Shopper Discounts Explained

Retailers give discounts to shoppers to nudge them to buy. On the face of it, one would assume discounts are the best way to improve conversation rates. But, it’s being done so much shoppers have become desensitized by discounts.

When buyers see that an item has been discounted $50 they disregard the discount amount and just look at the final price. So, whether the markdown is $2 or $50, it’s not taken into consideration, it’s ignored.

The solution? Grab the user’s attention by explaining why the discount is being given.

When you offer the shopper an explanation for why something has been discounted, it not only gets read, it improves conversion rates.

Check out the example we threw together for you below (we added the text why we’re discounting $36):

Discount_Explanation_Blog_Sample_A

When “Why we’re discounting $36” is clicked we’ll show this popup message:

Discount_Explanation_Blog_Sample_B.png

Active Versus Passive Marketing

There are basically two types of marketing: passive and active. Passive marketing is bottom of the barrel marketing where one is simply keeping up with competitors or implementing ideas based on internal pressures. For example, if your CEO asks to increase email channel sales contribution from 5% to 6% and you respond by increasing email messaging frequency by 20% then you are a passive marketer. An active marketer is someone who would take that CEO directive and improve Average Order Value without increasing send frequency.

I was reading an article about the success of the Starbucks app and that story nicely illustrates this point. Let’s look at two scenarios:

Passive scenario: (Made up example) Starbucks launches their app and sends a press release touting the fact that 14 million customers use their Starbucks app every week. This is the so lame, Starbucks has over 100 million customers and if 14 million use the app once a week that means nothing. Basically, the app is leveraging existing demand. If the app created new demand, now that would be impressive.

Active scenario: Starbucks launches their app and sends a press release that talks about how their app uses personalization. Their personalization algorithm uses weather and time of day data to make offers. It could offer a discount for iced coffee when it’s unexpectedly hot outside. Or, if a customer aways gets just one type of coffee the app could make a special offer so the customer can be marketed a higher margin item. This is a great example of active marketing because Starbucks app has taken a situation where the customer might not be actively thinking about getting a Starbucks and nudged them in that direction.

Looked another way, active marketing is when you are able to take a customer who doesn’t want to take an action and gently convince them otherwise.

What type of marketer are you?

Amazon.com Vs. ______.com

5 years ago an online retailer that had their own site but also listed on Amazon would see like 10% of sales come through Amazon. Today that number is more like 60%. Naturally, some retailers have decided it’s not worth competing and taken their focus entirely to Amazon. They either close their site or significantly minimize their attention to it since it’s not driving as much revenue.

I’m not sure if that’s the right call.

Amazon has some disadvantages. The biggest being that Amazon product pages have to be formatted pretty much identically. Product description is basically a list of bullet points. That means you can’t weave a compelling story on your Amazon product page.

Here is what I think is happening. Your potential buyers either discover your site first or are on Amazon, discover your item, check out your branded site, and then buy on Amazon. But the point is that a big percentage of your first-time buyers on Amazon did indeed visit your site. Just because they ultimately purchased the product on Amazon after spending 12 minutes on your brand site doesn’t mean Amazon should get all the credit. Even if they love your site they might prefer to buy from Amazon if they have Amazon Prime (and nearly 50% of American households do).

How can we know for sure that your branded site is influencing Amazon conversions? Glad you asked. One idea is to focus your PPC on a specific city (for example Austin, Texas). Boost your ad spend in this one city for a time period (based on purchase cycle for your product). Then go to Amazon and see if there was a proportional uptick in Austin orders. If there was it proves your site plays an important role in driving Amazon sales.

Think Different

1: Brick and mortar retail is really cost intensive.

2: Brick and mortar retail can’t compete again Amazon.com.

3: With brick and mortar retail one has to sign long-term storefront leases.

4: Enter Bulletin (bulletin.co).

5: Bulletin takes the flexibility of ecommerce and brings it to brick and mortar world.

6: The advantage of a retail store is the idea of unexpected discovery. Online, if people don’t think about searching the product you sell then they’ll likely never find you. Few examples: gelpro.com, skiersedge.com, excaliburdehydrator.com and pitbarrelcooker.com.

7: With Bulletin any of these retailers could rent space at a Bulletin store and allow shoppers to stumble and experience their product.

8: And it’s just like your own online store. If someone buys your pit barrel cooker from a physical store you will get that customer’s info. So you can manage that relationship moving forward.

9: Basically, ideas like Bulletin are helping take brick and mortar from being an inflexible high fixed cost model to highly flexible utility like solution.

10: Expect a lot more innovation in this space.

Why Curiosity Matters

Bob Moesta is a curious person. He was involved in home building and selling condos. His condos were designed based on the stated needs of their target audience (ranch style, 2 bedroom, 2.5 bath, granite countertops, hardwood floor, etc.) But still, a big percentage of interested people didn’t pull the trigger.

Bob wanted to understand why.

He discovered people who were moving into this condo were moving from bigger homes and were anxious about the downsizing process. They simply didn’t know how to pack up 20 to 30 years of stuff that had been collected. Important, nostalgic stuff. They didn’t know how to purge collected memories. So people would say things like, “Boy, we don’t know how we’re going to downsize. We’ll need to cancel on the condo because we need another year to figure out how to downsize”.

Here is what Bob did: he raised the price of the condo and included (in price of condo) moving plus 2 years of storage. Result? Sales went up 17%.

Be more like Bob when thinking about your ecommerce business.