Show Me The Data: What Are You Teaching Your Customers?

Jun 03, 2008 2:02 AM  By

Want to boost your quarterly sales and help your margin? Give your customers a special offer. But wait until you’ve tested their reaction.

You might be teaching them not to buy from you instead of motivating them to buy more.

Consider two marketing programs, one offering a one-time great deal on items in your catalog, the second a series of offers in a succession of books. I have seen topline test results for one category of consumer merchandise that suggest that the outcomes of these campaigns can be significantly different.

For the first program, if you have not previously made a special offer to your customers, they can receive your offer with a sense of being rewarded. You are recognizing their loyalty or high purchase rate with a discount on what they already like to buy. They are likely to not only buy in response to your promotion, but also to have a higher average order size and buying frequency for some time as a result of the impression you have given them.

For the second program the first promotional offer might well generate a feeling of being rewarded. However, receiving another promotional offer the next month will demonstrate that your program is not a reward for loyalty but the start of a series of percent-off or dollars-off offers just like those of many other direct mailers. The special impression communicated by a single offer will have been erased.

The evidence I saw showed that the one-time offer had a tail of higher average and more frequent purchases while the two offer program was followed by lower average and less frequent purchases. This has led me to consider that as of the second mailing in the series the marketer had already taught the customers that they can expect even more discount offers. The customers’ motivation to take advantage of the limited time reward offer is gone.

The singular or multiple nature and timing of promotional offers to your customers might send the wrong message. While the outcomes I mentioned might not occur for your customers, you should test both programs by mailing to small but statistically adequate samples. That way you won’t teach the wrong lesson to too many customers if my conclusion is right. And, you might find a way to teach the right message to those you truly do want to reward.

Bill Singleton writes “Show Me The Data” each month for Lists and Data Strategies. He is a Manager of Analytics and Consulting Services at The Allant Group in Naperville, IL. He can be reached at: bsingleton@allantgroup.com and 630-579-3448.