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.