Category Archives: discounting

Online consumers say: Make me an offer

A recent Ad Age/Ipsos Observer survey of 1,000 online consumers found the No. 1 thing they want is discounts on products or services. 65 percent of respondents asked for coupons, outranking better customer service, games and entertainment, or news. At first glance this seems depressing for marketers who try to decommoditize their service by focusing on brand aspects, aspirational values, or service quality offerings … so let’s explore.

1. Absent a relationship, price matters. Most consumers don’t have relationships with most brands; think about the brands you care deeply about, and you’ll likely stop at a handful. So any online marketing contact is likely to be superficial, akin to a first date, and of course to get customers to flirt with you, you may have to make an attractive offer. Price framing, in which you set a reference price and then discount sharply beneath it to convey value, is one way to help consumers new to your service judge whether you offer good value.

2. Immersed in clutter, offers matter. Online marketing touchpoints are wildly littered with banner ads, video, Google search results … creating a commoditized communications space. A typical U.S. consumer changes his or her web viewing window 17 times an hour, thus being exposed to thousands of marketing cries each day. No one can possibly digest this many messages, so consumers may expect an offer in exchange for their limited attention.

3. Online touchpoints are just the beginning of a customer relationship. Customers who evolve into loyal fans, every marketer’s dream, make repeat purchases and word of mouth referrals often far away from online communications. Life happens in the real world. Loyalists end up in a store, on the phone, perusing catalogs, perhaps with clicks for future purchases, yes, but those are often the “last click” after considered intent.

So brands have many opportunities to promote their deeper values as they grow share of customer. It just may not be online.

Via Ian Schafer.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Why 40% off may be better than a low price

It’s funny how your consumers remember the first thing you tell them.

A recent study suggests percent off is a much better approach than a low price point. It seems that if your first marketing message focuses on a specific price, consumers tend to remember it — and it will come back to haunt you.

Here’s an example. Imagine you sell widgets for $115, and your ideal customer would buy three widgets a year. To lure a new customer, you offer the first product at a special introductory price of $69. The customer buys, happy, but then when you try to sell the same customer again at the full price of $115 she balks.

Why? She remembers your first pitch, for $69, and now $115 seems a lot higher.

Now, start over. If you lure the first customer with a “40% OFF” offer, she may be tempted to buy. Then, when you try to sell the customer the second time at the $115 price point, she is less likely to recall that she paid only $69 for the first widget — because you didn’t focus on it.

It’s a funny habit of humanity, how people respond to different price offers that mean exactly the same thing. Percentages are attractive lures, and they avoid potential lethal effects on future sales from customers who remember the introductory price. Now, if only someone could explain why gasoline prices come in 9/10s of a penny increments.

(Summary of the study by Devon DelVecchio, H. Shanker Krishnan, & Daniel C. Smith here.)