How to Improve Upon Generic Cooperative Database Response Rates
February 2, 2015
5 Tips from the New Best Practices for Circulation Management
October 5, 2014
Measuring the Incremental Value of Catalog Mailings
March 28, 2015
Managing Promotional Offers and Finding the Equilibrium
August 19, 2014
Since the recession, catalogers have come to rely more and more on promotional offers to drive sales. And catalog and internet buyers have come to expect strong promotional offers and seem to wait for offers before they make a purchase.
Managing promotional offers and making sure they are well balanced within your catalog circulation, your e-mails and your on line ads is a critical part of getting your marketing mix right.
Do you need deeply discounted offers to get customers to buy? Deep offers have two big negatives; First, you have the margin hit of giving deep discounts. Second, you train the customers to wait for the big offer because they know the deep discount coupon is coming. One alternative is to wean your customers away from waiting for the big offer by giving them a series of much smaller discounts so that they learn to expect frequent but not such dramatic discounts.
Will customers buy at full retail? Not if you’ve trained them to expect discounts. I’m a big customer at Borders and now wait for the discount coupon because I buy so frequently their is always a discount coupon in my mail box. And now that I’m a “platinum” member and get an extra 10% off, I really am torn about buying at a regular bookstore because now I’ve come to expect 33% and 10% off on every purchase at Borders. I even buy the Sunday New York Times there to save $2.00. But the upside to Borders of the continuous stream of e-mail coupons is that I’m loyal to their discounted prices. Note that Borders did file for bankruptcy this month.
Can you send more frequent e-mails to your buyers who have responded to e-mails? One of the big trends that is emerging is that smart marketers are segmenting out the buyers who have responded to e-mail offers and are sending them more frequent e-mails than to their entire file of e-mail addresses. You can ramp up greatly the frequency of e-mailing coupons and promotional codes to those customers who have responded to them in the past—a discount buyer is a discount buyer. I’ve also noticed, going back to my Borders example, that as soon as I use a Borders coupon I get an immediate series of fresh coupons over the next one to two weeks.
So you should segment out responders to your promotional offers and hit them up frequently with more offers and even set up a separate stream of e-mails to buyer’s right after they have made a purchase. It is an old truth in direct marketing that people are happiest with you right after they have purchased something. So right after they buy is the best time to ask them to buy again!
Should each catalog have an offer? If you’ve trained your customers that you give them frequent offers, then you run the risk if you send them a catalog without an offer that your response will suffer.
Do you have the same risk with behavioral targeted ads? Probably much less so, because the ads are going out to your web site traffic which is a mix of previous buyers and non-buyers rather than to your own buyers. So the ads are being broadcast to a different population. So with on line ads you can test ads with and without an offer.
What about giving offers to your entire e-mail list? How can you limit the risk? One technique is to broadcast strong offers to your e-mail list that hasn’t made a purchase in over a year. These people are essentially dormant, so it can be worth your while to reactivate them using a strong e-mail offer.
So here are some rules to consider to help manage your multichannel promotional offers:
Don’t favor one channel over another with stronger offers through e-mail than through your catalog.
Try to limit how deeply you discount. It’s better to run shallow discounts frequently rather than deeper discount infrequently.
Segment out those customers who have responded to your promotional offers and consider increasing the frequency of offers to those buyers and sending fewer discount offers to those buyers who have never used a promotional offer.
Consider using promotional offers either via e-mail or your catalog to reactivate customers who haven’t bought from you in a long time or to e-mail subscribers who have never bought from you.
Know that when you send shopping cart abandon e-mails that customers are expecting a promotional offer.
Test constantly. Test the difference between deep offers and smaller discounts for catalog offers, e-mail offers and on-line ad offers.
If you are selling commodity branded merchandise, know “street price” of the items you are selling and be very careful about selling either above or below the established “street prices” for an item. If your price is above, you won’t sell much and if your price is below the established market price, you may get pushback from your manufacturers.
Have a pricing and promotional strategy so you are not just reacting with discounts to make your monthly budgeted sales.
Consider modeling your promotional buyers versus your full price buyers at the coop databases to see if they are different types of customers.
Accept that promotions are increasingly a fact of life and you may have to sell most or all of your merchandise using some promotional offer.