All marketers know their customers have different needs, interests, and motivations. Yet very often, whether a marketer pursues a one-size-fits-all or 1:1 targeting and content strategy, we see that one-offer-fits-all, and everyone gets it, every time. This creates three fundamental problems for marketers:
– It opens the door to undesirable outcomes by not driving customers to strategic ones
– Over discounting leaves significant dollars on the table
– Over communicating irrelevant offers damages the customer experience
Align the Offer to the Behavior You Want to See
Customers respond differently to different offer types. Prior to free shipping being tables stakes, it was often, but not always, the offer that generated the most response. Now that free shipping is expected, savvy marketers are looking at which offers are most effective at driving customers and prospects to specific actions. Most often this is to buy more frequently, increase their average order value, buy in a category they have previously not bought in, trial a new product offering, buy for the first time, engage in a second channel, engage with relationship building communications, download the new app, complete their first game, etc.
Focus your offers by behavioral segment and the tactical outcomes you want. Consider the single mom with 2 kids who spends $400 a week at Albertsons and has been doing so for years. She may be shopping elsewhere, but Albertsons is getting the lion’s share of her grocery spend. Albertsons needs to keep her happy, which very well may not just be through financial incentives. Telling her about a specific new product that her kids might love and will make her life easier has real value for this customer. If this same customer visited every week but only spent $20, we would know she is doing most of her shopping elsewhere. Given the regular frequency of her visits, an offer that encouraged higher spend amounts per visit or new category buying would be more effective at driving the desired behavior than giving her a discount on the small purchase she was already going to make.
Listen to what customers are doing, not just saying. For marketers who have access to systems with integrated data, this can be done by looking at their buying behaviors. As an example, if a Papa John’s customer bought a pizza yesterday, the likelihood they will convert on Papa John’s SMS pizza promotion today is near zero. Sure there are some households that might, but Papa John’s should know who these super buyers are and giving them a discount when they were already going to buy just hurts the bottom line. Looking at individual, segment, or overall brand purchase cycle will allow you to create recent buyer exclusion time frames that will improve campaign performance metrics and reduce your customers’ inbox clutter (i.e. improves the customer experience). It also gives customers one less opportunity to opt-out.
Don’t Just Try to Buy Them Back
After reviewing hundreds of marketers’ customer databases, a very consistent pattern of 66% to 75% of their customer base had not engaged with marketing communications in over a year. Even worse, annual customer churn in many cases exceeded 85%. Many had promotion-only reactivation programs in place to drive re-engagement, but a series of uninspiring coupons rarely had the desired impact. Instead of just trying to buy back lost customers, mix your program up with touch points that give them a reason to engage even if they are not ready to convert. Bring them back with How-To’s on products they bought that may still be in use, which can be especially effective with more durable goods (Weber Grill’s How-To for Grilled Game Day Nachos for example will make you want to break out the grill). Test integrated gamification tools like those from 3Radical that are engaging and can be used to drive a multitude of strategic actions. Give them a chance to vent through a quick survey. Even if they do not come back, learning why they stopped being a customer may give you the insight to improve overall retention.
For marketers trapped in a vicious promotion cycle, they may need to buy customers back, but should do so in a more effective manner. Consider an escalating offer value that provides increasingly lucrative offers to those who have ignored previous efforts. It won’t cost you anything unless they actually convert. Which is, after all, the goal. This may be capped at a break-even discount value, and should leverage single use coupon technology to minimize risk, but considering how much it costs to acquire a new customer taking a small loss to get them to reengage and convert may be far more cost effective than finding a new customer.
Offer strategy and associated tactics are an often overlooked opportunity for marketers to improve their existing programs. By encouraging specific customer behaviors that support a marketer’s overarching strategies and goals, marketers will find success financially and in improving the customer experience.
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