What's the Catch with Targeted Promotions and Discounts?

Traditional discounting is not enough anymore. If you want to be effective with promotions and discounts, you need to do it in a way that maximizes the chances that customers will take advantage of your offerings. In the end, a discount is not picking up goods for free – the customer has to pay for your products, and he or she may be unwilling to do so (especially if they don’t need it at the moment). 

Cookies traversed the kitchen’s realm and moved on to become an essential element of the digital world. By using cookies, websites can non-stop collect information about users.  Nothing can hide from them – visited websites, search content, clicks, and other activities; it’s all for cookies to see and analyze. This is where targeting comes into play. With valuable information about customer preferences, attributes, and behaviors, online sellers can use personalized promotions to target specific customer profiles or segments. 

What are targeted promotions?

Targeted promotions focus on adjusting the shopping experience for customers at different stages of the sales funnel. Such promotions can help you drive sales conversions, boost promotional ROI, generate more valuable leads, and create a competitive advantage in a cut-throat e-commerce environment. 

While multiple businesses invest up to 25% off their marketing budgets into promotions, the sales results are often disappointing. Targeted promotions are nothing new in a retail landscape – I can still remember zip-code based printed coupons that you could get at shopping mall ora daily paper. But, thanks to the rapid digitization of marketing technology, modern targeting goes well beyond zip codes. With the retention culture and customer information availability on the increase, modern marketers now turn their gaze at customer-centric promotional objectives and targeted promotions. Instead of one-size-fits-all promotional activity, marketing teams armed with relevant customer data can now base any promotion type such as discounts, loyalty, and referral programs on customer attributes and preferences. For example, instead of offering a 24h flash sale for all customers, only loyalty program members can take advantage of this offer. 

You can target your incentives in four ways:

• Based on customer attributes.
• Based on seasonality and special occasions (birthdays, anniversaries).
• Based on offered promotion (discount on favorite products).
• Based on the delivery channel.‍

‍Are targeted promotions beneficial to your business?‍

Targeted promotions not only increase the likelihood of attracting customers, but they also open up new avenues for promotion tracking – a key ingredient to any promotion success. Thanks to adopting customer-centric, instead of product-centric approach, promotions effectiveness can be measured in three additional dimensions:

• Customer-specific business objectives related to brand awareness and audience characteristics. 
  

• Geo-marketing analysis based on responses to promotion in selected regions. 
  

• Channel efficiency with a direct email or SMS messaging. 
  

Using lifecycle marketing to target promotions

The key objectives of lifecycle marketing are informed and shaped by targeted promotions. Every lifecycle marketer’s goal is to adjust the company messaging and offering to each phase of the customer journey. Most businesses follow a similar model of a customer journey that begins with the collect phase (attracting customers), convert phase (encouraging purchase), and retention phase (creating additional value and brand advocacy). 

Each of these phases is a perfect target for personalized promotions. However, as suggested by Stanford and Chicago Universities research, promotions have worked the best with customers who haven’t been to a website lately and have to be reminded about the store offering. 

“The offers remind the consumers of the products available on the platform, which increases their spending on it.”

To target customers on different stages of interacting with your brand, you can think of introducing three types of targeted promotions. 

Target Visitors and New Customers

The life of a marketer is tough. No matter your offering, most visitors (>90%) will not convert (purchase from you) on their first visit to your store. However, since they have already visited your store, encouraging customers to sign up for your newsletter to collect email addresses is a fantastic idea. Then, in the next stage, you can target these customers with personalized and exciting promotions with high perceived value and lax redemption requirements.  

For instance, you can offer a 15$ discount on the first purchase for all customers who register with an email address to let customers save money with your brand from day 1. 

Tips:

• While asking for customers’ email addresses, strive to keep the registration form as concise as possible. At this stage, you don’t need customers’ full name, age, or location – skip these points and get straight to the point.
  

• To increase the ROI from this kind of campaign, you can introduce a minimum order value eligible for the discount. 
  

• Monetary discounts are more transparent to customers than percentage offers. 
  

Target Repeat Customers

A dream come true for any marketer is a customer returning for more – a living proof that your marketing and sales strategies are working. Repeat customers are much more likely to purchase from you. Therefore, you should use sales-driven promotions that speed up the purchase process. To achieve this effect, you can offer attractive “thank you” discounts or a never-failing e-commerce strategy of adding a free shipping option to order above a predefined price. 

Here,we wrote about the psychology behind free shipping.

For instance, you can offer a 10$ discount on products from the customer’s favorite category or related to previous purchases. If customers make an order above 89.99$, add a free shipping option to sweeten the deal. 

Tips:

• Use CRM data to come up with targeted discounts tailored to selected customer profiles. 
• Include time limitations to increase the sense of urgency and scarcity. 
  

Target Dormant Customers

You can’t escape pesky one-time visitors, cart abandoners, and customers who simply disappear from your radar after making one purchase. That’s just bread-and-butter of sales. But, it doesn’t mean that you can’t target them effectively and bring back at least a piece of revenue that otherwise would be lost forever.  

For instance, offer an attractive discount (something too good to be true) to make them reconsider doing shopping with you. 25$ off all orders above 50$ with free shipping is a great reason to come back. 

Tips:

• Add automatic email reminders to your offer that are going to sent every week for four weeks. 
• Customers who left your brand are an invaluable source of information on how you can do better. Consider sending a survey with questions about why customers decided for another offer and reward their answers with targeted promotions. 
  

Customer attributes you can use to target promotions

Below, you will find a list of customer attributes that are a perfect fabric to tailor targeted promotions. 

• General customer attributes (gender/age group)
• Location
• Propensity to purchase
• Loyalty level
• Order history
• Occupation
• Marital and family status
• Favorite products and product categories
• Customer behavior 
• Interests and hobbies
• Browsing history
• Education level
• Ethnicity
• Lifestyle
• Values
  

Of course, before collecting any of this data, you need to ask for customers’ explicit permission to do so. Keep in mind that intrusive targeting is not only like shooting yourself in the foot, but also illegal. 

These are just a few ideas to help you get started with targeting promotions. If you want to dive into increasing customer engagement with personalized discounts, make sure to use the right promotional tools that are powerful enough to help you achieve your business goals. The trick is to find a targeting solution that can cover your business objectives from start to finish, decreasing wild personalization and maintenance costs.

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