothing. There's YouTube videos on this, like how the largest purchaser of potatoes in the world is McDonald's. Largest purchaser of beef in the world is McDonald's. So it's like they get an insane price for fries and then they buy them in bulk. So it's like literally pennies a serving and they're selling it for whatever. They're selling it for $0.99, $1.99 depending on how many fries you get. So it's almost pure profit. Like if you look at cost of goods sold to take out OPEX and all the other sorts of things that go with it. So that is a crazy statistic. So if you look at McDonald's and use them as an example here, our goal here is we want to identify your fries.
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15 to 40% is huge. That's, I mean, I'm just thinking about like for people that have like one product that they largely sell and it's like, oh, okay, what's the main service you provide if you're a service based business? Or what is the main product you sell if you're an e commerce based business or even in the SaaS space? Like, what is your hero subscription model? Does at least 15% of your revenue come from an additional product? And if not, that's screaming opportunity to model the franchise of McDonald's.
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I mean, we talk about Walt Disney and Disney a lot here because you obviously you have that experience. I've got experience in the corporate world. These big companies are big for a reason, because they're doing a lot of things right. Like, I'm sure you in the Disney world can think of all kinds of cross sells that they do.
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The MagicBand is like, you're like, hey, would you like to pay after $150 to go into the park per day? Would you like to make a custom band for $24? When you're buying a hotel PAC with tickets, do you want to Include a meal plan, all sorts of different aspects to it where it's like, how can you capture the entire customer's experience and get them to spend as much money before they actually arrive in park? That's like the. Too long. Don't read. If you want to understand how does Disney make as much money as they do? Because they collect as much money as possible before you physically step foot on property. Because then it's like new money, you've already spent it, right? So it's like, oh, the 10 to $20,000 on that vacation, you don't count what's already been spent because that car has been paid, right?
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You don't even think about that. It's like, it's so crazy how we as humans actually process things. It's like, you know, I just went to Italy and I was like, I didn't even think about the amount of money that we spent on Airbnbs for like two weeks there, you know, with two boys and like four bedrooms and like Venice and Florence and. But so I was like, yeah, I haven't thought about that. Like, yeah, dinner every night, we're gonna have a great bottle of wine. It's like all those costs, even though, like the bill hadn't even come, I don't even think about. So like, that's just sort of how humans behave. So Disney is dead on. It's like, get them to buy, maximize. That's like almost incredibly high amount of profit before you even set foot on the place, before they even have to deliver the service. Which is crazy to think about.
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But you have to understand that there's a level of expectations that are coming across, right? Like there's this like thing that I would call lion. Turn this someone else at the team and call it like the Disney bubble. Because you think about it, the average family of four is spending at least $10,000 for a seven day vacation, right? And that's directly to Disney's bottom line, which is park tickets, hotel accommodations, food and all that stuff.
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It's a ton of money. Really.
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It's a ton. And a lot of that is paid in, in advance, right? And you're going, and let's be real, like, Orlando is a swamp.
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It was a swamp.
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Fun fact. 5000 ladybugs are released every so often on Disney property because they eat mosquito larvae. It's a swamp. Everyone thinks that. Yeah, well, at Disneyland they have house cats, right? So these cats that go chase the mice problem because it's a different pest control issue. But Orlando's a swamp, right? It's 100 degrees, 40 degrees Celsius in the summer. You're surrounded by a hundred thousand other sweaty bodies. The other component is the ECVs. Like, you have all these wheelchairs now that, like, you get clipped on the back of your feet. So you're getting hit, you're getting poked, you're standing next to sweating bodies. You're spending $45 for a bottle of water. You're waiting six and a half hours in line to meet Elsa or whichever character you want, you actually end up going on four or five rides. If you have a family with a height requirement, so you have a child under the age of five, you're splitting, and you're not all able to attend the rides together. The husband, potentially and stereotypically, the person is like, oh, my gosh, why am I not working right now? The mom or that matriarch might be like, well, I need you to be in these pictures. You're pushing these kids, the kids are complaining, Everyone is stressed. But this Disney bubble is. All of a sudden, you pass two hours away and you're like, that was the most magical vacation ever. But all that to say is, they get you on your NAOV. Because at Disney World, 50%, at least, I don't know if those numbers are same, but, like, 50% of attendees at Disney World are new, 50% are return. At Disneyland, 80% are returning their annual passholders are in the drive in market, 20% are new. So it's a very different approach. So in the NIOV model that we're talking about, like, Disney World is an amazing opportunity because when you're going after the new folks, the marketing is way different. The old folks that are returning, they're trying to recreate the memories they had as a child. So they're taking the picture in front of the same tree. Whereas the new folks, they're new to the experience. So it's like, how do you get them to buy food and package plans? And you're selling convenience and comfort. And so anyways, to the Disney model. Sorry, Mike, it's such a great example, but we'll dial it back into your use case for your present.
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Well, the whole goal here is to identify your fries. All right, so like with McDonald's case, like, they have the fries thing kind of down. Like, there's no question about it. So, you know, let's say you buy a new laptop, you know, a cover for it. You know, like those plastic covers that everybody. Like, that would be like a cross sell. You know, you buy new shoes. Hey, do you want socks to like, hey, those are such great shoes. We have a fine array of socks. Like I was in buying shirts, like, do you want some ties too? I'm like, no, I never wear ties. But that's a cross sell. Amazon does this great like what others bought sort of at the bottom of the site, frequently purchased with like, I fall victim to that all the time. If you want to look at like the best E tailing experience, which is 42% of all online transactions by the way, look at Amazon. And Amazon does this exceedingly well and they do it with bundling and upselling too. They do a lot of bundles, if you notice as well, which we won't talk about as much in today's episode.
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But I would just say from the retail model, you just go to your local grocery store, right? We just had 4th of July, so what do you have? What are you buying? Hot dogs with buns. Despite the fact that there are uneven number of counters. Like why do you have six buns? And it's so dumb. I'm not gonna get started on it. But, but you can go in and you'll see like, oh, Fourth of July. It's like you have the chips or if there's a s' mores event, right, you're getting the marshmallows, the chocolate and the graham crackers. If whether or not you wanna like model your stuff off of Amazon, which is great, I encourage you to walk into like a TJ Maxx or a Marshalls or your local grocery store to see how they're putting products together for the cross sell Sephora.
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Oh my God, the Sephora is like the best on cross selling. It is the best. I told you this story. I'd never been into a Sephora about like we were buying Sephora for, I think for Secret Santa I had my niece, my wife was like, let's go to Sephora. Like, oh, I've never been to one of these stores before. And so we're in the checkout and all these like pre, like teen, pre teen girls are like taking the little samples as they've already bought something that they really wanted to come in on. Then they have these like line, this snaky line with all these little samples. Like think of your E commerce store as the same thing. Like what's going to be, you know, the thing that's your fries. What's going to be like the sampler pack to, you know, your full blown like Sephora makeup or whatever it is that you're buying there. So the Big thing is this helps to increase naov, the biggest thing, average order value. And it also increases your profit margins because. And you can also, if you get this right with the right cross sell, you can also increase your ncac. And this is one of the things that we talk about, we talk about ncac. It's like we use LTV as our marker. But also if you're making money on that first transaction, let's say your NCAC is like we have a client where it's $15 NCAC on a $120 item which has a 90% gross margin. Do the math. These guys are making money. These guys are making hand over fists. It's like a glove manufacturer. It's like I don't wake up in the morning say I need like a high quality, like luxury bespoke glove. But I saw it on my newsfeed, I'm like, I need one of those things because I'm going out and I'm using the chainsaw next weekend or whatever it is. But you need to know your numbers to be able to do this. So NAOV is super important. It also enhances your customer experience too and it boosts your retention at the same time if you do it right. As long as you follow. We've got sort of six steps here we're going to go through. If you also you have slow moving stock that you want to get rid of that's complementary to your hamburger, you know that you're selling your cross sell.
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Which the hamburger might be the fries and the upsell could be like upgrading to a pretzel bunch of. Because you're modifying the existing order to increase or like a double. Like making it a double or like for those going to the bar. Yeah, make it a double. Like you've already ordered the shot. We all know the bank example, it costs more money to acquire a new customer. So the more money you can get from them, the more profitable you can.
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More profitable you are on that transaction. Like where we're taking LTV out of this. So it's like you want more cash at the point of sale. It's great. You know we've got that client that I mentioned, like the 50 or 60 NAOV $200 NCAC. That's great. We can either get the NCAC lower, which is harder to because of the space that they're in, but the next real step for them is to enhance naov, which is the reason why we're actually doing this show.
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So when you increase your naov, you're allowed to then potentially increase your ncat, which is mean you're willing to pay more for that new customer. And it's very well known and I don't know who said it first, but the person who's willing to pay more for a new customer is always.
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Yeah, Ryan Deiss claims credit for but I think it was actually Dan Kennedy. All right, so we're, so let's make sure we understand the difference here. So cross selling is about selling a different but complementary product to a customer. So fries to your burger. Upselling is offering a more expensive version of the product that you're already going to buy. So super size that for you know, $1.99 or whatever it happens to be. So that's sort of the differences. We'll do a show on upselling at a later date. But today let's go into six ways to cross sell. So number one, choose a complementary product. So the principle behind this is that items that are naturally used in conjunction with each other, such as burger and fries make the best complementary products. This makes the add on feel like it's sort of a natural extension of, of what you're already getting. It's enhancing the current experience. So think about like you know, in the beauty niche, you know, this is actually a client that we have is, I'm using their example here. They sell a high end anti aging serum and then they suggest a complimentary eye cream at the point of sale. So like they're, it's complimentary to what they're already doing. Hydrating cleanser, prepares the skin and then you know, after the serum's application like it's complementary, they work well together. You could buy one independently but now you're actually, you're not baiting and switching here though, let's make sure that we're really clear on that. This is something that's in addition to, that adds more value. Because remember one of the biggest parts to this is that you're not only trying to increase your average order value, increase your profit margin, but you're also trying to enhance the customer experience and boost retention saying oh, those guys are great. I never would have thought of buying that thing that I actually really needed with the thing that I already got.
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Mindful that you don't want to deter from the initial sale. So I think that's where a lot of people will do cross selling wrong, where it's like, hey, here's an anti aging serum. But also try this blemish serum because now you're competing and when the customer has to Consider like, wait, do I need both? That's not a successful cross sell. But when you're like, oh, an eye cream, you have the most sensitive skin underneath your eye. You, you know, different formula and that these are complementary together because the antioxidants aren't going to cancel each other out so that you know these are going to go very well together. That is a successful cross sell because you've identified complementary products.
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Right. Using the beauty example is selling foundation. We're going to assume that everyone knows we find it. I've never used foundation. However, I know you need a brush to apply foundation. So adding a brush that is a perfect form fries an applicator to whatever it is you're best selling product. In their particular case, they had like, and we'll talk about this maybe one of the other ways they have like seven or eight different colors of brush. Don't offer seven or eight.
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No, because now I have to choose which one. And then I'm thinking of like, do I want a pink brush or a blue brush? But wait, now I'm not even thinking about the foundation anymore and thinking about, oh, I want my foundation with a brush. You're confusing the customer, so you've lost the cross style.
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Right. So that is point number two. Like, when you do offer that cross sell, limit the options and in most cases, it's all right. Well, if you're going to offer a brush for a foundation, foundation is the primary, is the Big Mac. You know, the brush is the fries. Just look in your Shopify store, which is the most popular. There's probably going to be one or two colors that are the most popular. And then also look at how people have purchased in the past. And there's ways to pull all of this inside the back of Shopify as well. You just sort of sort by products like, what are people buying together? This also gives you an idea into number one, like, what is my complementary product? You've got the data, chances are on the back end of your Shopify store or even if you are in the information space. We did ads for Frank Kern for probably about three years. He was selling a $19.99 ebook and then he would sell like the audio version of it as a cross sell. So it's like, is that an upsell? It's really, it's actually a cross sell because it's sort of more of the same thing that you're getting. It's complimentary to what you're buying. And you're also enhancing the customer experience so you can do this for E commerce. You can do it for info. All the same principles apply. So we do it with service.
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If you're an agency or something that's listening to it, like we offer AI assistance. Right? Like, so if you're already doing paid media. Okay, well, one of the ways that we increase paid media's performance is making sure that you have a chatbot enabled on your ad. That's our use case.
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Yeah, that's a tremendous use case for it. Because it's not, you're not undermining like why they're primarily there. They're there to primarily buy like media buying or creative or whatever happens to be like, this is in complement to that. But you got to limit the options. Don't offer like, well, like, what else do you want?
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Yeah, like, oh, let's tell you about SEO. Let's distract you from what you're actually trying to do, right? No, no, no. Foundationally what you're coming for is increased paid media performance. Okay. This is one of the tactics in which it will enhance better. But going back to that. So number one was identify complimentary product. Number two is limit your options. Like be super clear on what makes the most sense. And you're saying that you can go into your Shopify store, there's lots of like third party apps that can help you do this. I mean, I know like Triple Whale has had one of the best examples I've seen where they tell you like one of their models is like, it gives you straight up who makes the most sense of what purchases are because they do that cross sell, upsell journey and stuff like that. But there's a lot of resources available to you. But number two is have a clean, clear product.
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Yep, clean. Like choose complimentary, limit the options. Another example in the beauty case, and this is a good one, is like they sell, this client sells sort of a complete routine. It's a bit of a, well, that's more of a bundle and sort of an upsell. But in one particular case they have a shampoo purchase and then after that they offer a matching conditioner and I think like a hair mask as well. So there's like, there's ways to do it. Like think about one of the things, like if somebody's buying shampoo, like cross sell is, you know, conditioner, like obviously. So the third part of this, and this is where that last one sort of, you know, breaks the rule a little bit. So this is not a hard and fast rule, but I would apply this in most cases is that number three Is you gotta price it appropriately. So in most cases, the rule of thumb here with cross sells is try and make it anywhere between 40 to 50% less than the main product.
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So hence the fries is a much lower valued price than the burger. So that you're not now buying two whole products, you're buying a complimentary one. So you're not increasing massively your complimentary.
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Right.
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Like it's adding avocado.
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Right. So I don't even know what a Big Mac goes for, but let's say it's like three bucks, like fries or maybe like a buck. I don't know if you can price it 50% less than the main product.
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But you're not saying discount it. You're saying find a complimentary product with the filter of it not being significantly a crazy different price. You've already anchored your product price from the initial product that they want. So if they're coming for a shampoo, if the shampoo is $40 and you're offering a $60 conditioner, oh my God, you now have to convince them why that conditioner. But if you have a complimentary conditioner that's at like 40 to 60% cost, so if it's a $40 shampoo and then you have like a 20, 25 max price of what you're looking at, that's going to not cause friction to a more successful cross sell, which allows an up increase in your nao.
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Yeah, so 50% or less. Like one of the examples from. I think this is actually a different beauty client, but it's. They sell like a 60 or $70, like $67 moisturizer. And the cross sell is a 15%, a $15 lip balm. You know, I mean, they're complimentary to a certain degree. I think it's like a.
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For sure. It's moisturizer for your lips. Your lips, they don't secrete any oils. So with your face, oil can be a moisturizer, depending on your type of skin. But your lips, you have to apply something.
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Yeah, it's also got SPF in it too. So it's like there's an added benefit. But the point is that's like, what, 25%? You know, if it's 67, it's 15. I think it's 15 or $17. So anyway, that's usually where we draw the line. So if it's less than 50%, always good. Makes it just that much easier. It avoids the confusion. I mean, you can potentially, you know, say, hey, $25, and now it's 15, you know, because you're buying this other.
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Item but you're not detracting from the initial want. That's the hard part. A successful cross sell isn't going to cause additional friction on the initial purchase.
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Absolutely. So there you go. So number four is time it. Right. So the best time to do this is time it as the customer has already committed to the primary purchase. Like you said, very, very important. You're not sabotaging, you're not baiting, switching. Here you are like adding to what they're already doing. And the best place to do this is on an e commerce site. You know, once a customer clicks add to cart for a shampoo and conditioner set. You might have a pop up for frequently bought together section that appears like a conditioner spray or a heat protectant like something like that. So there's that right at the point of sale. This is usually done. Amazon does this all the time as one click when you're on add to cart like that's the time to do it. You get a time it effectively. So upsells oftentimes are done after the purchase is made. Like once you have one, hey, would you like to get two more for only X amount of dollars? So that would be an upsell. You're getting more of it. And that's usually the timing of that is not and the add to cart stage. You can do this as a pop up, you can do it as a box that they check, you know, right on your cart. The point is like that's the right time to do it. So last two here is first off, don't be pushy. Like don't have a pop up that screams in their face. It should feel like it's a helpful suggestion for them. Remember you're trying to enhance the user experience. You're trying to enhance retention for that client. They want to like your brand. Don't be a pushy. Like try to sort of sell them something that they really don't want. This is not timeshare that we're doing here. So don't be a pushy asshole. So like have a pop up to say you must buy serum with that cream or something ridiculous. Don't interrupt the experience, don't be annoying. Don't have multiple pop ups. People hate that. Just give them one chance. Like seriously, like I've seen that happen. So don't be pushy. And are you sure you don't want this? Last chance. And there's a timer on it. Like really is there a timer like the, you know, the collagen enhanced, the collagen cream is gonna like run out and that's the last bottle ever. The point is, is don't do any of that sort of like scammy sales stuff because you know naov and you're talking about retention here. Last but not least, number six, just continually test and refine this. Chances are you're probably not going to get it right on the first shot. Like for us for example, like our application page, it's the most important page on our site. We're continuously ab testing it. Like should we put a video on it? Should we like pick like this is the most important page on your site. So test this. You should always have a test going. Especially you know, pick your top one or two products, you know, figure it out. Just force rank them inside Shopify. Where are you getting 80% of your revenue from 20% of your products? Start with those. It might be 1, 2 or 3. We talked about this with the folks from Unbounce. Don't get too complex here, just start with one. But test, test, test so that you.
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Can potentially get 15% additional revenue with like 1% additional work.
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Yeah. And like have it on autopilot and that's really what you're trying to do here. So these are new clients. Remember like we're going NCAC here. We're talking about naov. Obviously this will apply for returning customers as well. But we're really sort of talking about like how to increase your naov and ultimately if you can increase your naov, it's one component of you being able to pay more and being willing to pay more to acquire a customer and that affects your ncac. Anything to add?
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I think you've headed over. As long as you don't want to deter the initial sale and that you want to enhance the experience, I would just take it back to basics. So I invite you to walk into a grocery store or to Sephora or to an Ulta or your local board game store and it's what are they doing in person? Like you want to bring that feel good opportunity to an online environment. And I think where brands will win is when they have that experiential part that feels like going into a blockbuster but online. Because when you can have personalized and relevance in any capacity, any touch point, I think you're always going to win. And cross selling allows that relevance and personalization to enhance the customer's experience. And when you do that, you increase your naov. Well you'll increase your aov for sure, but especially on the naov when you have someone's first time visit to your store. Become a lifetime customer.
A
Yeah, at the end of the day what you're trying to do is obviously increase profitability, but really what you're trying to do is enhance your customer experience. So that's why you have to test it. So anyway, we will do our show on upsells at a later date but hopefully this was insightful for anyone in the e commerce space and or digital product space. You can do it in any space here. See it all the time. It's obviously it's a really easy way for you to increase revenue for your for your website and for your business and ultimately scale and grow the right way. And once again, this is a marketing performance indicator which you can get over@perpetualtraffic.com MPI but you already knew that. So thank you for listening this week. Make sure that wherever you listen to podcasts, you leave us a rating and review. We didn't read them this week but we will on our next show. Leave us a rating and review. We love five stars but we also like, you know, the one and two stars, which are hysterical. But the point is is we really appreciate you listening. Here we wait all those ratings and reviews get us out to a wider audience, teach people how to do this stuff the right way and that's what this show is all about. So on behalf of my amazing co host Loreni Petrulo, until next show, see ya.
B
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Podcast Summary: Perpetual Traffic Episode – "Maximize Your Profits with These 6 Brilliant Cross-Sell Plays"
Episode Details:
In this episode of Perpetual Traffic, hosts Ralph Burns and Lauren Petrullo delve into the strategic implementation of cross-selling to enhance profitability. After a series of solo episodes featuring guests, Ralph and Lauren reunite to discuss a crucial marketing metric known as NAOV (Net New Average Order Value) and its interplay with customer acquisition costs.
Ralph Burns initiates the discussion by defining NAOV as the average amount new customers spend on their initial purchase. He contrasts it with NCAC (Net Cost to Acquire a Customer), emphasizing the importance of understanding both metrics to ensure profitability from new customer acquisitions.
Lauren Petrullo expands on this by highlighting the often-overlooked significance of NAOV in determining the feasibility of acquiring new customers at a higher cost.
The hosts discuss a real-world example involving a client in the pet supplement industry. With an NCAC of $200 and an NAOV ranging between $50 to $100, the client ensures profitability through multiple purchases and a steady continuity program, projecting a lifetime value (LTV) of approximately $600.
Lauren emphasizes the necessity of enhancing NAOV to potentially allow for higher NCAC, providing businesses with more flexibility in their customer acquisition strategies.
The conversation transitions into differentiating cross-selling from upselling—two pivotal strategies in increasing NAOV.
They provide tangible examples:
The core of the episode revolves around six actionable strategies to effectively implement cross-selling:
Choose a Complementary Product
Limit the Options
Price it Appropriately
Time it Perfectly
Don’t Be Pushy
Continually Test and Refine
The hosts draw parallels with industry giants to illustrate effective cross-selling:
McDonald's: Utilizing high-margin items like fries to boost profits.
Disney: Pre-selling various aspects of the vacation experience to enhance initial revenue and customer satisfaction.
Lauren (10:05): "Disney is dead on. It’s like, get them to buy, maximize. That’s like almost incredibly high amount of profit before you even set foot on the place."
They also touch upon examples from the beauty industry, such as coupling a high-end anti-aging serum with a complementary eye cream to enhance the overall skincare routine without causing product overlap or customer confusion.
The ultimate goal of cross-selling, as emphasized by both hosts, is not just to increase profitability but to enhance the customer experience and boost retention.
By offering relevant and complementary products, businesses can make first-time customers more likely to become lifelong patrons, thereby increasing NAOV and justifying higher NCAC.
Ralph and Lauren wrap up the episode by reiterating the importance of effective cross-selling strategies in scaling and growing a business sustainably. They encourage listeners to apply these six strategies to their own businesses, emphasizing the significance of continuous testing and refinement to maximize profitability and enhance customer satisfaction.
Key Takeaways:
Notable Quotes:
Lauren Petrullo (03:30): "You could have an increased target cost per acquisition, which allows you a more competitive bid in the various auctions that you're running your paid ads from if you increase your net average order value for your new customers."
Ralph Burns (10:05): "Disney is dead on. It’s like, get them to buy, maximize. That’s like almost incredibly high amount of profit before you even set foot on the place."
Lauren Petrullo (31:46): "When you can have personalized and relevance in any capacity, any touch point, I think you’re always going to win."
This episode serves as a comprehensive guide for marketers, business owners, and digital professionals looking to implement effective cross-selling strategies to maximize profits and enhance customer relationships.