With rising input prices and falling supply chains, it is becoming increasingly difficult for consumer-facing groups to achieve the profit growth investors are seeking, retailers Walmart, Target and Marks & Spencer recently acknowledged.
This leaves bold executives looking for simple ways to increase revenue without adding too much cost – somewhat of a challenge in an inflationary environment. Is there a better way than to sell your customers another company’s product? You earn commission and your partner manages production problems.
So fetuccine from UK delivery service Pasta Evangelists comes with cheap or free fillings with good cheese and drinks, while Home Chef’s US food kit includes promotions for luxury kitchenware.
Talks about cross-selling opportunities have been significantly higher in the telephone company’s earnings reports, presentations and regulatory data since the beginning of 2021, according to data from the Centeo platform.
Most come from airlines, which have been in business for years, as every traveler who has been offered “opportunities” with rental cars, travel insurance and credit cards knows.
Delta’s deal with American Express brought in record revenue of $ 1.2 billion in the first quarter, up 25 percent from the pre-pandemic period, and was a key part of its plan to generate 60 percent of luxury seat revenue. And no. ticket resources until 2024. And her relationship with Lyft is so strong that this week the tour-sharing group “reminded me” of an upcoming trip to Chicago and asked me if I would like to book a car.
The Canadian airline last year partnered with Starbucks, which allowed customers to earn and pay points on both companies’ programs, and American Airlines chief commercial officer Vasu Raja recently boasted that spending on her credit cards related to Barclays were crossing inflation. American Airlines is also heavily promoting Apple TV Plus, allowing passengers to try on-board shows and encouraging them to pay to continue watching at home.
Now, it is not surprising that others would like to enter the field. There are dozens of large owners among Belod’s clients, a software platform that connects businesses to client bases. Real estate companies promoted tax services in April, gifts for Mother’s Day in May, daily dog care for tenants with licenses to have pets, and transportation companies for new tenants and those leaving, says founder Mikhail Naumov.
While cross-selling is nothing new, technological change has made it easier and more appealing to a wider range of groups. Supermarkets and department stores have always hosted banks, pharmacies and cafes on their premises. And now it offers third party merchandise through its websites. The German electronics store Media Market has been offering this service for several years.
This allows retailers, operating at very narrow margins, to analyze their large customer bases for targeted opportunities. Those with strong customer relationships are looking to get rid of digital marketing money at a time when privacy changes on the iPhone and Android have made it difficult for Facebook and Snapchat to sell targeted ads.
Airline customers tend to have high credit ratings and discretionary spending of money, and grocery stores mostly like drinks, so indirect promotion is there. The newsletter from a downstream cleaning company involved in providing good food in a rented apartment in Manhattan did not look right, but they probably wanted to share our dreams of having a home.
However, the newly found enthusiasm for cross-promotion and additional returns carries risks. Just look at the financial services sector.
In the UK, large lenders have become so dependent on earning money by selling credit protection payments on credit cards and mortgages that they start adding to it without permission and registering people unfit for payment. The Payment Protection Insurance scandal eventually cost the industry more than 50 50 billion. In the US, the collapse of Wells Fargo’s fake accounts was raised by management pressures for cross-selling. Also, regulators in both countries have consistently expressed concern when cross-selling programs for extended warranties, travel insurance and the like require customers to choose instead of choosing it.
It is difficult to imagine the scale of the problem that arises from simple promotion. But if companies become heavily dependent on revenue from their side activities, there is certainly potential for data abuse and high-pressure tactics.