One of the cornerstones of all the supermarket chain’s sales and marketing strategies is to sell key household consumables that consumers buy regularly (and are price sensitive towards) at a loss. The prime example of this are baked beans, sometimes sold as low as 9p per can. Water could not be canned and sold profitably at that price. The strategy is simple; loss leading products are there to entice customers in to the store to then be hit by aggressive cross-selling and up-selling promotional activity which then turns the visit in to a profitable one.
That’s kind of interesting but I don’t sell baked beans!
If you sell web hosting, domain names are your baked beans. They are that loss leader that can be promoted at an eye catching price to entice people in and then be sold additional higher value domain names e.g. your web hosting, email products and further add-ons such as domain security. Unless your business is purely based around domain names, absorbing the cost of the domain names in to your web hosting is a tactic that could help increase conversions and your Average Revenue Per User (ARPU).
This isn’t a promotional tactic; it’s a way of life
If you choose to sell your domain names using Every Day Low Price (EDLP), the danger of applying this as a short term tactical decision is that you will attract a stampede of bargain hunters looking for a cheap domain name and nothing else. You could attempt to increase the base ARPU through Emails to your new customers but it’s far less risky if they are profitable from day one. Your best bet could actually be giving the domain away free as part of the web hosting package. This will ensure each sale will be profitable without relying on people buying more to do so. The supermarkets have been using loss leaders for decades and are incredibly sophisticated at maximising the value of every basket, and there is no reason why you can’t do it either.
How to get people to buy more on their first visit?
Here are some quick tips to get you started and links to read more…
• Use the old ‘related items’ method with cheaper products linking to more expensive ones plus the added benefits of upgrading clearly listed
• Use a basket people can add to as they shop around your site rather than taking them straight to the check out
• Also use an editable basket once they commit to the order process so they can add more at the last second
• Run a price promotion if they bundle certain products
Further reading:
• http://www.conversion-rate-experts.com/articles/
• http://www.seobook.com/website-checklist-closing-deal
• http://www.seomoz.org/blog/17-new-rules-for-successful-ecommerce-websites
• http://www.addedbytes.com/online-marketing/ten-ways-to-improve-your-website-conversion-rate/
Image credit: http://www.flickr.com/photos/stone-soup/3849277255/
QUOTE:
Use the old ‘related items’ method with cheaper products linking to more expensive ones plus the added benefits of upgrading clearly listed
• Use a basket people can add to as they shop around your site rather than taking them straight to the check out
• Also use an editable basket once they commit to the order process so they can add more at the last second
• Run a price promotion if they bundle certain products
Would be good to see more features like this added to Hostpay