December 16, 2020

What do challenger brands need to do differently in the new normal? Part 3. Incentivise new customers

In the third post of our series, we look at how to incentivise and keep your customers engaged after purchase.

A number of e-comm brands saw a spike in sales during the first lockdown in the UK, with data showing that 1 in 3 have purchased a new brand or product*. Having attracted new customer, and with the second lockdown expected to cause a spike in purchase, brands need to plan for ways to incentivise and retain them into 2021 and beyond.

Research has shown that over the past few months,  there has been a growth in interest in exploring and evaluating DTC brands – more so than traditional incumbents – highlighting an urgency to explore how to incentivise potential customers, recent first-time purchasers, and long-time customers given the open mindset of consumers With 63% of UK consumers changing stores, brands or the way they shop, advertisers can’t expect that customers will continue to shop in the same way.

Offering discounts can be an effective way to incentivise prospects and existing, but it isn’t the only tactic available to advertisers looking to grow revenue in the long term. Below we explore key activation ideas and when they should be used, but firstly we look at why identifying the objectives is a must.

Identifying your objectives

Before considering ways to incentivise customers, advertisers firstly need to consider what is the key objective and end action desired. Increasing sales revenue will be the overall business objective in the majority of instances, however exploring the objective for each customer group – new customers and existing customers - and what margins are being worked to can help map out affordability for different activation ideas.

Activation vs objectives

Objective: increase new customers

Activation: discounts

Why? New customers may feel cautious about trying a brand they have never purchased from before, so this is often an effective way to introduce a brand to this customer segment. Advertisers can market this across different channels, such such as offering a discount promoted via social media or even an onsite discount exclusive to new members to capture their email address. One way we have seen this be effective is across the affiliate channel, segmenting publishers and activating a specific discount with a segment of publishers. During lockdown we saw phenomenal sales from onboarding closed user groups and activating a discount only available to this subset on one of the programmes we manage - 40% uplift of new customers driven by these publishers who had a discount.

Activation: referral marketing

Why? Harness the power of peer-to-peer recommendation by rewarding your existing customers for recommendations to their friends or family. In Google’s recent research, social proof is highlighted as one of the biases increasing the likelihood to purchase, and a “nudge” from an acquaintance can be a powerful recommendation.

Objective: increase frequency of purchases of existing customers

Activation: discount codes

Why? With many advertisers having an abundance of new customers during lockdown, it’s important to segment these customers and understand how they have since interacted with the businesses. This is an already engaged audience, but ongoing purchases cannot be assumed. Whilst discounts are often reserved for new customers only, nudges via discounts promoted in email increase share of voice within their sector. Where we’ve seen most success is when applying this for specific product ranges or based on certain basket value thresholds - ensuring that margins are maintained for the business.

Activation: loyalty programmes

Why?  If you already have a loyalty programme available ensure your customers are fully aware of the benefits and why it would benefit them to join; visibility of the homepage, reviewing the basket pages or even prompts when capturing their email address can be nudges for sign up. There are many benefits to joining that aren’t discount-led such as points per transaction, increasing purchase frequency overtime and share of wallet as there is an added incentive to encourage consumers to shop with your brand more frequently above competitors.

Activation – exclusive content

Why? Early access to product launches or sales has increased in frequency across advertisers, but another way to differentiate through exclusivity is by providing content. One of our clients has a dedicated Facebook page for their members where they can access video content and engage with other members. It is a high engagement product so is the perfect way to  build a community of like minded people sharing tips and information about a common theme. Actively promoting this via owned and paid channels can provide greater reach to potential new audiences. Advertisers should consider engagement levels from their existing customers first before embarking on this approach. For challenger brands, keeping the brand front of mind through non-sales specific messaging will help maintain brand presence when they are next in-market to explore purchasing again.

With customers more open to discovery and trying new brands, advertisers need to be activating multiple ways to keep existing customers engaged to purchase again. The shift to online transactions means that incentivising customers can be more than a discount - exclusive content, reward tiers/points for purchases, suggested products and consistent, relevant content are also great ways to strengthen the relationship with the customers. Ultimately, brands need to differentiate themselves from their competitors and bring value in ways that work best for them and the customer.

Toni Honey, Group Head - Affiliates

Source:*Ipsos, Tracking the Coronavirus Wave 7; April 29-30

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