ca. 30 Minuten
nach Wunsch auch mit VideocallChristmas is not just the time of mulled wine, cookie baking and decorated city centers, but also the time when retailers are fighting more than ever and more visibly than ever for each and every customer. A tried and tested remedy, above all others today as well as ten years ago seems to be: discounts. But where is the line drawn between meaningful acquisition (a.k.a. persuasion) strategy and dangerous margin mutilation? We look at what methods are available to you, as a seller, to tip the scales in favor of the first.
Classification: general approach vs. direct approach
Of course, an essential aspect of the question of how you can use discounts sensibly from the start is to use either a general approach (e.g., on the generic home page of the online store or the sales shelf in the store) or a more direct approach (e.g., in marketing emails or smart content for logged-in online shop visitors). In this article, we focus on the latter: the optimized use of discounts and other benefits in the direct customer approach.
The Key: Sensibly Differentiating Customer Groups for Your Offer Strategy
Of course, the key (as with most other marketing topics) again lies in meaningful customer segmentation. To send the same newsletter with the same offers to all customers is, in times of AI and high-performance database technologies, not been popular for a long time – and anyways, it was never really very purposeful. But how can meaningful segments be formed for a solid offer strategy?
Before you look at the segmentation levels of age and gender as well as purchase history and product preferences, take a moment to subdivide your client portfolio at a higher level – in the given context of discount offers. This is your guide to the question of which offer strategy to use with which customer.
From our experience, we can say that in the customer base of most sellers the following four types of customers can be isolated in not too small numbers – we summarize for you a brief characterization as well as starting points for the right offer strategy:
1. The Opportunist
The opportunist is rarely a regular customer anywhere, rather, they buy whenever they get a coupon from somewhere – and wherever that coupon takes them.
The good news: The opportunist is easy to convince. Send them a coupon and they will most likely buy.
The bad news: With long-term loyalty strategies, you usually do not have to worry too much – chances are low. The question is also whether the opportunist will even buy much beyond the coupon value.
Here's how to find them: You have various ways at your disposal for this – depending on how exactly you want to define your segment of opportunists. E.g., isolate the customers in whose orders the coupon key is never zero or simply set your segment criteria based on discount rate: If it's always >0%, you have reeled in your opportunists.
Your offer strategy: We already gave it away – send them a coupon! But beware: It is advisable to think carefully before addressing an opportunist segment, whether an investment in this type of customer is really worthwhile. Targeted exclusion from campaigns may be the better strategy here.
2. The Penny Pincher
In contrast to the opportunist, the penny pincher can certainly be a regular customer. But they are always looking for discounted offers and in many cases only buy if they find one.
The good news: They are also easy to convince – with special offers of all kinds. Three parts for the price of one, 50% discount on product category X, 10 € gift for an order value of 50 € or more.
The bad news: With the penny pinchers, you deliberately choose to reduce your margins. But that can be worth it, because you can also possibly lock in the penny pincher long term with measures of this kind.
How to find them: Quite simply: via the discount rate (for example, > 50%).
Your offer strategy: See above – send discount offers, convince to buy, lock in long-term loyalty through positive experiences regarding their discount affinity. And also beyond discounts: In addition to the discounted products, it is best to always offer non-reduced goods on the side – if these products are particularly well matched to the customer's purchase history, you may already have your migration strategy and reduce the penny pincher’s discount rate over time.
3. The Big Spender
This customer type does not look so much at the price and they certainly do not look at discounts – they like to buy at a high-price. Also, they certainly have the potential to become long-term top customers.
The good news: You do not need discounts to bring this customer to a buy. Your margin is happy!
The bad news: The big spender is not necessarily the most reliable (= most predictable) customer. But they can be.
How to find them: Through the ø sales per item – depending on the price level of your assortment. If necessary, set a specific threshold for the discount rate in addition to that.
Your offer strategy: Stay away from special offers! Be sure to use the big spender to pamper your margin, because as we know, not all customers allow that to happen. In other words, here you balance out what you invest in the penny pincher. In addition, the big spender is happy about offers that meet their needs: Tune the products carefully based on their purchase history and don’t hesitate to use products with higher price tags.
4. The Reliable One
The reliable customer type is probably your favorite. They'll buy anyway, no matter what you offer them. If in doubt, they even come to you if you do not communicate with them at all (beware, this is not a tip! Of course, a proper communication is always the basis for a long-term commitment).
The good news: You do not need discounts for the reliable one to buy.
The bad news: Doesn’t exist.
How to find him: Combine the number of orders with the days since last order as your business model dictates (e.g., number of orders > 5, days since last order < 30). Also, limit the order date to a certain period of time to make sure that the purchases are not too far in the past (and correspondingly have large buy-back periods).
Your offer strategy: The key lies in coherent communication that is well-tailored to the customer. You do not need any discounts to convince them (so you can get your margin out of them with a good product selection), but they'll be glad if they do get them occasionally. Do them the favor – they are worth it.
...and on top of that: The Arbitrary One
Of course, this customer type also (and especially) exists in large numbers. In terms of offer strategies, they form the great other beyond the types of customers listed above.
It is best to build a series of test scenarios around the arbitrary ones that increase the likelihood of soon being able to assign them to one of the groups described earlier. Beyond that, the only conclusion is that this type of customer does not play any special role in communications being part of particular offer strategies, so you can just include members of this group in your regular communication based on customers’ demographic data, purchase history, and product preferences without special thinking about discounts and coupons. (Of course, here and there with a (preferably margin-protecting) special offer in between – one would like to keep these customers happy one way or another.)
Wonderful! But how Does it Work?
As always, the basic requirement for such strategies and their implementation is one thing above all others: a comprehensive and flexible customer segmentation which not only considers the customer's master data, but also their purchase history (and preferably their journeys). The segments formed with such a tool then let you implement all the information you need in the system of your choice (for example, your email marketing system).
The good news: With minubo this is now even easier than before. Not only do you have comprehensive and flexible customer segmentation, but also, you can now export your segments more easily and fully customized to your needs: using the export tool, you simply set up a (one-time or scheduled) export where you select all required key figures and attributes, and load your data on your computer as a CSV file or directly into your operating system via an established interface (such as pet online retailer ZooRoyal, a subsidiary of the REWE Group – read more in our Success Story).
Good luck with the implementation of our tips – we look forward to your feedback!
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