Discount Proneness is what happens when you “teach” customers to expect discounts. Over time, they won’t buy unless you send them a discount. They wait for it, expect it. Unraveling this behavior is a very painful process you do not want to experience.
The latest shiny object where Coupon Proneness comes into play is the “shopping cart recapture” program. Mark my words, if it is not happening already, these programs are teaching customers to “Add to Cart” and then abandon it, waiting for an e-mail with a discount to “recapture” this sale – a sale that for many receiving the e-mail, would have taken place anyway.
The best way to measure this effect is to use a Control Group.
When I hear people talking about programs like this (for example, in the Yahoo analytics group) what I hear is “the faster you send the e-mail, the higher the response rate you get”.
That, my friends, is pretty much a guarantee that a majority of the people receiving that e-mail would have bought anyway. Hold out a random sample of the population and prove it to yourself. There is a best, most profitable time to send such an e-mail, and that time will be revealed to you using a controlled test. The correct timing is almost certainly not within 24 or even 48 hours.
That is, if you care about Profits over Sales, and trust me, somebody at your company does. They just have not told you yet!
When you give away margin you do not have to give away on a sale, that is a cost. Unless you are including that cost in your campaign analysis, you are not reflecting the true financial nature of the campaigns you are doing. If you are an analyst, that’s a problem.
If you are using cart recapture campaigns, please do a controlled test sooner rather than later. Because once your customers have Discount Proneness, it will be very painful to fix.
For that matter, if you are an online Marketer in a multi-channel company, you should be regularly using controls because they are the gold standard in Marketing Measurement / Campaign Attribution.
At some point, your boss will be more concerned about attributing Profit than attributing Sales. Would be nice if your response to this question was, “Yea, we’ve been looking into that”, wouldn’t it?
If you’d like to hear more about this topic and see some example data on what these scenarios look like, you can attend this webinar:
What Online Marketers Can Teach Offline Colleagues (and vice versa)
May 19, 2009 noon ET Jim Novo, Kevin Hillstrom, and Akin Arikan
A WAA event, open to both members and non-members. Web analysts are not the first to grapple with multiple channels. Traditional marketers have always had to illuminate customer behavior across stores, call center, direct mail, etc. So, rather than reinventing the wheel in each camp, what proven methods can you teach each other? Three different but aligned approaches on solving the multichannel puzzle, should be something for everyone here.