Let’s face it, the reason why Membership Clubs sell as upsells in telemarketing calling scripts is because they prey on the consumer’s weakness of accepting that the deal is too good to be true.  “Wow, you mean I can try this unbelievable deal for a full 30 days,… I can use it all I want and if I cancel, I won’t have to pay a dime……I’m in!”

The truth of the matter is that of those poor souls that buy in, many space off the 30 days and end up being charged and thus disgruntled when they end up being charged.  Who do you think they are most disgruntled with?  Perhaps with the primary initial product marketer.

With these negative option clubs, it is the so-called, “breakage” model that makes them highly profitable.  Everybody wins except the consumer, right?  I don’t think so.  The net result is that disgruntled customers actually end up blaming the product marketer for selling it to them in the first place….which not only increases overall return rates of the primary product, but leaves a bad taste in the consumers mouths for ever wanting to do business with you or call on another TV product again.  Thus, the whole industry has begun to suffer.  Why else have call in response rates dropped so dramatically.  Surely the ease of the Internet has had a certain affect for loss of call in traffic, but 3^rd party upsells have also been regulated severely due to their nature on the Web.  So in actuality everybody loses except the “club” companies.

Enough consumers have complained about this that the FTC has become involved and acted on further  law, (Roosevelt), that has caused conversions to these “clubs” to be even more reduced.  Furthermore, the credit card companies have become involved and are enforcing their requirement to gain a re-read of all the credit card #’s a second time for 3^rd party offers.  These two facts have caused a dramatic overall reduction in conversion to these “clubs”.  Of course, none of this would have ever happened if the deals were truly of value from the consumer’s perspective.  There wouldn’t have been massive consumer complaints about such.

Here’s a thought, if clubs were so good, why not let people try the clubs for 30 days and only if they call to actually purchase it after the trial, do they keep on being able to use the club.  I won’t bet on that one ever flying.  No club is willing to offer such because very few would buy in!

Here’s another thought.  A better way is to upsell consumers on legitimate products is by cross-pitching them over to relevant, but non-competitive other products.  How do you find those relevant other products?  Go to Sales Portal.  A web based marketplace that brings product marketers together for the purposes of buying and or selling end of call transfers.  To see a demo on how their platform works, go to www.salesportal.com and click on their 3 min. video.  Best of all, it’s absolutely free to register your products on their web site.  Who knows, there might be some perfect matched pairs just waiting for you to join.  If not, be patient, others will find you and your product.

The current controversy over third party upsells – in particular, club memberships — contains a certain irony and some valuable lessons for direct marketers.  On the one hand, the industry has evolved from a single transaction-based model to one that relies increasingly on a relationship and longevity between marketer and consumer.  After all, successful continuity programs rely upon innovative products that deliver on their promises and foster continuing goodwill with the buying public that can last months, even years.

Yet somewhere along the line, some DR practitioners and their supply chain partners allowed greed and the allure of the quick buck to warp the industry.  They started pushing monthly programs with little to no value to the consumer where the rate of practical usage was, in some cases, less than one percent.  These programs rely on what is known as a breakage model, where a lack of consumer redemption – call it benefit – is what creates the profits that can be spread among marketer, telemarketer and/or the referring party, not to mention the originator of the program.  In the process, consumer confidence has turned to ire – ire that has now summoned the threat of increased government regulation.  It is time for the industry to course correct by embracing new business models that dovetail with consumer desires and interests; a premise that is essential to not only survive, but to thrive.

There’s nothing wrong with upselling complementary products or services to the public; they may in fact be welcome in many cases.  For example, many fitness programs sell vitamins, meal replacements and ancillary workout equipment.  The buyer is in a mindset to affect healthy change and often welcomes the opportunity these auxiliary products represent.  Problems arise, however, when buyers view the product being pitched as having little to no relevancy.  While one could argue that the proposition of a buyer’s club that offers discounts is widespread enough in its appeal to have broad relevancy, the consumer’s failure to take advantage of its benefits strongly suggests otherwise.

At the same time, the industry faces a conundrum: because so many direct marketing programs rely on negative cash flow in order to establish a relationship with the consumer, many have come to rely on third-party upsell programs to fortify their revenues and attain profitability.  So what is the industry to do?  The answer lies in seeking alternative sources of incremental revenue that do not rely on a breakage model that effectively cracks consumer confidence.  One such solution involves the concept of cross-pitching™. The key to successful cross-pitching™ is relevancy: the consumer is offered only complementary products or services after the original reason they have called is satisfied.

Take the fitness category referenced earlier.  While many seasoned marketers have already sourced all of their upsells, not every company has.  A strength-training device aimed at aging boomers could be ideally paired with a joint supplement manufacturer.  After the inbound caller’s originating needs are met, the operator would simply employ a soft sell approach by asking the consumer if they are interested in a complementary product.  While a typical cross-sell could require reading a script of 90 to 120 seconds, cross-pitching™ can be executed in a matter of mere seconds.  If the caller says yes, they would then be transferred to the call center of the supplement company.  The second marketer pays a bounty to the originator of the lead for the warm transfer, a fee that is typically far less than they would pay for any other media-generated lead.

When ideally applied, cross-pitching™ creates value for all of the parties involved: the consumer who gains the benefit of a welcome, relevant product; the lead generator, who can now realize incremental revenue for generating the lead; and the lead buyer, who is able to dovetail off the lead generator’s advertising and obtain a qualified prospect.  While other models will no doubt emerge, cross-pitching™ is but one example of an FTC-compliant alternative to suspect third-party upsells that the industry should wholly embrace.