Make an extra 60,000 kroner every year in your online shop, for free..

Extra services in an online shop were what I considered in October 2010. I looked at whether a customer would pay for a longer return period or another extra option alongside the product they bought.

Extra services in an online shop and customer reassurance

I discussed examples from software and car hire. I thought some value might lie in customers’ sense of security, even if they never used the service.

I also mentioned an example where an extra charge was automatically added to the basket. I had moral reservations about that and said we didn’t use that approach.

A longer return period as an option

I described a proposal to offer a longer period for payment. I saw it as an option customers could accept or decline and considered it in connection with BilligVVS, where I sat on the board, among other things.

My expectations about how many would buy or use the service were guesses and examples. I didn’t present a measured result from the experiment.

The amount in the title was an illustrative calculation

The 60,000 kroner illustrated how small amounts per order could add up over a year. It wasn’t documented earnings or a guarantee that an extra service was free to deliver.

The proposals and discussion of return rules are from 2010. The article presents my thinking and concerns at the time, not current guidance on consumer rules or automatic charges.

Also read about my subsequent dilemma about ethics and personal branding.

Small extra amounts can make a big difference

In October 2010, I’m considering how to get more from orders you already have. We’re emerging from the financial crisis, but I’m not convinced everything simply returns to normal. I’m an optimist, but I also see lots of problems in the US, China and Europe.

We don’t need to spend all day on that. Whatever happens in the world, making more money is interesting. And I particularly want to look at e-commerce.

There are some rather cheeky examples of extra services in an online shop. I’ve particularly noticed one in software where I can see the money but also have a moral problem.

Seven dollars to download your software again

Some competitors sell what they call software insurance. The customer buys a program, and just before payment an extra seven-dollar service automatically appears in the basket.

It isn’t necessarily clearly explained. Some may not notice at all. Others can click a little question mark and read what they’re buying.

The service lets customers download the program again if, for example, they format their hard drive or lose the software. A program they’ve already bought and paid for.

We don’t do it ourselves at this point. I think the approach is rather nasty and have moral reservations about it. But looking only at the money, I understand why others do. In the video, I also honestly say I won’t rule out us looking at it.

I’ve heard from industry sources that around half accept the service. If true, seven dollars from half of customers means an average extra three and a half dollars per purchase.

We had around 350,000 Slow-PCfighter purchases over the last 14 months, perhaps closer to 400,000 as I remember it. Using the lower figure, 350,000 times three and a half dollars gives an extra $1,225,000. More than a million dollars.

So I see the temptation. But I haven’t thereby proved all that money would reach our bottom line or customers would react the same way with us. It’s a calculation based on figures I’d heard.

Will the customer pay for a longer return period?

An acquaintance had sent another example: A business offered customers a six-month return period for a small charge at checkout.

At the time, I started from the 14-day return or cancellation period I mentioned in the video. The idea was to offer something more. The rules in this historical discussion don’t describe what applies to every purchase today.

My immediate thought was that if customers didn’t return the item within the first 14 days, perhaps the likelihood of returning it over the next six months was quite small. That was my guess, and of course it depends on what you sell.

You probably won’t get many paying 9.95 kroner for a longer return period on a lollipop. But buying a 3,000-kroner washbasin, a 24.95-kroner option may seem quite manageable.

I sat on BilligVVS’s board and considered whether it might be interesting there. In a conservative calculation, I thought it might add 350,000 to 500,000 kroner a year to the bottom line. That was an expectation, not a result we’d already measured.

I could see it as customer service too: Customers can buy more flexibility. Of course, it’s an option they need to be able to accept or decline. I didn’t know how an automatic add-on would be assessed in Denmark and wouldn’t simply include it by default.

The car rental company sells a full tank and less hassle

Related ideas exist elsewhere. Travel companies sell cancellation insurance. In the video, I complain about some people buying cover they may already have elsewhere. That’s my criticism of duplicate purchases, not a review of any individual customer’s insurance.

At US car rental companies, I’ve also seen what I call gasoline insurance. You pay upfront for a full tank and don’t have to fill up before returning the car.

It might be presented with petrol ten or twenty cents cheaper per gallon. Then the customer thinks: I save a little, avoid the hassle and avoid an extra bill if I forget to fill up.

But you can’t necessarily time the return with a completely empty tank. If you have 15 or 20 litres left, you’ve paid for fuel you give back to the rental company. That’s where I see part of the economics.

It can seem a bad purchase if you only consider what the customer actually uses. But customers may also value not having to think about it.

Reassurance is something people buy too

You might think: Bloody hell, Martin, that’s robbery. Does it provide any value to consumers?

My point is that perceived reassurance can also be part of the product. People buy the feeling things are under control and nothing will go wrong.

I compare it to a pair of Diesel jeans for a thousand kroner and a cheaper pair for 300. The expensive pair doesn’t necessarily keep your backside warmer. But customers may feel better because the brand fits their social circle or desired identity.

Similarly, the option to download software again or return an item later can provide a feeling of security even if customers never use it. That’s the feeling I think you’re also selling.

Do the sums for your own order volume

So ask whether there’s an extra option your customers could benefit from and pay for. It doesn’t need to be a big amount per order to become interesting. Also read E-pusher about my experiences with online sales.

I mention BilligVVS with perhaps 300 orders a day. But you don’t need that scale. Let’s say you have 15 orders a day and can earn ten kroner more per order.

That gives 150 kroner a day and around 4,500 kroner in a 30-day month. Over a full year with the same order volume every day, it’s 54,750 kroner. That’s the scale I round up to nearly 60,000 kroner in the video.

I’m talking about extra profit, not just revenue. If the service costs something to deliver, include that in the calculation, of course. And if orders only arrive on some days of the year, the amount changes.

What’s interesting is how much ten or fifteen kroner becomes when repeated across many orders. But I also have concerns about how some businesses get that extra payment. Both are part of my thinking here.

You won’t get rid of my face

I also start this video by responding to concerned messages after my previous video, where the camera mostly showed the sky. People asked whether they wouldn’t see me anymore.

You won’t get away that easily. Last time, I knew the story would take a while and wanted to avoid cramp in my hand. Florida’s sky is beautiful too, though some apparently prefer my face. I alternate a little between the two and continue using the new microphone.

Best wishes, Martin