Off-The-Shelf vs. Bespoke Data: Maximising Upselling
Most companies recognise that being data-driven can help them optimise their client journey and operations. In order to facilitate this, they need data tools. The problem is that there are so many different data tools which are constantly updating and changing, to the uninitiated, it can quickly become confusing! In this article we are going to be focusing on two broad categories of data tools: Off-The-Shelf and Bespoke Data Stacks.
A Quick Explanation:
By Off-The-Shelf – We are talking about data tools (often with a SAAS model) that handle the whole process of taking data from your sources and give you reports. They are often set-up to address common business problems but may not be bespoke to your business hence…
Bespoke Data Stacks – Everything is set up with your specific business in mind. To add more confusion, data stacks are themselves made up of composable tools that extract, model and visualise data.
To highlight the strengths and weaknesses of both of these data tools, we will use an eCommerce brand looking to upsell as our example and show how the different tools would handle this.
Off-The-Shelf Data Tools And Upselling
Off-The-Shelf data tools are pre-built solutions designed to address common business needs. The appeal of Off-The-Shelf data tools lies in their ease of implementation. They often come with user-friendly interfaces, require minimal technical expertise, and provide immediate access to valuable insights. By incorporating such tools, businesses can potentially increase upsell opportunities and realise a positive return on investment (ROI).
In terms of upselling specifically, these tools will typically leverage order data, analyse customer preferences, and make recommendations based on the most likely combinations. For example, an e-commerce platform might suggest complementary products based on previous purchase patterns. It’s something that will work “out of the box” and you’ll see a quick ROI on the tool.
Your return on investment is however affected by the tool’s pricing structure. Many vendors adopt tiered pricing models based on usage or charge a percentage of generated revenue. While these pricing structures may seem reasonable initially, they can quickly become expensive as businesses scale or generate more revenue. Not only is your ROI affected by the tool’s pricing structure, but there are many more subtleties that can improve your upselling strategy, this deeper level of complexity is something that Off-The-Shelf tools typically can’t achieve as they aren’t modelled on your bespoke business logic, and unbeknownst to you, the opportunity cost of using them only grows as your business does.
Bespoke Data Stacks And Upselling
Bespoke Data Stacks are tailored to the unique requirements and specificities of an organisation. These tools offer the flexibility to incorporate proprietary data, factor in additional variables, and adapt to changing business needs. By leveraging bespoke tools, businesses can unlock their full potential and achieve superior results in revenue generation.
The primary advantage of bespoke data tools lies in their ability to provide a deeper level of insight. Using upselling as our example you might want to look at:
Margin: What is the margin on each product? Most studies show that people will purchase something small with you as a way of testing your service/company and rather than recommending the most likely product to convert, you could instead at the 2nd most likely to convert but with a higher margin for example.
Users: Are there user characteristics that you know which might give you a different outlook on recommendations? For example if you had a male customer who starts to add feminine hygiene products onto his online shop, perhaps he is in a relationship and now is the time to upsell meals for two, flowers etc.
Promotion: Sometimes you as a business create your own demand. There might be a strategic push that you want to do on some products, perhaps you have a new partnership that needs to be marketed. While off the shelf tools can offer this, it’s often in an untargeted way and may be difficult to measure the impact of your promotion.
All this type of customisation is where a bespoke data stack will excel. While developing and maintaining a bespoke tool incurs upfront and ongoing expenses, the long-term gains can outweigh these costs. By optimising upselling strategies based on their unique business context, organisations can achieve higher ROI and profitability.
Conclusion
You might assume that being a data agency, we are bound to recommend a bespoke data stack, but this isn’t true! If you are a smaller-sized business, looking to get started with data then Off-The-Shelf can get you started quickly and cost-effectively. Most companies we work with start this way and then migrate to their own stack when they are ready.
The decision between off-the-shelf and bespoke data tools depends on an organisation’s maturity, budget, and strategic goals. While off-the-shelf tools may suit smaller businesses or those in the early stages of data adoption, larger enterprises with unique requirements should consider investing in bespoke solutions.
If you are looking for help or advice on setting up or scaling your data, why not get in touch with the friendly team from 173tech?