An offer strategy is a planned approach to presenting products or services to potential customers. It involves determining the right offer or offers to make to specific target audiences to achieve business objectives. A well-designed offer strategy is key for acquiring new customers, upselling existing ones, and driving profitability.
Elements of an Effective Offer Strategy
There are several key elements that comprise an effective offer strategy:
Understanding the Target Audience
The first step is researching and understanding your target audience for each offer. This includes gaining insights into their demographics, psychographics, buying behaviors, pain points, and motivations. By tailoring offers specifically to your audience, you are more likely to capture their attention and interest.
Defining Offer Objectives
An offer strategy needs clear objectives that align to overarching business goals. Typical offer objectives include acquiring new customers, upselling existing customers, moving excess inventory, or capturing market share from competitors. The objectives determine what kinds of offers will be most effective.
Crafting a Compelling Offer
With objectives defined, you can craft compelling offers that speak directly to what your audience wants or needs. Effective offers clearly communicate key benefits, are relevant to the target audience, and provide clear calls-to-action. Different kinds of offers include discounts, bundled packages, free gifts, limited-time deals, tiered pricing, samples, contests, and more. Testing different offers is key to optimize results.
Determining Offer Timing & Frequency
Offer timing and frequency should align to customer buying cycles. Knowpeak demand and low-demand periods and consider factors like holidays, events, and seasons when planning offer launches. Avoid conditioning customers to always expect discounts by carefully spacing out promo offers.
Selecting Promotion Channels
Match offers to channels where your audiences are most likely to discover them. Common promo channels include email, social media, display ads, website banners, contests and giveaways, affiliate marketing, and more. Consider reaching potential new customers on third-party sites where competing offers appear.
Setting Quantifiable Metrics
Set quantifiable metrics upfront to measure offer performance. Common metrics include sales revenue, new customer conversion rate, cost per acquisition, customer lifetime value, and return on ad spend. Analyze results at regular intervals and optimize underperforming offers.
Types of Offers and Promotions
Some of the most common types of offers used in marketing include:
Discounts
Discounts directly lower the price of a product or service for a specified period. Types of discounts include percentage discounts off the regular price, dollar amount discounts, buy one get one free, free gifts with purchase over a threshold, and more. These appeal to price-sensitive buyers.
Bundled Packages
Bundling combines several products or services together into a discounted package deal. This provides increased value and appeals to customers who want to purchase multiple items at once.
Limited-Time Offers
Scarcity and urgency can be created with limited-time discounts or special promotions. Countdown timers are often used to indicate the offer’s expiration. This drives quicker purchase decisions.
Tiered Pricing
Tiered pricing offers the same core product or service at different price points based on the features included at each tier. Higher tiers have more features, capabilities, or benefits. Customers pick the tier that aligns with their needs and budget.
Samples
Product samples or free trials let customers try before they buy. This is commonly used for software and consumer packaged goods. Samples reduce risk and instill confidence in the quality prior to purchase.
Contests & Giveaways
Contests, giveaways and sweepstakes reward customers with prizes in exchange for engaging with the brand. They typically require submitting contact info or sharing on social to enter, which grows brand awareness.
Loyalty Programs
Loyalty programs provide rewards, discounts, and perks to repeat customers. Members earn points, credits, or status for ongoing purchases. Programs retain customers and incentivize them to spend more.
Best Practices for Structuring Offers
Some best practices to keep in mind when structuring offers include:
- Lead with the customer benefit positioning first before presenting the specifics of the offer.
- Highlight the value being delivered upfront in the headline and description.
- Use specifics like dates, percentages, and dollar amounts to make the offer clear.
- Incorporate scarcity and urgency with limited-time wording if applicable.
- Make the CTA clear and compelling to click or act now.
- Use descriptive adjectives and persuasive language to generate excitement.
- Provide clear steps for the customer to redeem or take advantage of the offer.
- Show savings versus regular prices to convey the deal value.
- Feature happy customers and social proof in imagery if possible.
Optimizing and Testing Offers
Offer optimization and testing is crucial for improving results over time. Some key optimization approaches include:
Test Different Creatives
Test offers with different headlines, imagery, copy, and formatting to identify what resonates most with your audience. Consider various ways to emphasize the value.
Experiment with Offer Details
Test tweaks to offer details like percentage discounts, dollar amounts, number of bonus items, size of bundles, expiration dates, and redemption requirements.
Try New Discounting Approaches
Try out different discounting models like volume discounts, customer tier discounts, first-time buyer discounts, and variable dynamic pricing.
Evaluate Offer Codes and Coupons
Assess the impact of using offer codes and printable coupons versus offers without codes. The extra steps often weed out less interested buyers.
Gather Customer Feedback
Survey customers or run focus groups to get direct input on the appeal of current and potential new offers. This provides valuable consumer insights.
Track Performance Over Time
Look at offer performance trends over weeks and months. Monitor for declining returns and offer saturation indicating the need for fresh offers.
Analyze Customer Cohorts
Compare the performance of offers across new customers, existing customers, and at-risk customers. Tailor offers for specific cohorts.
Optimize Based on Data
Let data guide optimization instead of assumptions or opinions. Statistical significance testing can help confirm real differences.
Using Offers for Each Stage of the Buyer’s Journey
Tailoring offers to each stage of the customer buyer’s journey can improve conversion rates along the path to purchase. Here are some examples:
Awareness Stage
- Free educational resources like ebooks, samples, or webinars in exchange for contact details
- Giveaways and sweepstakes to promote brand awareness
- Contests with prize incentives to generate user-generated content and social sharing
Consideration Stage
- Free trials that allow prospects to experience the key benefits first-hand
- Product demonstrations and walkthroughs that showcase capabilities
- Comparison charts or ROI calculators that help model the value
Evaluation Stage
- Discounts or promo codes for initial purchases
- Bundled packages that provide extra value
- Referral bonuses for sharing with peers who may also buy
Purchase Stage
- Limited-time discounts or incentives to trigger buying urgency
- Financing options to reduce purchase barriers
- Free expedited shipping or setup offers to reduce friction
Conclusion
An effective offer strategy is crucial for driving new customer acquisition, getting existing buyers to spend more, and setting companies apart from the competition. By tailoring compelling offers to target audiences that align to business objectives, brands can achieve greater marketing ROI and revenue growth. Offer testing and optimization enables improvement over time. With the right strategic approach, marketers can unlock the tremendous value of promotional offers and incentives.
| Offer Type | Primary Objective | When to Use |
|---|---|---|
| Discounts | Increase sales velocity | Sales and promotions |
| Bundled packages | Higher average order value | Cross-sell / upsell offers |
| Limited-time offers | Create urgency / scarcity | Slow sales periods |
| Free trials | Reduce risk for prospects | High consideration purchases |
| Contests / giveaways | Brand awareness and leads | Launching new products |