An Unlikely Upsell Tactic: Free Phone Charging

By Peter Fader, Professor of Marketing at the Wharton School of the University of Pennsylvania

Companies work hard to acquire new customers. But once they do the work isn’t over. Then comes the task of cultivating these customers to both stay and grow with the company by employing retention and development (R&D) tactics.

R&D tactics are often wrongly viewed as interchangeable — spoiler alert: they’re not! Further, they’re often employed homogeneously without regard to the value of the individual customer. In my latest book, The Customer Centricity Playbook, my co-author Sarah Toms and I introduce a new framework for looking at R&D that goes beyond this “one size fits all” approach.

To understand the framework, first let’s look at R&D along two dimensions:

High Value Customers vs. Low Value Customers — Not all customers are created equal. High value customers are your company’s “best customers.” They have a high propensity to spend and a large customer lifetime value (CLV). Conversely, low value customers have a lower propensity to spend and smaller CLV. When evaluating R&D tactics it’s important to consider which group of customers you’re targeting and to budget accordingly, usually investing more in the high-value customers.

Offense vs. Defense — Playing offense means compelling customers to spend more. In playing offense companies deploy tactics, such as loyalty programs, to increase a shopper’s CLV. Playing defense means actively working to retain customers, generally through various forms of customer service. By playing defense companies try to prevent the loss of customers due to frustration or poor experiences.

Together, these two dimensions — Customer Targeting and Tactical Approach — create a 2x2 in which we can examine various R&D initiatives.

In the book, Sarah and I provide examples of initiatives in each of the four quadrants defined by the framework. Here, I’m going to look more closely at the upper left quadrant — specifically, at a company that’s found a way to play offense with high-value customers without directly asking them to spend more money.

Playing Offense with your High Value Customers

Many examples that we see of firms playing offense with high-value customers involve upselling to a premium offering. Amazon Prime or LinkedIn Premium are great examples of brands asking their high-value customers to pay more in order access to exclusive benefits. However, I’ve observed an interesting example of a company, ChargeItSpot, that helps retailers play offense with those high-value customers without directly requiring additional spend.

ChargeItSpot provides phone charging stations to retailers including Nordstrom, Neiman Marcus, Target, and Under Armour (more info here). Their stations feature secure lockers, that allow shoppers to lock their phones away while they shop and, inadvertently, they spend more time in the store while they wait for their phones to charge.

While it’s great for customers to spend more time shopping, the extra shopping time won’t do much for a low-value customer who has a low propensity to spend. However, if a high-value customer, who already has a propensity to spend, lingers in the store they are much more likely to buy more.

ChargeItSpot’s retail clients have found that shoppers who charge their phones dwell 2.30x longer and ultimately spend 1.47x more at the register than they otherwise would have. (Yes, a causal impact, more info on the study here). They’ve also found that chargers have a higher baseline NPS, which is made even higher on days that they charge. So what we see are retailers using the amenity to cater to their good customers who already have a propensity to spend (high value customers) and compel them to spend more (play offense) by lengthening their shopping trips.

What I found particularly interesting is that shoppers don’t see this as a tactic, but somewhat akin to hospitality offerings and serve as a sort of “digital champagne.” Retailers are not only enticing their best shoppers to spend more — the shoppers are grateful that they’re doing it.

ChargeItSpot is an intriguing example of how retailers are solving a real pain point for their shoppers and at the same time, are playing offense with high value customers. It’s not always about upselling to a premium option. Sometimes if you give shoppers the right tools they will spend more organically — and even thank you for it.