Modern customers love memorable, people-focused promotions that reward their curiosity and loyalty. In fact, Statista research found that 92% of shoppers looked for special offers and coupons before buying online. But simply offering a special offer isn’t sufficient in the cut-throat world of modern commerce. McKinsey found that 78% of customers say they’re more likely to repurchase from a company that personalizes their experience. The stark reality is that some 70% of promotions fail to break even.
Modern promotion marketing is a tricky balance of a number of competing factors. Firstly, giving customers the level of personalization that they’re expecting is a technical challenge. Ensuring you’re getting a return on your investment — and have enough visibility to make that judgment — is also a big hurdle for marketers. Thirdly, having the flexibility to adjust campaigns on the fly, without huge development costs is something that brands struggle with.
Despite all that, the good news is that with mParticle you have all the information you need to provide tailored and effective rewards.
Step 1: Identify areas where promotion marketing can add value
There are a few different questions — or sets of questions — that marketers can ask themselves to judge where they should most effectively invest in promotions. The first is to identify which stage of growth you’re at.
Consider the kinds of questions you ask yourself day to day — an easy way to work out your pain points is to write down the questions that are always on your mind.
Longer-term, there’s a benefit to figuring out what kind of issues you’re having — they’re a good indicator of the kind of problems you are likely to run into.
The startup phase
- Can we secure enough customers to become viable?
- Can our services compete with our competitors’?
- How can we expand our sales base?
- Does my team have the capacity or expertise to take on more projects?
The growth phase
- Should we start hiring specialists?
- How do I maintain recurring client/customer relationships?
- How should I be reinvesting profits into my business?
The maturity phase
- How do I free up my team from routine work to focus on growth goals?
- Have I lost touch with my core business?
- How do I keep customer sentiment high?
How you answer these questions will influence which promotions tactics you will want to focus on. For growth-stage companies, aiming at acquisition and conversion-orientated rewards will be most effective to help deal with the particular challenges of getting customers onboarded and engaged. For each stage of growth, there are a set of promotion tactics that make sense for you — and how you want to maximize customer lifetime value (CLV).
For larger enterprise retailers, for instance, we’re seeing fewer — but more sophisticated — promotions, driven by a ruthless dedication to data-based decision-making. For earlier-stage venture-backed scale-ups, who are still playing the promotion-heavy typical acquisition game, promotions are iterated through rapidly and many smaller ‘bets’ are placed. In the following sections, we will be using the example of a gaming start-up, looking to use promotions to drive acquisition.
We’re going to imagine this fictional company is developing a freemium fighting game, that powers up your characters if you walk with them a certain distance. The game is monetized by selling consumables to shorten the required walking distance.
As a start-up our main focus is on acquisition — but we also want to focus on getting users to make that first purchase. By thinking through the flow above, we can see how using promotions tied to the customer journey can add value at every step.
Step 2: Integrate mParticle with Talon.One to turn customer touchpoints into rewards
The next questions you need to ask yourself when brainstorming a promotion are:
- What activities are you trying to incentivize, what behaviors are you trying to change?
- What are the rewards you want to give?
- Where do you see those rewards being redeemed?
The first step is to establish a baseline of behaviors, so you can measure uplift. In our gaming start-up example, for now, we want to examine the rate at which customers make their first in-game purchase. Then, once we add some promotional incentives, we can see what difference they are making.
You can configure your Talon.One webhook to send any event type to mParticle — so if a coupon is served, or if a coupon is redeemed, this can all be tied to customer profiles in mParticle.
Reference mParticle’s Events API to ensure you are formatting your events correctly. mParticle’s SDKs and APIs collect user events from across platforms and will unify these touchpoints into deterministic customer profiles — which means you can get a lot of insight into where you’re sourcing your best users, and theoretically your most coupon-sensitive users.
In our gaming example, we’re going to offer a coupon for a bundle of five strength potions, which will reduce the walking distance required to power up our character. In the regular bundle, you buy three and get one free, with the applied coupon, we will buy three and get two free.
By sending these events to mParticle, we can see how/if this coupon makes more users buy an item for the first time.
Step 3: Build a proof of concept campaign
When you’re considering what comprises a minimum viable product (MVP) for your initial launch, here’s a set of questions or milestones to act as a jumping-off point:
- Define your goals and metrics for success
- Research the status quo — what are your current customer segments, demographics, and current tech stack capabilities?
- Define target behaviors and potential motivators based on the customer profiles of your target segments
- Based on current user behavior, pinpoint the promotional levers that could tip users towards conversion
- Design your ‘story’ — create a prototype that takes the user through each stage of the desired user journey
- Launch your MVP — follow through testing and evaluation to roll out
- Tweak your plans based on the results you defined at the outset
- Iterate on your campaign
Most campaigns will change from the point where they’re originally conceived to launch, but the best campaigns are tweaked even after launch. How users behave in a live environment is often very different from how we expect.
This is where it is incredibly important to keep track of user behavior, segmenting and targeting users based on how they are actually acting — instead of how they ideally would.
And with a flexible promotion engine, you can alter the inputs and outputs of each campaign without additional development costs. Talon.One can ingest information about users from mParticle and then create promotion rules based on those traits. For instance, is the user a new sign up, then send a coupon for strength potions. Once the coupon has been sent, or the coupon has been redeemed, the results can be returned to mParticle to catalog how those users’ behaviors were impacted by any promotions.
However, let’s imagine that we’ve pitched our initial campaign idea — a coupon where you get two free potions for every three potions purchased — to the rest of our marketing team, but they’re not happy with the concept. They’re worried that we will cannibalize the potion sales — basically giving an extra free potion to users who would have purchased at our base offer rate. It’s time to tweak the promotion!
In Talon.One we can quickly rearrange our rules, using the same integration data from mParticle. We’re still going to target new users, but instead of giving them a coupon for an extra free potion, we’re instead going to give them a cosmetic item — a free sword.
Step 4: Iterate on results
“63% of consumers will modify their spending habits in order to maximize the benefits of a loyalty program” - Forbes
Once you’re getting results from your campaign launch, it’s time to identify where it can be improved — either at the input level (targeting, audience, eligibility) or output level (level of reward, type of reward, frequency).
Running A/B tests or incrementality tests is a good way to narrow in on the approaches that are seeing good results.
Let’s say you want to target a specific section of your customer base with a new promotion. To find out what the most appropriate campaign setup is, you can try out a couple of different targeting variations.
In our previous example, we created an audience called ‘testAudience’ which was targeting new users. However, we’ve realized that we’re investing heavily in retargeting, and we’d like to re-engage users and nudge them towards getting in the habit of purchasing in-game items. To change the audience targeted by promotions, you just need to change the rule in Talon.One. When mParticle is integrated, you will see your currently configured mParticle audiences automatically in our dashboard — ready to select.
Our retargeting campaign has turned out to be super successful, but our retention rate is still lower than the industry average. We decide to expand our sword offering to everyone.
To run the tests, we just duplicate the rule and then switch the logic to ‘is not’ a member of TestAudience. We can then selectively surface the coupon to users, to see their pattern of behavior, while making sure that users who already redeemed the coupon don’t get it again.
Your end objective may be increased sales or it may be improving long-term customer loyalty. Either way, the testing process allows you to figure out which campaign targeting strategy works best.
Another easy variation you can test is incentives and rewards. Ultimately, they’re the driving force behind all promotional campaigns. Rewards and incentives vary significantly from campaign to campaign. Some are much more effective than others at helping businesses achieve certain campaign objectives. The most common types of rewards and incentives are:
- Free items
- Loyalty points
To continue the example from above, let’s imagine that our testing has showed that regular onboarded users don’t convert at a higher level after getting the free sword offer. However, we still need to come up with a plan to increase the stickiness of our app.
The decision is made to create a loyalty program, which will return 10% of any in-app spend as loyalty points. In the below example, every user is automatically enrolled in the loyalty scheme, it checks that a session has closed (on checkout) and then automatically adds the loyalty points to the customer’s ledger.
The users can then spend these points for extra items.
Step 5: Level up your campaign by mixing discounts, coupons, and loyalty
Once you have some campaigns that are running, and performing, it’s time to start thinking about how the different elements of your promotion marketing mix can work together.
Customers demand personalization, and what better way to re-enforce that by turning every touchpoint into a potential reward hook. With the power of mParticle, you’re already learning about customer behavior and preferences building out high integrity user profiles — but it’s what you do with this information that makes the difference.
Marketers are best when they’re strategizing and executing on creative campaigns. By dealing with promotions in a holistic way, you’re freeing up marketers to invent and innovate on how to engage your customers.
For instance, by combining referrals with loyalty — perhaps giving extra sweet referral bonuses for users in higher loyalty tiers — you can supercharge programs that are already seeing good results. Or by creating complex reward logic, such as giving the cheapest cart item free if you buy three of a certain product line, you can incentivize higher average order values. The only limit is your imagination.
For our gaming app, our marketing team is extremely excited about how we’ve seen improved results due to our introductory coupon and ongoing loyalty scheme. So the decision is made to add reward touchpoints along the entire customer journey.
Using mParticle audiences, we create buckets of users that are just onboarded, and set the goal of getting them to make their first purchase within seven days. For the first seven days they get 2x loyalty points on their first purchase in addition to their coupon for a free sword.
However, our acquisition team tells us that we are seeing lower referral rates than equivalent apps in the same genre. Because of this we decide to add a formal referral scheme. We will change the coupon code to a referral code that is generated for each user. By redeeming the referral code, the user will get the free sword — and the referrer (advocate) will get 500 loyalty points.
As you can see, by linking referrals and coupons, we get a more complex and powerful campaign.
After a few months, we start to notice that users are starting to drop off. To try and keep our users engaged, we decide to create an audience in mParticle for users that we believe are about to churn, based on their last login or purchase date.
Talon.One rules don’t have to run when a user performs an action in app, it can be triggered as soon as they join an audience in mParticle. In the below example, the user will automatically receive a coupon via email when they enter our churn risk audience.
To further distinguish this campaign, perhaps we could give this user 2x loyalty points until they are returning to the in-app behavior we no longer classify as high risk of churn.
When combining this ‘reward everything’ mindset with the user profiles and data you already have in mParticle, you can see great results. By identifying key demographics or user audiences, you can target them with rewards for especially high-value behaviors or mitigate against risks.