Price as a reflection of value is an ever-present consideration for affiliate managers.
It’s well established that consumers are driven by a saving, which is why most deals exist in the first place. Nevertheless, it is neither sensible nor viable to keep slashing prices to the point of complete margin erosion.
Smart brands adopt a strategic mindset to hit a balance between value and ROI. As for the real trailblazers, they appreciate that increasing the discount isn’t the end game of incentivisation. Rather, it is one piece of a much bigger puzzle that deserves far more attention that it currently receives.
Nine is the magic number
From my years of experience in the affiliate channel, most of which have been split between a coupon publisher, and RevLifter, I’ve been privy to many conversations over what makes a truly great incentive.
From countless meetings, articles, events, and award judging processes, I know that in most cases, the principle considerations are brand equity and the depth of the discount. I don’t doubt the importance of both. However, I do believe that by failing to understand the factors that lead to a deal being used or ignored, we’re limiting the potential of a crucial tool in the marketing arsenal.
I’d relish the moment that we analyse incentives in the same way that we pore through the language of our social posts and retargeting. The fact is, very few brands take a strategic, data-driven approach when building and optimising their deal-based efforts. Campaigns can fail to truly align with a customer’s motives, interests, and behaviour.
Numerous studies have hinted at the benefits of a more in-depth understanding of price and deal psychology. In 2003, the University of Chicago assessed the inclination of a consumer group to purchase an identical item sold at $34, $39 and $44. Familiarity with the number nine from years of buying goods at $0.99, $1.99 and endless other variants won out. The $39 price was the midpoint in terms of value but the best at driving sales.
It’s been a while since we’ve seen a new ‘left-digit effect’ – the reason why $5.99 appears more attractive than $6. Still, I’m convinced there is so much about deal psychology we’re yet to uncover, and the missing piece is hyper-personalisation, based on variations in consumer behavior.
At RevLifter, a fundamental aspect of our learning process involves running different types of promotions alongside each other to see which resonates in certain scenarios.
A/B testing has been a game-changer for retailers with the ability to serve offers on-site, usually in response to key challenges like cart abandonment and upselling. We’re amazed at which incentives tend to resonate the most.
For example, a retailer may consider two offers: “free shipping” or “10% off for new customers”. The second offer might prove far more expensive than the first. But would it be more effective? The timing and location of the offer could have a marked impact on sales. Plus, while some customers are happy to add more items to take advantage of a bigger discount, those with smaller carts may be content with a more basic deal.
It’s the same quandary that surrounds the effectiveness of a time-sensitive “10% off” against a “take 15%” code with a much longer shelf life. Smaller discounts with an expiry tend to drive better responses than larger evergreen discounts. Oddly, I’ve found great success with “13% off” promotions – the lack of a round number making the offer more noticeable and less likely to succumb to deal fatigue.
Takeaway pizza companies are known to work with completely different vocabularies. Should they advertise ‘Buy one, get one free’, ‘Two for one’ or something else? Looking at the touchpoint, do consumers respond better to recommendations at the checkout or on a product page? Do we prefer overlays to a more subtle page element, and if so, in which circumstances? Black or white text? Red or blue background?
We often decide on promotional characteristics with a rational lens – assuming that bigger discounts will be more effective. The reality is that consumers make purchase decisions and view promotions through a combination of rational and emotional perspectives.
Timing, exclusivity, personalisation, positioning, and message all have a significant impact on deal-based campaigns. It’s the extent of their influence in specific scenarios that we’re yet to determine.
By responding to consumer behaviour and interests through hyper-personalised, intelligent deals, a dramatic incremental uplift across a number of key ecommerce metrics can be achieved.
Some recent efforts have focused on the scarcity principle. Known as one of the main psychological drivers for using a deal, this sees consumers purchasing items they believe will soon become hard to find. Linking our campaigns to back-end inventory systems has made it possible to demonstrate which items or lines are in hot demand and where a deal should be positioned.
The wider performance marketing industry has seen gradual uptake for the social proof principle. Here, consumers are shown evidence of fellow shoppers purchasing the same item, which can ease them toward the checkout.
Marketing automation providers have a penchant for scientific or data-based branding – their knowledge of email psychology adding weight to the latest piece on “201 Things You Definitely Didn’t Know About Subject Lines”. Now imagine the same lines of commentary for deals, and the ramifications of being able to apply these learnings to just about every affiliate programme in existence.
Only through testing and actionable insights can we formulate and deliver intelligent deals that consider every aspect of the consumer’s behavior, resulting in more profit and a better chance of conversion. For that, we’ll also need a heightened level of interest from brands and a desire to unlock new efficiencies when delivering promotional efforts.
Price will always enter the conversation, but as we seek to delve deeper into a consumer’s mindset, we shouldn’t ignore the small details that make an intelligent deal.