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When to Push Targeted Promotions

Posted by Chris Cain on August 22, 2017

The goal of every retail business should be to build a base of repeat customers and maximize their lifetime value. Loyalty can be achieved a number of ways after providing a great ecommerce experience. Provide great content, great service and great products to start. Once those priorities are in place, think about prices and promotions. Going to the promotional "well" too often can train customers to wait for discounts, diminishing the value they place in a merchant's products while driving down profitability.

Today's retail technology affords ecommerce teams the ability to provide highly targeted discounts to encourage repeat business from an engaged and invested customer base.

Are Discounts Right For the Brand?

Discounts as a blanket strategy aren't always the best choice for the long term health of a brand, off-price retailers notwithstanding. Some customers are purely price-driven and won't return without a big sale. Having deal-seakers become the driving force of revenue is a slippery slope from which few brands can recover.

Brands focused on the value proposition of great product and service can sustain a solid profit margin while strategically deploying promotions to move slow-moving inventory or to re-engage lapsed customers. Price-Quality-Matrix.png

It may be counter-intuitive, but sometimes a higher price signals quality to a particular breed of customer. This is where effective promotion targeting and segmentation can pay off. Understanding where a customer is in their life cycle with a brand can shape different messages that are more appealing in the short run and encourage more brand loyalty in the long run.

The Rightful Place for Discounts

Discounts are a straightforward method of either building loyalty for customer retention or acquiring a new customer. A Black Friday offer may be great at attracting new customers, but does little to create a longer term relationship. Just getting a second purchase can increase the likelihood of a third order to nine times that of a first-time customer. Here are three types of targeted discounts that will continue to pay dividends for ecommerce businesses over the long-term.

  1. Email Acquisition Incentives - Email is by far the most efficient channel in any digital marketing mix. Even luxury brands have learned that having an aggressive offer at the outset of a relationship will more than pay for itself down the line. Technology can also identify customers trying to game the system by suppressing the offer to visitors who have visited the site or filled their cart.

  2. Private Sales - Inventory liquidation is an inevitable reality for most retail businesses. Why not limit these offers to the best customers? Maintain a segment of customers who have proven their willingness to pay full price and give them the first chance to save. They will likely buy a few full-priced items as well. Early access to new product is another great benefit for loyal customers. The Nordstrom Anniversary Sale is anticipated every year because new styles are available at a rare and short-lived discount. The exclusivity of the sale means it does nothing to diminish the retailer or the brands that participate.

  3. Lapsed Customers - By calculating the average amount of time lapsed between purchases, promotions can be targeted and triggered to deploy when a customer is most likely to repurchase and then escalate when they are most likely to drop off.

Common incentives like free shipping are now minimum expectations. Customers have made it clear that they will look elsewhere if they don't see free shipping and free returns prominently displayed on an ecommerce site. Deliver relevant offers to the right segments at the right time are critical to acquiring and retaining quality customers.

Leverage Data to Find the Answer

Most ecommerce brands could benefit from some form of targeted discounts. The answer ultimately comes from tracking the data of your customer behavior, and combining that with your own market and competitive knowledge.

Full Service Ecommerce Solutions - One Click Away

Onestop's in-house performance marketing agency is built upon a data-driven approach to building the lifetime value of the customer - encouraging a healthy mix of new customer acquisition strategies with re-engagement that keeps them coming back. Talk to us about your digital marketing strategy to see how we can help you blow passed the competition.

Topics: Discounts, promotions, price, Strategy, segmentation, Digital marketing

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