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QVC: Using Technology to Build Relationships

By John Hunter

June 01, 2003 — CIO — Would you like a magazine subscription with that? How about a time-share in Florida? Maybe some hot-pink lipstick to go with that new power tool? Not interested? Well, we’re not surprised. We’re not interested either.

At QVC, we run the opposite way from customer relationship management companies that want to teach us how to sell a screwdriver to someone who bought a diamond ring. CRM may sound like a customer-friendly strategy, but it’s really just a marketing tool that helps departments within a company work together to cross-sell and upsell to customers. Although cross-selling and upselling can be appropriate and effective under the right conditions, we’ve found that maximizing the sale generally doesn’t help to achieve customer loyalty and repeat purchases. Building trust and consistency in consumer relationships is the key to success in the retail business.

We know that trust works, and we have evidence to prove it: More than three-quarters of our customers rated QVC 7 out of 7 for trustworthiness. Those customers tend to repurchase at a rate 80 percent higher than those who rate us a 6. They are also more willing to recommend us to a friend.

But while building trust is a very smart business strategy, it’s not easy to pull off. As Doug Rose, QVC’s vice president of merchandising brand development, says, trust-building is a time-consuming pain in the neck. Sure, it’s tempting to skip all the boring stuff—including answering phones quickly and efficiently, keeping reps informed, making sure everything is customer-friendly—and just maximize the dollar productivity for the moment by constantly pushing products at customers. But we’ve learned that the best long-term strategy is to let the customer decide what to buy—in effect, to opt in to our system.

Focus on Tomorrow, Not Today

Sure, upselling and cross-selling can be effective when done properly. But at QVC we believe that it is more important for our long-term success to focus on creating a positive customer experience. So unlike fast-food chains that always ask "Do you want fries with that?" we carefully limit the amount and kind of upselling we do. We never upsell more than 15 percent of our customers in a given month and never make more than one offer a month to a customer. And we offer only products that are related to what the customer is buying. Whereas most companies would be thrilled with, say, an 8 percent upsell, our main concern would be not annoying the other 92 percent of customers by trying to sell them a Craftsman drill with their Birkenstock sandals.

 

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