Personalization Ideas for Promotion-Addicted DTC Retailers
New research from Sailthru and Coresight Research indicates that retailers, specifically DTC brands, lean on targeted promotions 20 percent more than other retailers. With wild success using promotion-driven display advertising on sites like Instagram, it's no surprise that DTC marketers favor the same concept on channels like email and SMS.
However, the research also finds that larger brands (those over $500 million in annual sales) use personalization for a much wider range of activities including predictive personalization, email send time, journey-based and persona-based personalization. These techniques, when mixed with promotion-driven personalization, can provide a more effective long-term marketing strategy than a one-note approach.
Forecast the Future with Predictive Personalization
Predictive personalization technology uses past customer behavior to determine the likelihood that someone will or will not take a certain action. The beauty of predictive personalization is that it's very flexible and can be used to create an ever-more-relevant experience for customers across both shopping and content.
A hardware brand with a wide variety of products could use past data such as searches and previous purchases to predict what other products a consumer might want to learn about or purchase. The brand would show completely different content to someone who just bought a gas grill than someone who searched for specific plumbing parts. With every new action, search or purchase, the predictive personalization gets new inputs and becomes more relevant.
For DTC brands, creating more reasons to interact with their audience, from content to follow-up emails about a recent purchase, can create a richer customer experience — and predictive personalization can help refine the approach. In fact, predictive personalization can help with promotional messaging. It can help refine the target audience for a specific promotion and help determine which product is most likely to cause a sale.
For example, a retailer can identify customers who are likely to make a purchase in the next few days. An A/B test where a control group doesn't receive the offer may reveal that customers predicted to make a purchase soon may not need any promotional incentive. This cuts down on clutter for the customer already likely to purchase and reduces costs for the retailer.
There Is a Right Time for Everything
Once DTC brands create content that is tailored to customer behavior, the next step is getting in front of the customer at the right time. Personalized send time is a great way to reach customers at the time they prefer to engage. Orchestrating personalized send time across email sends, SMS and mobile app push notifications creates an even more effective program.
Thrive Market uses algorithms to adapt a user experience to their needs, using personalized send time on email and localized and personalized send time for SMS messaging. This information can help brands fine-tune their outreach - perhaps sending product recommendation emails in the late afternoon so that they are at the top of their inboxes when they go to the site or sending a promo code via mobile in the evening that could be applied to an order.
Asking for preferences is encouraged. Someone may not want early morning delivery notifications via SMS if they are trying to be quiet for sleeping family members and will be happy to share their preferences for email updates instead.
Try New Targeting
There's nothing inherently wrong with targeted promotions. It certainly preserves margin more so than blanket promotions offered to all shoppers. The problem is when DTC marketers get into a rut and their customers start tuning the brands' messages out.
What's worse, DTC marketers can lean into certain strategies so heavily that they are giving more away than they need to, like abandoned cart offers, for example. Testing what's needed to get a response and mixing it up with some new approaches can help preserve margin and increase engagement:
- Test abandoned cart offers. An offer on abandoned cart emails isn't always necessary to drive conversion. Marketers can test displaying an offer to a subset of lapsed customers or maybe even only to drive first-time purchases. Another option is to test sending abandoned cart emails only for hot products that are selling out quickly. Retailers like Wayfair use scarcity as a tactic for abandoned cart emails using subject lines such as "Items in your cart are very popular!"
- Segment post-purchase bounce-back offers. Marketers can create different audience segments based on predicted AOV with the goal of stretching spend. For example, a segment with an AOV in the $25 to $40 range might only need a $10 offer to make their next purchase compared to a segment that tends to spend a lot more.
- Target lapsed promotions based on the individual's shopping behavior. Some rules need to be refined to reflect an individual consumer's actual behavior, not by a criteria that applies for the average shopper. Brands like ShoeDazzle and JustFab analyze data to put people in the right segments. For example, someone that shops once every three months but hasn't shopped in four would be 100 percent lapsed. While someone who normally shops every six months would not be considered lapsed at three months. Brands can reactivate customers based on their individual shopping patterns for a more efficient approach.
Staying Nimble Is the Key to Success
More than anything, these suggested approaches to personalization remind DTC retailers to always be testing new ideas. Consumers share their data with retailers and expect a relevant experience in response. Tailoring approaches based on individual behavior can go a long way toward improving overall customer value, if not the immediate conversion rate for a specific campaign.
With personalization, there is always room to refine and improve. With every bit of insight generated, marketers can make the next experience a little more relevant and bit more efficient. Promotions play a big role but adding in new approaches will create longer lasting success.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Monica Deretich is a retail industry advisor at Sailthru.