ROI: Greater Revenue and Profit
In categories where Intelligent Cross-Sell was active,
PC Universe sold significantly more accessories. Specifically,
PC Universe achieved:
- A 22% increase in accessory revenue per order
- A 10% increase in attach rate (the percentage of
orders with at least one accessory)
Because accessories are typically more profitable to sell than
primary products, it is worth noting that more accessory revenue
means disproportionately more profit.
ROI: Minimal Management Cost
PC Universe achieved these results without needing to dedicate people to manage the Intelligent Cross-Sell system on a day-to-day basis. Instead, Intelligent Cross-Sell worked via "guided automation," a process whereby PC Universe defined-and, when necessary, occasionally refined-business rules for targeting cross-sells by factors such as popularity, brand affinity, and key selling features. Intelligent Cross-Sell then automatically determined compatibility among primary and accessory products, selected and explained the best cross-sells, and adapted to inventory changes and new products, all on an ongoing basis.
The Bottom Line
"Intelligent Cross-Sell enables us to do suggestive selling in a way that's helpful to customers and is measurably better for our business. Based on these initial results, we believe we can do even better in other categories where we will be applying Intelligent Cross-Sell."
—Patrick Colletta, Director of E-Commerce, PC Universe
The Details
The results are based on PC Universe's own transaction data from July 26, 2006, to January 3, 2007. Of that 22-week span, the first 11 weeks comprise the "before Intelligent Cross-Sell" period to serve as the control, and the latter 11 weeks comprise the "after Intelligent Cross-Sell" period, during which Intelligent Cross-Sell was active. (As a secondary check, we ran the same metrics on back data from the 12-month period prior to Intelligent Cross-Sell's deployment, and the results were similar. We reported results from the contiguous 11-week periods because PC Universe's site and inventory were most comparable then.)
Category Coverage
During the time period analyzed, Intelligent Cross-Sell's "Recommended Accessories" functionality was active only in the notebooks category. They appeared on each notebook's main product page in the "Buying Options" box, such as below.
Because Intelligent Cross-Sell enabled PC Universe to select and explain the best accessories on a product-by-product basis, PC Universe was able to feature these cross-sells much more prominently on the page than before. Prior, PC Universe would provide an unfiltered-and often unwieldy-list of accessories behind an "Accessories" tab. (That tab was still available after Intelligent Cross-Sell was deployed so customers could always have a complete list of accessories available.)
Each notebook had up to three Intelligent Cross-Sell accessories. The possible accessory categories were batteries, docks, carrying cases, mice, and USB key drives, in that priority order.
Measurement Notes
To ensure that CNET Channel and PC Universe were correctly measuring Intelligent Cross-Sell's effect, and not various other factors, we employed the following techniques.
- Because Intelligent Cross-Sell was active only in the notebooks category, we limited the accessory-revenue calculation to transactions that involved a notebook and at least one accessory from an Intelligent Cross-Sell accessory category.
- We did not count transactions where accessories were purchased by themselves (which would not be the result of a cross-sell), and we did not count the revenue from the notebook within each transaction (Intelligent Cross-Sell does not affect that).
- To normalize the "before" and "after" periods' different number of total orders, we used the metric "average accessory revenue per order." In calculating the average, we counted every order that involved a notebook, whether or not it had accessories. Thus, the 22% increase reflected both the amount spent on accessories and the frequency with which orders had accessories. Because it is a common industry metric, we broke out the latter figure as the 10% increase in attach rate.
