7 steps to make the perfect offer for your customers
Offers are a great way to attract new customers and retain existing ones. Businesses often use them to increase sales and push that doubtful customer to go ahead and make a purchase.
Running offer campaigns are now easier than ever with several digital mediums rising to prominence over the last decade. Currently, smartphones are the leading platform to deliver offers directly to customers. Considering that everyone has one, and more and more brands are pushing customers to download their apps; it is no surprise.
But it is the actual making of these offers that often leaves marketers in a tizzy / is a topic of debate amongst the marketing community.
Having helped a lot of companies run offers campaigns, here are the 7 steps that we found work best while constructing offers:
1. Set your goals
Before you even start to think about offers, make sure you know what you want from these offers campaigns. Your goal should vary based on the size and existing customer base of your company. Some examples of goals are:
“80% new users to make their 2nd purchase”“70% users who haven’t made a purchase in the last 14 days to make 1 new purchase”
2. Set offers campaign parameters
As with any marketing campaign, you need to set some variables beforehand:
Budget: Money allocated to a campaign will depend on various factors such as the number of users to target, channels for running offers campaign, types of offers etc. We have a detailed article on this subject which you can read here.
Duration: For the first few campaigns, DO NOT go in for long duration campaigns. They need a large budget and also take a long time to show any kind of results.
Instead, running a short week-long campaign will help you determine how close you are towards reaching your goal. If you’re way off, then you might need to rethink your offers.
Only when you’re satisfied with the result should you deploy a long-term campaign (anywhere between 1 and 3 months) and let the sales come in!
Testing Criteria: A lot of companies make the mistake of not having any pre-defined method to test the effectiveness of the campaign. Because your first few campaigns are going to be experimental in nature, you need to know which ones worked the best.
A/B testing is a tried and tested method to do this. It essentially involves testing 2 slightly varying versions of your campaigns on 2 sets of users.
3. Get (atleast) last 30 days of sales data
There is no one-size-fits-all when it comes to offers. An offer that might work for one brand, might not work for another (even if they belong to the same product category). There’s a reason customers are attracted to certain products or services of your brand — be sure to leverage this!
By just looking over sales figures (purchase history, browsing history) you’ll be able to quickly identify some patterns unique to your brand. Some examples might be:
· 2 products that are frequently bought together· Alternative products bought by customers
· Products that are highly rated
4. Use the power of modern data science
Analytics is commonly used by marketers when they want to understand the business performance of a company. Why not also use it to improve business.
Using analytics, one can unearth sequences and patterns that would be invisible to the naked eye. Tools like Marax’s MARS uses its specialized Reinforcement Learning AI techniques to keep learning from customers and automatically send out the best-fit offer to them.
5. Identify target customers
There are 2 popular methods to identify who should your offers be going to/ the customers that should be receiving your offers.
Propensity Model: Put simply, it is the application of certain mathematical models on user data, to predict whether a user is likely to take some action. The model has existed for years but recent data science techniques have enabled everyone to easily use it with existing CRM software such as RapidMiner.
Users are given a propensity score, based on the action that you want them to take. You can then easily decide whether you want to target those users (sometimes, even at an individual level)
RFM Model: This technique is based on the belief that a customer can be understood based on 3 quantifiable factors:
· Recency: How much time has elapsed since the customer last interacted with the brand (in any manner, including browsing, adding to cart etc)· Frequency: How often has a customer interacted with the brand over a set time
· Monetary: How much has a customer spent with the brand over a set time
6. How to ensure profitability while discounting
A lot of companies believe that discounts equal less profit (or even a temporary loss). This does not have to be the case if your margins are set properly and you know your sales volume targets.
In addition to this, calculate your current customer acquisition cost, and make sure you don’t increase it by much. Some guidelines for this:
· Convert new customers to repeat customers· Maximise a new customer’s spend for their first order
· Push customers to complete purchases from their cart
Remember, you can always make up for a reduction in profit on one product by increasing the number of products sold.
7. Draft your offers
It is finally time to make those awesome offers. Make a variety of offers, for there is no one offer that fits all.
Here are a few tips to help you do this:
· Include additional products or services that complement the original offer. This may or may not be discounted, and will help you drive profits· Decide the maximum discount amount and minimum order value in a calculated manner such that you shouldn’t cut too much of your margins
· Use psychologically proven tips to make customers use offers by adding scarcity (eg. Only 5 items left) or a fast action bonus (eg. Order in the next 30 mins)
You have to also ensure that the right offers go to the right customer. Use tools such as MARS which uses AI to learn from your customers and automatically send the best-fit offer to every one of them.