Friday, May 15, 2009

Art of the cross sell

I was looking at a website for a product the other day, and noticed they had a large sign reminding you to ask for your 10 dollars back. As I looked further, I saw it was a coupon service, free for 30 days. I thought, how ingenious.

Most people tend to forget, that companies sometimes make more money cross selling other items then they do selling their products themselfs. The best example is Best Buy and Circuit City (I know CC doesn't really exist anymore).

A business week article stated in 2004, Best Buy can attribute almost half their operating profit to warranty, which has 40-60 percent margins versus the 6-10% gross margins on the sale of a tv or computer. My uncle just spent 160 bucks on two HDMI cables that probably cost the manufacturer no more then 10 bucks to to make, and that I imagine were bought by BestBuy for 40 or 50 bucks.

At those margins, Best Buy can sell the TV at cost. So the question is, can you cross sell something either through affiliate programs with your products? I am trying to figure out what I can cross sell with my product I am working on right now. Anyone have experience with this?

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