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Cross-Sell Models

Cross-sell models are also known as basket analysis models. These models will show which products people typically buy together. For instance, if we find that people who buy red wine frequently buy cheese and crackers, too, it makes sense to place these products next to each other in the store. This type of model is also used in connection with combined offers. They are used, too, when a company places related pieces of information next to each other on its Web site, so that if a customer wants to look at cameras, he or she will find some offers on electronic storage media, too. Amazon.com is a case in point: If a user wants to look at a book, he or she will at the same time be presented with a large number of other relevant books. The other "relevant" books are selected on the basis of historical knowledge about which books other users have purchased in addition to the book the customer is looking at.

Up-Sell Models

Up-sell models are used when a company wants to create more sales per customer by giving the individual customer the right offer at the right time. These models are based on the notion that a kind of consumption cycle exists. A time perspective has been added here. We are not looking at what's in the shopping basket once;instead, we are looking at the contents of the shopping basket over time. If, for example, we find that people who at one point have had one kind of sofa will get another specific sofa at a later stage, we will want to promote the new type of sofa with suitable intervals after the first sofa has been purchased. In the software industry, the method is used to discover who will buy upgrades of software at an early stage. Based on their information, a vendor can endeavor to penetrate the market with new versions. Upselling is also a strategy to sell a more expensive or newer version of a product that the customer already has (or is buying), or to add extra features or add-ons to that product. The BMW site enables users to configure their cars before purchasing. Users have the option of upgrading anything from the seats to the wheels for an additional cost, and they can immediately see what those upgrades would look like. Another example is Spotify that offers a free account, but recommends users to subscribe to its Premium account.

 
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