The McDonald's effect - how upsells drive $100M+ in extra revenue
It’s Friday night, 6pm. You’ve been driving for three hours and have another two hours to go. The advice you’ve been hearing echoes in your head: never arrive anywhere hungry. You see there’s a rest stop three miles ahead.
You exit the highway and park your car. The Golden Arches are smiling at you. You enter the McDonald’s and walk up to the counter.
“Can I have a Big Mac Menu?”
“Would you like a large menu?”
“Sure”
“A large coke?”
“Yep”
“Do you want to add any sauces?”
“Mayo and ketchup please”
“We have a McFlurry promo: half price when buying a Big Mac meal.”
“That sounds great, I’ll have one.”
In that short conversation, you went from ordering $10 worth of food to ordering $18. +80%. That’s the McDonald’s effect. All their customer-facing employees are trained to upsell.
In ecommerce, the same is happening. Stores are gearing up to give the customers easy options to buy more.
Ecommerce 1.0:
Ecommerce 2.0:
Why does this work?
- Customers are already in buying mode when something is in their cart. Easier to buy more.
- Reacquiring customers can cost a lot
- Higher AOV
- Higher ROAS
- Reinvest extra profit in channels
- All channels become more profitable
