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Promotions remain one of the most effective tools for maximizing eCommerce revenue and boosting customer loyalty.
Promotions not only attract new customers but keep the existing ones engaged and loyal to your business.
Recent studies show that 80% of consumers will purchase with a new brand if they provide some form of offer. However, firing out discounts without consideration will generate some nasty after-effects. These include:
- Conditioning customers to expect discounts
- Failing to cater to individual interests by giving every customer the same thing
- Generating streams of unprofitable sales
To avoid these situations, retailers should aim to use promotions in a smart and targeted way. That means using promotions management strategies containing clear goals, sustainable tactics, and a solid reporting framework to outline what works.
There are many different eCommerce promotions management strategies out there, but they are all backed by the same vital ingredients. Let's explain a bit about what those are.
What is an eCommerce promotions strategy?
"An eCommerce promotions strategy is a comprehensive plan that outlines how a business will use special offers, discounts, and deals to attract and retain customers."
The strategy itself is not just about slash-and-burn pricing. Conversely, it is a thoughtful approach to value proposition. It encompasses everything from understanding your audience's motivations, capturing their interest with relevant deals, and earning their long-term loyalty.
If you're wondering whether your promotions strategy is fit for purpose, ask yourself the following questions:
- Do your promotions feed into your precise business goals, or are they simply designed to increase revenue?
- Have you ever wondered if your Black Friday sale generated a profitable outcome?
- Do you run promotions without the data to support whether they give you the best results?
An effective eCommerce promotions management strategy removes these grey areas, enabling you to maximize conversions, raise your average order value (AOV), and maintain a steady stream of profitable sales.
And who wouldn't want that?
What defines an effective eCommerce promotions strategy?
If we were to study some of the best promotional strategies, we would see plenty of common themes. If you have one of these already, you're ahead of the game.
Flexibility
Not all of your promotions will work. You have to be willing to head back to the drawing board to create different versions of offers, or switch to something else entirely.
The idea isn't to invest all your time in creating a single promotional event – it's to lean on the data to determine which event works best.
Personalization
Abandoning the one-size-fits-all approach means becoming more targeted. For that, you'll need personalized offers.
Many retailers now serve promotions based on cart contents, past purchases, recently viewed products, and more.
Boston Consulting Group believes personalized offers will unlock an extra $70 billion in retail revenue per year. Take a slice of this pie by giving your customers offers that genuinely reflect who they are and what they're buying.
Continuous optimization
Lastly, you should be willing to monitor your results regularly to optimize your promotions, doing more of the things that work and less of the things that don't.
Technology can assist you on this point. Nowadays, it's common for brands to run an A/B test between two different offers and automatically push the one that converts the best.
All understood? Now it's time to build an effective promotions strategy.
#1 Start with your goals
Before starting any promotional activity, it is essential to set clear goals for them.
Some of the most popular include:
- Increasing sales
- Moving excess inventory
- Landing new customers
- Growing AOV
- Reducing abandonment
- Increasing email sign-ups
- Boosting customer lifetime value (LTV)
Once your goals are established, it's far easier to create promotions that return meaningful results.
#2 Target specific customer segments
Now you have your goals, you'll need to find the types of customers that can drive them.
At this stage, we're looking at specific shopper profiles as well as key situations where promotions can feed into your goals. Let's see how we'd go about driving some common retail challenges.
New customer acquisition
Starting simple, we identify new customers by seeing which do not have an account registered to their email address and issue a discount on their first purchase.
Existing customers, i.e. those with an account, should see different offers to avoid frustrating them with discounts they cannot redeem.
Growing AOV
Make your customers more valuable with a conditional 'spend and save' promotions. For this, you simply use the customer's cart value to push them up to the next level of spend.
Here are some tiers and customers to target:
- Cart value: Under $25
Offer: 'Free delivery on orders above $25'
- Cart value: $25-$49
Offer: 'Get 5% off when you spend over $50'
- Cart value: $50-$99
Offer: 'Get 10% off when you spend over $100'
Reducing abandonment
Most visitors who abandon your site will show some type of signal before they do. An exit-intent offer can keep more customers on your site by reacting to these signals the moment they happen.
Tell-tale signs of abandonment include mouse movements to the close window button, the copying of product names, and the opening of new tabs. When this happens to a customer you want to convert (e.g. new, high-value), you should serve an offer to remedy the situation.
Targeting your promotions towards specific customer segments can drive your goals without giving away discounts when you don't need to.
#3 Analyze and refine
Analyzing the effectiveness of promotions after running them is essential.
There is no set formula for how often you should check your progress. The only golden piece of advice is to ensure you are quick to make changes once you have gathered enough data to make reasonable conclusions. If an offer is performing well, make sure more of your audience sees it.
In terms of performance analysis, naturally you should focus on the metrics outlined during your goal-setting phase.
You should also pay attention to which offers serve a specific function. One promotion might convert customers at a high rate, demonstrating a potentially bright future within an exit campaign.
Another might be better at stretching spend, so consider its place in the customer journey to catch customers in the purchasing mindset.
As you dial up the analysis and intelligence, prepare to see better results. Take the example of beauty brand Navy Haircare. A year after launching its first personalized offers via RevLifter's intelligent offer platform, the brand saw +130% revenue and +21% AOV by continuously monitoring its results and optimizing its promotional strategy.
Conclusion
Effective promotions management is critical to the success of any eCommerce business. Without it, you risk firing out promotions without caring for your customers or margins.
By setting clear goals for your campaigns, targeting specific customer segments, and making time to analyze and optimize off the back of your experiments, you will soon reach your promotional potential.
