Upselling a
Promotional Product Using Customer Purchase Information
Goker Aydin* and Serhan Ziya**
*Department of Industrial and Operations Engineering
email: ayding@umich.edu
**Department of Statistics and Operations Research
email: ziya@unc.edu
Within
the context of telemarketing, Federal Trade Commission defines upselling as “soliciting the purchase of goods or services
following an initial transaction during a single telephone call.” Hence, upselling is simply offering an additional product or
service to a customer who just made a purchase and, in fact, it is a sales
strategy that is hardly exclusive to telemarketers. Most catalogers, online
sellers and traditional retailers use upselling as a
means of increasing revenue and clearing inventories. Thanks to the wealth of
customer segmentation data, a firm can tailor upsell
offers at the individual customer level. Knowing that a customer bought a
certain product at a certain price, the firm can decide whether the upsell offer to this particular customer should include a
discount, and, if so, how deep the discount should be. In this paper, we
investigate how such an upselling strategy can be
used in clearing the inventory of a promotional product…