Although there are signs that inflation is easing, higher prices and an uncertain economy continue to impact consumer behavior. Although many customers are “brand loyal,” given the economic environment, stressed consumers nowadays will most often make retailer and product choices with price as the main factor.
But what does price really mean? It doesn’t necessarily mean the amount on the price tag. Instead, there is an increasing focus on delivering more value for consumers, which can include other cost-reducing methods such as strategic discounts, targeted shipping offers, and rewards or cashback on purchases. National Retail Federation CEO Matthew Shay put it best, saying “Retailers are providing great products and experiences at the right price levels to help stretch household budgets.”
In general, retailers are experimenting with a variety of promotional components to convey value, reduce the actual cost of products and win the battle for the customers’ wallet. Loyalty programs, as well as strategically deployed marketing tactics, can help retailers win over hesitant consumers.
Today’s Consumer Mindset
Rising prices and an unstable economy are driving consumers to be more bargain-hungry than ever. Retail Dive reported on a Morning Consult survey which revealed that 85% of U.S. respondents said rising inflation had affected their shopping habits, which included actions such as shopping at discount stores and consolidating shopping trips to save costs.
Meanwhile, in a survey commissioned by Wildfire, we found that 90% of respondents are more interested than ever in getting discounts, using coupons and earning cashback rewards when shopping online, due to rising prices.
Strategic Discounts
Consumers now expect personalized offers and content, based on the widespread adoption of services like Netflix and Amazon delivering specific recommendations based on their own interests. So they expect nothing less from their favorite brands.
Retailers can deliver the personalized experiences shoppers expect by leveraging the data in their loyalty programs and looking at members’ purchase history. Instead of storewide discounts that could cut too deeply into margins, brands should consider offering their VIP customers targeted offers based on past purchases — for example, bringing their attention to products from the same brand or similar/related products.
They may also consider other triggers, such as individualized promotions based on customers’ historical average order values. For example, if a customer has a propensity to spend an average of $100 on every purchase, test their response to a steep discount offered if they make an order totaling that level or higher.
Storewide Discounts and Rewards
Our survey also found that discounts and rewards programs can have a strong effect on purchasing behavior:
- 82% of consumers agreed they are more likely to complete an online purchase when they have a coupon or discount
- 81% are more likely to purchase from an online store that offers some sort of reward or cashback on purchases
- 61% of survey respondents said that they “always or often” look for coupons/coupon codes, discounts and cashback rewards when shopping online
Obviously, retailers can appeal to these consumers by offering sitewide discounts — in “bursts” or short time periods only — to protect margins. In addition to protecting margin by limiting the time period for promotions, retailers with an affiliate program should look to further grow this marketing channel by ensuring that their discounts are always shared and allowed to be marketed across their network of publishers. They should also seek out additional publishers that align with the brand and can drive in-market customers effectively.
More Efficient Marketing Channels
Affiliate programs are one of the smartest marketing tactics to deploy, because they provide retailers with a baked-in return on marketing spend due to their percent-of-sale pricing model. But in addition to this beneficial efficiency of the affiliate marketing model, affiliate programs also provide brands with inroads into third-party cashback reward programs, which have become widely used by many consumers due to the growing popularity of programs like PayPal’s Honey, Capital One Shopping and Rakuten Rewards.
These programs rely on the tracking and attribution infrastructure of the affiliate networks. If brands are unable to respond to the consumer demand for cashback rewards by offering them directly to the consumer, brands must allow these types of affiliate publishers to promote their offers and their brand (instead of excluding them from participating in a brand’s affiliate program). With millions of users each, the abovementioned cashback rewards platforms and others like them can serve as highly efficient new customer acquisition channels for online businesses.
Leaning into these channels can help retailers gain exposure to cashback-hungry customers and help direct those customers to their brand, since according to our survey findings four out of five consumers’ choice of store is affected by the availability of rewards.
While nobody can predict where prices are headed as we start a new year, it’s clear that by strategically offering and promoting special offers, retailers can positively influence shoppers. Consumers in today’s price-conscious world are significantly more inclined to interact with a business when it offers discounts, provides rewards or collaborates with affiliates to advertise savings.
As VP of Merchant Business Development at Wildfire Systems, Michelle Wood oversees the merchant network side of the platform. Her team builds productive partnerships with online retailers and affiliate networks, bringing them into the Wildfire platform and improving their incremental revenue opportunities. With over 16 years of experience in digital media, affiliate marketing and influencer media sales, Wood has worked with many of the world’s most notable enterprise ecommerce companies to acquire new and loyal customers and exceed revenue targets with positive ROI. Prior to Wildfire, she held executive positions with leading performance marketing companies including ShopAtHome.com and Coupons.com.
View Original Article
