Effective Offers Companies Use and Why

In the past blog post, I wrote about a couple ineffective offers companies use to increase their revenue, so now I will write about why some offers are effective.

According to 14 Ways to Use Offers, Coupons, Discounts and Deals to Drive Revenue and Customer Loyalty when creating an offer for customer companies must consider their brand strategy because higher and frequent discounts creates a lower end brand whereas infrequent discounts and exclusivity creates a higher end brand.  To ensure offers remain consistent with the company's brand strategy companies should choose a goal, start small, and measure the results with every offer. Ultimately, effective offers should be those that indeed increase sales but also creates loyal customers all while being aligned with the company's brand.

From the 14 posed in the article cited above, most of them were effective and commonly used.  Those that stood out the most to me since I have been influenced by them myself are:


Referral 

This offer has been used by companies for a long time.  It consists of attracting a new customer and getting them to get another person to use to product/service the company is offering all while providing an offer to both parties. The offer to both parties is what drives the referral offer.  It provides a discount for a customer to essentially increase their customer base and revenue.  Also, the person that gets referred is incentivized to try the company because of the discount, but because the referring person is usually close to the person getting referred there is a great chance that they will try the company, if they truly liked it. Companies I've seen use this DirectTV, Uber, and Airbnb. 

Personally, I have used this offer because of it's ease of use.  All I have to do is refer a friend! When I used to referral offer with Uber my friend and I were traveling together to our destination. I sent her the referral afterwards, which she used to get back home from our destination.  Since she used Uber after I referred it to her, we both got the offer.  By doing this, we both rode the Uber together and were able to get the offer easily.


First-Time Shopper Offer
This offer essentially rewards customers for taking the risk of trying something new. Customers appreciate this greatly because they feel like the risk is somewhat eliminated and impulses them to buy something at least just to try out the company's product and/or service. I've experienced this with JustFab.  When I created an account, they sent me an email with the offer seen below.  When I received this I felt an even greater urge to buy something because I feel like I was getting a great deal. ($19.98 for a pair of shoes!) I ended up buying primarily because of the time constraint. It ended up being a good buy because I liked many of the shoes they had. Being able to try a pair for a cheaper price to see if the quality was good was important for me and gave me a better impression of the company.




















Volume/Cart Size Offer
This offer encourages customers to buy a little bit more in order to receive a discount or free shipping. The article claims that "a strategic way to incorporate this into your online store is to calculate your average order value for the previous few months and offer a discount or free shipping on all order 10-20% over your average order value."  This offer isn't really about enticing and retaining customers; it's more about increasing revenue.  It works because customers always want to get a discount, even if it is just 10%.  Especially when customers look at their cart and only need a few more dollars to receive the discount they feel a greater urge to add something else just to receive the offer. Amazon does this, and I've been enticed by the offer many times. I usually see that the offer to get free shipping is given when the order is at least $35. By placing a minimum amount, Amazon is attempting to ensure that their customers spend at least that amount every time they order, which ultimately increases revenue. 

Yes, all of these offers are effective because they increase sales and attract customers, but what makes them the most effective of all is that they are easy for customers to get without having them feel harassed.  Instead of companies bombarding customers with email or incredible promotions, companies are enticing customers to spend more by offering discounts they just can't resist. Companies just put the offer out there and customers are left to decide whether or not they want the offer, which customers appreciate and boost the each company's image.

Ineffective Offers that Companies Use and Why

We all receive millions of marketing offers by all kinds of companies every day.  Because there are so many, there are only a few that we really register as consumers.  I found this article called "14 Ways to Use Offers, Coupons, Discounts and Deals to Drive Revenue and Customer Loyalty," which lists various kinds of marketing offers companies use to entice consumers to buy their product and even remain as loyal customers.  The author discusses the pros and cons to each offer and companies use them effectively at increasing sales. I found this article extremely useful in understanding the company perspective, but it failed at discussing the effectiveness of each offer.

All of the 14 offers listed are commonly used by all kinds of companies, but I will be discussing some of the most ineffective ones and some of the most effective ones.

Email/Newsletter Subscription Offer
This kind of offer sounds good in theory because you're able to get your customers' email and communicate with them directly new products and provide them additional offers.  What happens in reality is that all kinds of companies begin doing the same and your customers are getting bombarded by emails. The strategy you thought would increase sales and get you closer to your customer doesn't work as nice as you thought it would because your customers prefer either not to provide an email any more or they provide it but don't read the emails.

Personally, I provide my email to almost every store that asks.  This isn't because I'm sincerely interest in receiving their offers but because I don't want to feel like I'm being rude.  I also know that I'll be receiving many daily and weekly emails from all these store that ask for it, which prompts me to never read them. I just check them and mark them as 'read' without even opening them.  I'm sure I'm not the only one that does this.  I've heard of people creating an email just for these promotional emails and of those that refuse to give their emails.

I know some companies have taken measures to improve the customers' ability to control the number of emails they receive by allowing them the option to reduce the number of emails or disable them entirely, but it's still useless. The emails are still too general and don't provide an incentive to be opened and read.  A solution to improve this approach would be to customize these emails based on what the customer purchased when he or she provided his or her email. This make the customer feel like the email is especially for them, thus providing an incentive to be opened.


Influencer Offers (Bloggers, Celebrities etc.)
Influencer offers are explained as being beneficial for companies because these influential people they partner with have a large audience that works perfect for companies to increase their brand exposure. Additionally, they offer the person's network specific offers to convert those fans into customers.  This offers is beneficial for companies especially when the product is new and unique. When customers see a celebrity endorse a product they have never seen before, they are willing to buy it because the endorsement seems genuine.

It's until the endorsements are repetitive and common that this offer strategy becomes ineffective.  Recently the products have been waist trainers, teas, and vitamins. Customers can tell that these celebrities are being paid to promote the product and that they don't really use it.  I see this mostly on Instagram.  Celebrities, like the Kardashians or Teen Mom stars Chelsea Houska and Jennelle Evans, post pictures of a product they supposedly use and like, but when multiple celebrities are posting about the same product, credibility decreases.  It's obvious that the company is seeking to get their product endorsed, so as a customer I wonder if these celebrities have really tried the product or they are just getting paid to post a picture with it on Instagram without even trying it.

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  Using emails/newsletter subscriptions and influencers to promote a product or increase sales isn't entirely ineffective or else companies wouldn't use them.  From those listed in the article "14 Ways to Use Offers, Coupons, Discounts and Deals to Drive Revenue and Customer Loyalty," these are the most ineffective.  These offers prefer to reach a mass amount of customers over customizing to a few probably because the product is new, in a niche market and/or hard to differentiate. The problem is that customers want to feel like they are receiving a unique service and these offers don't do that, thus not leaving a positive, long-lasting impression on the customer. It might be better to try the effective ones primarily, which you can check out on my next post.

3 Steps to Finding the Best Flight for You

Searching for flights is so easy now because of how widely used airlines are and the wide variety of sites used to book them. It's choosing the best flight for your wants and needs that’s difficult. There are just so many options to choose from! Despite there being so many, airlines have been able to differentiate themselves to different target groups by either offering an expected or augmented product. You just have to know what target group you belong to. Here's how you can find out.

1. Know your restrictions: budget, travel dates and times, and/or destination.

Having an idea of either what your budget is, travel dates and times, and/or destination before you begin researching helps to narrow down your search. Having too wide of a search becomes stressful and overwhelming because of the amount of options there are to choose from.

2. Know your wants. What is most important to you during your flight?

Do you just want to get to your destination? Do you need to eat on the plane? Are you traveling with a lot of luggage? Do you need space? Entertainment? Airlines have so much to offer to those who want them, but there are also airlines who dont offer much to those who don't require them. This step lets you know which airline would suit you best.

The product levels, according to the Customer Value Hierarchy, are seen in the image on the right. The core benefit of an airline is transportation to your destination. The basic product would be seats, storage to place your belongings, and arrival to your destination. It's after the basic needs that differentiation occurs different ways to accommodate different needs. The expected product offers features and qualities you would normally expect when buying the product. For airlines this would be on-time arrival, good customer service, and safety. The augmented product offers additional benefits that would exceed the customer's expectations. This would be the addition of dinners, entertainment, amenities, etc. While it may seem that most people would want the augmented product, airlines have capitalized on the fact that not all people do. Some are willing to exchange the added benefits for a cheaper price.

With the expected product travelers would expect on-time arrival, good customer service, and safety. These travelers are usually on a budget and traveling light. Airlines offering expected products are Ryanair, Transavia, Southwest Airlines, Easy Jet. These budget airlines understand that their customer target group are those travelers that are on a budget, so they offer a basic flight to their destination. This means no amenities or "free" offerings during the flight, and tight restrictions on the amount of luggage allowed in exchange for a lower cost.

On the other hand, those airlines offering the augmented product can provide: 

• tea and coffee at the gate
• newspapers
• entertainment
• “free” and actually delicious, warm food
• blankets and pillows
• headphones
• other amenities for overnight and lengthy flights
• extra bathrooms
• extra space in first class seating

The list could go on and on (for an extra charge per ticket of course). Airlines offering augmented products are Lufthansa, Iberia, British Airways, American Airlines. These airlines understand that their target groups consists of travelers who care more quality of the experience over the budget, so they offer all of these added benefits to differentiate themselves from other airlines.

3. Research Research Research.

Once you know your restrictions and wants, you can conduct research specific to your restrictions and wants. Extensive research is super important in knowing whether you are paying too much or getting a nice deal on a flight. Since you already know what your budget, travel dates and times, and/or destination are, you will be able to focus your search on the aspect you have chosen and narrowing down your search. Also, you will be able to change some aspects you know you're flexible about to see if you can get a better deal. 

For example, if you have a budget of 100 euros to get to Paris from Madrid but have flexible travel dates, you could search which day out of the week would be cheaper for you to travel. It's all about the amount of research you do to ensure that you find the best option for you.

Airlines have done a great job at targeting all types of segment groups - those who just want to get to their destination fast, those who want something cheap, those who want to travel comfortably, etc. You must know what segment group you belong to before conducting research because, if not, you'll get stuck with information overload. Before purchasing your ticket, remember the 3 steps to finding the best flight for you: know your restrictions, know your wants, and research, research, research!