Ensure that you are maximizing the long-term value of each customer

Excerpt from The Low-Down on Discounting - Maximizing Conversion without destroying life time value. A practice Guide Powered by Sailthru

Discounts work. Whether you’re looking to move inventory quickly, re-engage a lapsed customer, or bring a new prospect into the fold, offering a discount is a powerful approach.

Begin with Data To get an accurate picture of how customers are responding to discounts, both in the short and long term, it’s imperative to create a single view of their activities. Only omnichannel data can provide the 360-degree view that marketers need.?Discounts move merchandise, but they can also destroy your brand. To properly protect brand equity, marketers need to consider both the short-term and long-term effects of their discounting strategies. Only omnichannel, 1:1 data can give marketers the full view of their customers necessary to make discounting decisions that work in both the short and long term. Without omnichannel data, customers can be lost from marketers’ view as they move between channels and platforms. Marketers that have no way to tell which customers are responding to which incentives are liable to be executing on strategies that appear inefficient or incoherent to the user.

Test, Test, Test Having great data is one thing. Using it properly is another. That requires designing and implementing repeated tests that can uncover patterns among various consumer segments. Both short-term and long-term testing are necessary to properly evaluate a discounting strategy. Short-term tests can measure the immediate lift of an incentive program. Long-term tests can measure the downstream effects on lifetime value. Testing is an ongoing process, and not one that is best performed in isolation. Successful data-driven marketers operate in a culture of testing. They test early and often. Always be testing. Don’t be discouraged if your tests don’t immediately show huge gains. Small, repeated wins can produce incremental lifts that are just as impressive in the long run and many tests take a long time to show results. Always revisit past results to ensure the full picture is being analyzed

Which Discounts are Most Effective? There are many instances in which a marketer might decide to offer a discount. Supported by proper testing and analysis, each type of discount can be a legitimate and useful conversion lever. In general, discounts fall into two categories: Those that are triggered by consumer behavior (or lack thereof) and those that respond to the business's larger competitive and economic environment. There are myriad reasons to offer a discount, and as long as you have the data needed to prove value in the long-term, then using discounts across the board can be effective in driving customer value and purchase frequency. Explore discounts triggered by consumer behavior including new-customer discounts, cart-abandonment and other win-back strategies and loyalty discounts. Discounting can be used to respond to business factors such as strategically important products or services, competitive dynamics, and seasonal/holiday discounts.

Getting Started with New Customers New customers present one of the best opportunities to create or recast a discounting strategy. The good: They’re highly engaged and don’t come with discounting “baggage.” The bad: They’re disproportionately more likely to opt out of communications. Discounts can spur early purchasing and cement the relationship, while giving you the opportunity to test a variety of discounting approaches. It’s the best of both worlds — and an approach that anyone wary of discounting will appreciate.?New customers present a prime opportunity to leverage a discount for high conversion rates. Carefully testing variations on this early discount can make sure the discount isn’t deeper than necessary and doesn’t hurt the long-term value of the customer. Aside from the depth and type of discount, marketers should also pay attention to the sourcing of their new customers, the customer’s location, and even the time of day that the discount is communicated to the customer. Expiration dates, careful selection of the products or services offered at a discount, and well-run loyalty programs can help protect the integrity of a brand without diluting the short-term impact of the discount.

Discounting for Existing Customers Discounts executed outside of the context of a larger strategy run the risk of eroding your brand value, confusing customers, and ultimately, damaging their lifetime value to your brand.?For existing customers, how you offer a discount is just as important as why you offer it or how generous it is. Careful consideration of urgency, cadence, segmentation (combined with personalized omnichannel data), and willingness to pay can help marketers design a discount that makes sense for both the brand and the customer. The selection of a specific offer type can be used to help justify a discount in a customer’s mind, lessening its impact on the long-term integrity of a brand. “Get 20% off with a $200 purchase,” for instance, can be positioned as a volume discount. “Refer-a-friend” discounts explicitly reward customers for a specific behavior, and can generate high-quality leads.

Discounts are powerful tools that belong in the arsenal of every marketer. But it’s crucial to use them wisely, and to measure their downstream impact on your brand. Fortunately, there are many ways to do this, and Sailthru* has wide experience coaching clients through the process.

? Begin with collecting true omnichannel, 1:1 data about each customer

? Test both the long- and short-term effects of your incentive programs

? Vary the type of discounting deployed, to avoid discount reliance

? Start with new customers, who are naturally most highly engaged with the brand

? Appeal to existing customers with a 1:1 personalized approach

? Make smart choices to prevent customers from discount saturation

? Deploy expiration dates, cadence and messages implying urgency

? Leverage variables such as location, source and engagement Combined, these initiatives will help you drive revenue, but also ensure that you are maximizing the long-term value of each customer – which is where the real treasure lies.

Combined, these initiatives will help you drive revenue, but also ensure that you are maximizing the long-term value of each customer – which is where the real treasure lies.

About Sailthru is the leader in driving customer lifetime value through personalization. Our modern marketing technology enables ecommerce brands to engage with individual users across all channels in connected, continuous experiences.

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Published by?#NHGBe?2022-06-30 -Be-Time 10:30 AM?

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