It’s the comment we dread to hear from an advertiser: ‘we’re having some struggles internally around the incrementality of incentive sites’.
Admittedly it’s not surprising to hear an account manager from a cashback publisher admit that having the issue of incrementality raised by a client is problematic. While one must respect the thoroughness of the more conscientious CMO with regards to investigating incrementality, it does often feel that the claim that "[insert affiliate channel] doesn’t drive us incremental sales" can often be unfounded and a barrier to genuine progress.
Thankfully, during my relatively short (four-year) period working in affiliate, this concern is raised less and less, which hopefully suggests that the industry is ‘buying-into’ what incentive affiliates can offer an advertiser.
We do still hear the infamous ‘question of incrementality’ bandied about from time to time, though, to which our response has long been: What’s incremental to you? You must work with your network/agency/publisher contacts to communicate exactly what an incremental sale means to your business, and 9 times out of 10 you’ll get a positive response regarding how best to meet your goals.
With that in mind, I’ve noted a few examples below of what an incremental sale might mean to you.
What even is a new customer, anyway? Do you class a new customer as someone who’s never purchased from you online – or someone who hasn’t purchased within the past 6, 12 or 24 months? Your definition of ‘new’ will likely be influenced by your vertical as well as how long your company has been advertising online.
There’s also a school of thought which argues that having new customers does not necessarily equate to more valuable sales. A customer who purchases from you once and never again is a whole lot less valuable to you than a repeat customer who visits you regularly via an affiliate. Advertisers should also bear in mind that affiliate traffic will be surveying offers from their competitors, suggesting that there is (in some cases at the very least) customer loyalty to an affiliate rather than to an advertiser. As Matt Swan of Affiliate Window observes in his latest whitepaper: “The fact that a customer has clicked through an affiliate link is a strong indication that the affiliate has influenced the sale.
“Just because a consumer has purchased from you before,” continues Swan, “it doesn’t mean that they are guaranteed to do so again.” The point I’m trying to make here is that new customers are great, everybody’s seeking them, and some affiliates obviously have some useful mechanics to allow you to skew your incoming sales towards having a larger share of ‘new’ customers – but none of this should be at the cost of overall volume or potentially loyal return customers, in the name of ‘incrementality’.
Put it this way - is a repeat customer, buying from you four times a month, more incremental if they were previously only purchasing once a month before finding the affiliate incentive?
Customers who spend more
Recent Affiliate Window data has illustrated that not only are cashback and voucher affiliates the top two publisher types in terms of volume, but they’re also driving higher average order values (AOVs) than the closest three competitors, suggesting that reward-minded customers can be incentivised into spending a little more:
This is not to discredit the contribution of the likes of the content or social channels, but to illustrate that a key function of reward and discount sites is that they can incentivise greater spends. A simple ‘tiered’ structure which rewards shoppers with a greater advertised rate of cashback/discount in return for spending a little extra is easy to set up, easy to manage, and delivers improved AOV results time and again.
Customers who spend more than they may have been considering initially can offer your brand incremental value – likewise customers who may be incentivised to buy product add-ons, as we can see from this AOV breakdown of the insurance market, where cashback sites rank as one of the highest overall for average spend:
Now it’s obviously quite tricky to incentivise customers to simply spend more on insurance (what are they going to do, purposely buy a more expensive policy just for the cashback?), so what I think we’re seeing here is the results of a fairly recent trend wherein insurers have tapped into the potential of offering higher cashback rewards in return for customers buying extra products alongside their insurance. The likes of MORE TH>N, for example, have previously offered an additional £25 commission, on top of the standard bounty, for customers who take out legal + home emergency cover alongside their insurance policy.
Customers who increase your market share
One of the great benefits of working with reward affiliates is that they’ll be listing the vast majority of your main competitors too – giving them a fairly unique view of your market share and how it may change over time. Many people class an incremental customer as someone who may not have been considering your brand, or who had initially considered a competitor instead.
This is great, not only because it gives advertisers an idea of the scope of available sales, but because it also allows for greater accountability and measurability on the part of the affiliate, who can provide feedback on how promotions are faring against your competitors who may be undertaking in different levels of promo activity.
Speaking of promotions, there are several ways to get ahead of your competitors in this regard – be it through sponsoring category pages or partaking in themed newsletters, or a more aggressive and comprehensive approach, such as retargeting customers who have been browsing or shopping with your competitors through the affiliate space.
Within our own group, we’ve seen some key verticals such as travel, insurance and telecoms getting particularly fierce, not only in terms of the number of listed brands, but also in the number of these brands who want to promote so actively in exposure placements. These verticals are investing in the belief of taking market share from competitors (particularly potential ‘switchers’ in the case of insurance) as incremental activity.
We also commissioned independent research of cashback users, which revealed that 52% of those questioned had used a cashback site to purchase from brands they’d never heard of, and 32% started their research at a cashback site. Putting your brand in front of people who may not have been considering you previously is, well, let’s face it, the foundation of all advertising anyway, but it still rings true across the affiliate space.
Those who worry about incrementality often pull back spend with their incentive affiliates but remain listed, resulting in a higher proportion of sales coming from less incremental positions such as on-site search results. An effective method of finding truly incremental sales is to position your brand in front of people who may not have been considering you.
Sales you wouldn’t have otherwise acquired
Our in-house research strongly suggests that there’s a real benefit to putting your brand in front of browsing shoppers. We saw that, of all the TopCashback members who’d purchased from an advertiser within our fashion category, over 50% of those had already clicked on more than two other fashion brands before their purchase. For members who’d purchased from two fashion advertisers, 41% had clicked on four or more before their initial purchase, and for those who had shopped with five fashion retailers, a healthy 26% had clicked on more than ten other brands.
From this we see that the more ‘savvy’ the customer, the more likely they are to shop around. When promoting with your affiliates it’s important to remember that ‘undecided’ shoppers such as these may make up a considerable portion of the affiliates’ member base and therefore you need to make your customer proposition as strong as possible – as well as your visibility. Being first to be ‘seen’ can mean the difference between making and not making a sale in a competitive vertical.
The same research shows people buying from the top five fashion brands going on to purchase from an average of six other fashion brands. Thus, bigger brands cannot rest on their laurels to maintain sales through brand name or customer searches alone, as there’s a whole vertical of engaged advertisers working to take their market share through increased visibility and strong customer offers.
To summarise, let’s just say that there are plenty of ways your affiliates can offer added value to your programme, be it through discount codes, cashback, PPC, social, content or something else. The main things I’ve tried to stress are having a clear strategy and an open-minded approach towards what your partners can offer, as these are the most beneficial things to growing your sales. In my experience, an open dialogue about concerns and opportunities will always be most prosperous. It gives affiliates an insight into the business mind-set of the advertiser, and likewise lets the advertiser know that the affiliate hears any concerns and can proactively solve them.
There’s lots of ways to measure incrementality, not all of which involve attracting new customers. Some of the best ways of finding incrementality involve getting the most from your existing customers, such as increased average order values, higher frequency of purchase, and upselling of additional products to retain customers.