Offers are a necessary evil of retail. Sales and discounts can be equal parts beneficial and detrimental, often providing short-term gains that can result in longer-term headaches. Nonetheless, they’re necessary, and employing an airtight, behavioral-fueled offer strategy will have noticeable impacts on the success of your business. The key to an optimized offer strategy lies in deriving behavioral insights from customer data, and using them to inform your approach to future offerings
Here’s why offers are great:
- They incentivize purchases and drive increases in revenue (which makes you look good)
- They’re a great way to move inventory that needs to be liquidated ahead of a new season
- They can be the nudge a shopper needs to become a first-time customer
Here’s why offers are problematic:
- While they drive overall revenue, they’re not particularly friendly to your margins
- If disseminated too frequently, many customers will begin to anticipate them, only purchasing when discounts are available
- In some cases, they’re distributed to shoppers who were already going to purchase an item at full price, reducing the bottom-line impact of those sales
Here are seven tips for using context to optimize your offer strategy:
- Identify and exclude shoppers who may not need an offer. Using predictive analytics, create a program that identifies individuals whose likelihood to purchase within the next several days is higher than average. This knowledge will allow you to exclude this group from promotional offers, allowing them to purchase on their own without the need for a margin-harming discount.
- Identify customers who only ever purchase discounted items.Conversely, use historical behavioral data to identify individuals who, over time, have repeatedly purchased exclusively from sale or clearance categories. You can then exclude this group from non-sale messaging, and view them as people who should always be included in sale pushes.
- Vary offers in automated, triggered campaigns. For automated campaigns, such as purchase and browse abandonment, many retailers will include an offer in a second or third drip as a last-ditch effort to entice a purchase. This is a smart strategy, but only if you’ve created multiple versions of that drip to ensure consumers aren’t “trained” to expect an offer. Varying offer-based abandonment emails keeps shoppers honest and prevents habit-based offer seeking.
- Identify non-customers with high engagement. Another way behavioral data aids in optimizing your offer strategy is in allowing you to identify individuals who may simply need a small nudge to complete their first purchase. Create a segment that singles out individuals who have never purchased, but have recently been highly engaged. A modest offer may be all they need to take the plunge.
- Reach disengaging high value customers. We’ve spoken previously about the value of identifying high value customers who are disengaging with your brand. Visibility into this segment of your audience is valuable as part of a behavioral offer strategy. Consider delivering an offer for a high value purchase to these customers as a method of reengagement that rewards them for past brand loyalty and prevents potential attrition.
- Engage individuals who repeatedly fail to redeem a promo code.For individuals expecting to cash in on huge savings, the inability to redeem the promo code they’d expected to use can cost your brand. Use modeling to understand in real time when a shopper is having issues with a promo code entry field. Consider reengaging them with a fresh, fully functional promo code to complete their purchase. To take it one step further, send this only to individuals who have purchased beyond a certain threshold in the past, to guard against sly shoppers who are simply trying every promo code they can find on RetailMeNot.
- Carry email offers through to your online experience. An often overlooked aspect of offer strategy is ensuring an offer is carried through to other channels. A quick and easy win in this area can be achieved by optimizing your website to deliver the same offer online that a shopper received via email. By leveraging the distinct segment you created for email, you can ensure that the reason a person visits your site (an enticing offer) is front and center when they get there, speeding the path to conversion.
Try employing these approaches, and watch as the power of context impacts your offer-related KPIs. While managing offer delivery is a consistent challenge, it can also be a high-impact methodology that builds brand equity, if done right.