Deployed intelligently, discounts are valuable tools in the battle for customers’ online spending, acting as important triggers for purchases and upsells. Intense competition, however, means many retail organisations use discounts in ways that undermine revenues.
Many websites, for example, bombard consumers with discounts from the moment they arrive on a home page, which is both unscientific and counterproductive. Firstly, it irritates consumers who want to do some fact-finding before making a decision on a holiday or a new car. Secondly, it severely erodes margin by giving discounts to customers who were always likely to make a purchase in any case. And thirdly, these kinds of crude tactics create the impression of a “pile them high and sell them cheap” approach, which damages brand prestige in many sectors.
These mistakes happen because companies do not know enough about consumers when they come to the website and are unable to segment them in any sophisticated way. By sophisticated I mean according to how they behave on the site now and previously, and according to what they have bought.
In many cases, brands will simply use discounts to keep consumers on the site at all costs, when with smarter segmentation they could save themselves time and margin by targeting only realistic prospects. It is worth remembering some global companies have huge bounce rates but are highly profitable because they do not waste resources on “tyre-kickers”.
Of course, some consumers want an offer as soon as they arrive, but how do you know who they are? Each company and its website is different, but so is each consumer. Differentiating between them takes some clever segmentation.
Unfortunately, many companies still do not have any means of using offers intelligently as highly-targeted tools for sales conversion. Instead of churning out codes, brands should be using offers and discounts in exchange for an activity they want consumers to complete, such as placing an item in their basket or providing an email address. The smart use of discounts pinpoints web visitors who are at a certain stage in the customer journey and targets them with the right incentive to purchase.
AI Makes Discounts Successful Through Smart Segmentation
What companies lack is access to more advanced AI-based innovation that allows them to segment website visitors and customers accurately, in real-time and at scale, using behaviour analysis. This is becoming a much greater priority because third-party cookies are set to disappear, out of concerns about privacy among the big browser operators. Apple and Firefox have already acted (and in different ways), and the most significant player of all – Google – will follow in 2022. Organisations will still be able to use their own first-party cookies for their own domains, but the use of third-party cookies to monitor what visitors do on other domains will end.