Cross-selling is at the heart of this month's AVN Online. But what precisely is cross-selling, and what are the most effective ways to profit from it? In this exclusive roundtable, AVN Online gets answers to these and other questions from three experts on adult online marketing: Becky DeForest, Chief Executive Officer/owner of Adult RevenueService.com; Greg of ExecutiveStats.com; and Ron, president of 12Clicks.com.
Let's start by defining what we are talking about. What precisely is cross-selling?
Becky: Cross-selling offers your customer another site membership when they get to the checkout page. There are two types: pre-checked and unchecked. Pre-checked means the customer has to uncheck the box if they don't want to buy the second membership. Unchecked means the customer must check the box to purchase the second membership.
Ron: It is selling a secondary offer or product from your "join" page - using the customer's data from the original sale for the secondary offer, as well.
Greg: It's the process of selling another trial membership to a customer who is buying a membership to your website. They can be pre-checked cross-sells, or they can be customer selected. These are normally put by the Terms and Conditions and above the "submit" button on the join forms.
How does cross-selling work with respect to adult websites?
Ron: You're basically offering the customer the option of joining a second paysite at the point of sale; either with one click of the mouse or in the case of a pre-checked cross sale, no clicks.
Becky: Some adult sites cross-sell a membership to another site they internally control. Or, they can cross-sell a site that is owned and operated by an outside company. In the latter scenario, the outside company usually pays a onetime commission for each cross-sell sent.
Greg: It allows the member to try other websites by joining one website. It also creates an important revenue stream to help float the high pay per signup models.
What difference does cross-selling make to the bottom line?
Greg: It is a great way to add extra income; whether you just sell them off of your join pages or you buy them in to increase your overall recurring database of members, the net profits can be very good. But with that comes lots of risk. Without proper management, you quickly can find yourself losing the ability to process credit cards.
Ron: These are huge, huge numbers, as it pertains to your bottom line. Let's be conservative and say 30 percent of the time you make an extra $25 per sale (the going rate for a pre-checked cross-sale). If you're paying your affiliates $30 per join, you just lowered your acquisition costs by 25 percent.That's a huge number and is the secret to the rising payouts we're seeing industry-wide. Now an unchecked offer has nowhere near that impact, but some unique site owners have made it work to their advantage.
Becky: This is hard to say, because of the different types of cross-selling you can do. If you're selling another internal membership, all revenues (rebills) on that membership remain in the company. This can generate up to $50-plus per cross-sell sold. If you are selling to another company, commission payouts are usually in the $25 - $30 range. But, in this scenario, all risk for chargebacks also goes to the other company. Without cross-selling, most companies could not afford to pay affiliates the high commissions that are standard in the industry.
What is the biggest mistake companies make when they cross-sell?
Greg: The biggest mistake you can make is, not knowing how to manage the cross-sells: buying in too many at once; buying low-quality cross-sells; or selling to someone who can't pay for them or disappears without first paying for them.
Becky: Being deceitful with your cross-sells is the biggest mistake a company can make. I've seen companies hide the pre-check cross-sell under the submit button. I've seen companies not disclose the pricing or trial lengths for the cross-sell. I've also seen companies hide the fact that opting in for a cross-sell can result in billings from completely separate "partner" companies that are unrelated to what the customer is purchasing. I've heard rumors that some customers can get up to 10 charges in week's time from bad cross-selling practices. Make no mistake, there are many companies that are less than honest when it comes to their cross-selling methods, and this eventually is going to hurt the entire industry.
Ron: There really are two big mistakes that are made by companies when they get involved with cross-selling. The first is to become a buyer of cross-sales with little or no experience. Because of the risks involved with chargebacks, it is an incredibly dangerous market to get into without experience. We all know people who had a nice, profitable business almost overnight lose that business because they "heard about those pre-checked cross-sell things and wanted to give it a whirl." While properly conducted cross-sales are safe enough, buying is best left to the guys who've made it their business. The other huge mistake is dealing with unscrupulous segments of our business. Often lured by higher payouts for cross-sales, program owners also run the risk of damaging or even losing their business.
The scam works a bit like this: You cross-sell to one of these characters and they now, too, have your customers' information. If they do anything more than just letting it rebill, it can come back to haunt you in the form of a chargeback or, simply, horrible retention.
This is such an insidious danger that it often goes unseen until it's too late. Know who you're dealing with and the way they conduct business.
The big question: What are the best ways to deploy cross-selling to maximize sales, without offending customers?
Becky: Offer from the originally purchased site an unchecked cross-sell to a site that is different in terms of content offerings. This method comes with the least amount of risk in terms of chargebacks, but the opt-in percentage is very low. Typically, most cross-sells are pre-checked on the "pay" page. They always should be disclosed clearly, with pricing and above the payment submit button.
Greg: The best way to cross-sell is to find a complementary product or Web site. Make the Terms and Conditions clear and make the cross-sell visible, and ensure that the processor or gateway sends an e-mail explaining that the customer joined another site. Provide good, customer support for canceling or refunding the cross-sell.
Ron: Deploying cross-sales to maximize sales and not offending customers is a tricky balance. We've been working with several conservative programs and IPSPs regarding this very thing. On one end of the scale you have an unchecked offer that just sits on the join form waiting for the customer to read the offer, click the check box accepting the offer, and become a member of both sites. On the other end of the scale you've got two or three pre-checked, cross-sale offers with a deceptively short description for each, and the nuts and bolts of the offer buried in the Terms' section. One offer is ultra-conservative to the point of not being worth the trouble of setting it up; the other offer is all but criminal.
We work to find a balance far from the shady end of the spectrum and take into account each program owner's business practices and opinions about how hard to go after a cross-sale.
The final setup when we buy cross-sales from other programs generally looks like this: one pre-checked cross-sale for a free trial with the description and basic terms spelled out clearly and above the submit button. Our customer service is under strict orders to refund completely anyone who calls or comes to our cancel page explaining that they didn't understand or did not realize they were signing up for our secondary offer. We also back up the sale with an e-mail alerting them to the sale and giving them a cancel link along with the username, password and details of the sale.
We then do absolutely nothing but let the customer rebill. We do not resell, upsell or email the customer. While you do occasionally receive a little negative feedback because the offer is pre-checked, the fact that we're so ready and willing to refund fully in the event of confusion usually wins the day.
We also have a few small tricks to protect our business partner in this process, but I've got to keep something to myself!
This article originally appeared in the November 2008 issue of AVN Online. To subscribe, visit AVNMediaNetwork.com/subscribe.
