By Robert Ian French, President & Partner
Make them an offer they can’t refuse.
Offers have long been an indispensable method of increasing response rates and improving conversions for direct mail, DR Digital and DRTV. As the internet evolves into the ultimate direct marketing medium, offers are becoming equally essential to the success of online marketing.
These are the fundamentals of building an offer that drives sales and builds customer loyalty.
The role of the offer
First, what is the real purpose of an offer?
If you respond “to increase sales”, you’re right. But the true purpose of an offer is not to just get the consumer to buy, but to buy now. Since there is no guarantee the consumer will encounter your ad again – especially in the online world – an effective offer must motivate an immediate response.
It accomplishes this task by making the consumer consider the cost of not acting. In other words, the offer makes us think about what we will lose or give up by not making the purchase. This subtle fear drives the impulse to act.
In two-step programs (e.g., high-priced products or considered purchases such as insurance), the purpose of an offer is slightly different. In these cases, the true purpose of an offer is to provide a low-risk way for the consumer to enter the selling process. The consumer wants more information and you want their contact information – a marriage made in marketing heaven.
Anatomy of the perfect offer
Let’s look at designing the perfect offer in three simple steps:
- Make the offer as closely related to the product or service you are marketing as possible. A free can of motor oil with every order of a make-up kit isn’t likely to send sales through the ceiling – but a free bottle of make-up remover might. In fact, one of the best offers of all is more of what you are already selling. If your creative is effective, the consumer presumably wants your product – so giving them more of what they want for the same price is always a winning formula. That’s why 2-for-1 offers work so well.
- The offer must have high perceived value. The perceived value of a product is often very different from its real value. For example, books – even expensive hard covers – have low perceived value. Music used to have high perceived value, but the availability of free music on the internet has significantly diminished its perceived value. Money is the only object where the perceived value and real value are always identical. This explains why discounts (e.g., 25% off), dropped payments (e.g., “your first payment is on us”) or rebates are so effective – consumers know exactly what the value is.
- If possible, the offer should be time-limited. Remember, the purpose of an offer is to get someone to act now. A temporary offer strongly influences the decision to purchase. And this is equally true for low-cost items such as DVDs and high-priced items such as golf course memberships. The fear of missing out on an attractive offer can often overcome consumer inertia or hesitancy.
Constructing the perfect online offer
The previous three steps also work online. There are, however, other factors to consider when creating the ideal online offer.
Most importantly, is the product you are offering readily available at retail? If so, keep in mind that consumers hate to pay extra for the pleasure of shopping online. That’s why free shipping is usually the most effective offer available. In fact, it can outperform other offers by as much as seven to one.
If free shipping is too rich, consider free shipping on orders over a certain amount. Amazon.com has successfully employed this strategy.
Unfortunately, discounts on future orders will not drive more immediate sales because the benefit being provided is too far in the future. They can, however, have a huge impact on future sales if presented after the initial purchase.
Also consider special ‘online pricing’ to motivate online purchase. Telling consumers they will save money by shopping online – and demonstrating this through special offers – drives first-time and repeat business.
In the online environment, offers are also an extremely effective tool for acquiring email addresses of opt-in prospective customers. In these cases, the offer can be fairly modest. Free information, special discounts, newsletters and contests all work well.
When designing offers, try to keep your personal opinion out of the mix. Offers that don’t appeal to you may resonate well with the general public. The only way to know for certain which offer is most effective is by testing which, of course, you should be doing on an ongoing basis anyway.
If you build it (and build it well), they will come
Offers are powerful – consumers love and often expect them. They drive response, improve conversions and increase ROI. There is a perfect offer for every product or service. Find yours and watch your results improve!