As Pareto’s Principle states, roughly 20% of a system’s given input is responsible for 80% of the outcome. In a business context (as highlighted by Forbes and many economists over the years), Pareto’s Principle means that about 80% of a business’ revenue comes from 20% of its customers. In retail, for example, the majority of profits come from those few loyal customers that tend to purchase more than one-time shoppers. In some cases, especially for B2B companies, this ratio is closer to 90/10.
What Pareto’s Principle should tell business owners and decision makers is that to grow revenue, the focus shouldn’t necessarily be on how to adopt new customers (although growing a customer base is still important). Instead, the focus should be on how to up-sell and cross-sell those 20% of customers and clients who already are loyal. The questions that business owners and decision makers must ask are: 1) Who are my top customers and clients? 2) What do they want more of? and 3) What opportunities are they missing out on?
IoT not only has the potential to answer these questions but it also allows businesses to automate the up-sell and cross-sell process in a way that feels engaging to loyal customers. Here are five ways business owners and decisions makers can utilize IoT to increase sales and improve revenue.
- Implement a ‘Smart Shelf’ System
Many brick and mortar stores miss out on sales opportunities simply because there is a gap between what’s on the shelf and what’s in the back room. For example, a customer may want to purchase an item that isn’t on display, but is sitting in the back room. Unless the customer asks an employee to go check the back room, they may wind up leaving the store without purchasing the product. A combination of RFID chips, store shelf sensors, digital price tags, smart displays, and cameras can show managers exactly what is on the store shelf and what is in the back room. By connecting these two sets of data, stores can optimize their inventory process and easily identify what items have the most value to customers.
- Maximize Flow Management
How customers move around a store can greatly impact the purchasing decisions they make. Depending on the layout of the store and the location of certain items, customers may not notice an item that they would otherwise purchase. Smart cameras and sensors strategically placed around a store can gather data that managers can use to analyze foot traffic patterns and how they affect consumer purchasing behavior. IoT also can be leveraged to automate digital signage around a store so that customers can have up-to-date insights on what is where, leading to a higher potential for cross-sells.
- Help the Customer Find Intended Purchases
Along the lines of maximizing flow management, helping customers find other items that they may want to purchase is a simple way to cross-sell. As Fortune points out, Amazon saw a 29% sales increase when it added the “items other buyers purchased” feature to its site. With IoT enabled sensors and beacons, brick and mortar stores can learn what items frequently are purchased together. This data can be used by managers to reorganize inventory so that items frequently purchased together are next to one another on the shelf. Stores also can set up beacons and alerts that help customers navigate shelves to find items they may need in addition to ones they already intend to purchase.
- Create Smarter Loyalty Programs
According to Pew Research’s 2018 Mobile Fact Sheet, 77% of American consumers own a smartphone of some kind, more than double the number of American consumers who owned smartphones in 2011. This upward trend indicates that customers are more connected now than ever before. Businesses can leverage Bluetooth beacon technology to send real-time alerts regarding specials and deals straight to their consumers’ smartphones. By giving customers the opportunity to join a program that enhances their shopping experience, businesses quickly can learn who their loyal customers are and develop a rapport with those 20% of customers that have 80% of the purchasing power.
- Leverage Data to Up-Sell Advertising
For many businesses, there’s another audience that may buy into up-sell opportunities―advertisers. IoT flow management systems that gather foot traffic data can be used to identify the areas of a venue or store that have the most visibility. By showing advertising partners concrete data regarding where their ads will have the most impact, business owners can put a premium on the displays that customers see most.
Discover Greater Up-Sell & Cross-Sell Opportunities with Aeris’ IoT Services Platform
Aeris delivers scalable, cost-effective, and secure IoT solutions that can lay the groundwork for your business to improve up-selling and cross-selling strategies. Our experience managing millions of devices, coupled with more than 50 patents, clearly shows that Aeris’ technology infrastructure sets the standard for tomorrow’s enterprise IoT deployments.
Contact Aeris today to get started.