Here’s How to Use In-Store Incentives to Grow Your Marketing Database

There are many ways you can acquire email address and contact details for both buyers and non buyers, however not all tactics may be as cost effective as you may think. Our goal is to acquire as many of the right customer contact details as possible, at the lowest cost possible. When planning our tactics to achieve this goal, we should keep in mind three things:

 

  • It’s a numbers game. You won’t get everyone to provide you with their contact details no matter which tactic you employ. So, be realistic with your projections, and test different tactics until you find one that works best. Then, continue to test against that tactic to find a better way.

 

  • The retail industry has ‘conditioned’ consumers to want more for less. Every consumer is looking for a bargain, so you must consider the ‘value proposition’ for the customer – is providing my details worth the pain of receiving emails, SMS text messages and newsletters? Does your tactic provide the customer with enough of a bargain in their eyes to offset their perceived pain?

 

  • You need to cast as wide a net as possible to acquire as many customer contact details as possible to achieve the lowest cost. The challenge here is to provide an incentive that has high enough appeal to offset the perceived pain of cluttered inboxes.

 

Listed below are some tactics to consider when developing your acquisition strategy:

 

Just ask them to sign up for your newsletter or Loyalty Program for free!

 

Simply asking customers and non buyers to join your Loyalty Program or receive your newsletter is very cost effective. The problem with this tactic though is that it generally doesn’t strongly appeal to a customers’ basic instinct – looking for a bargain. So, although there is no acquisition cost, participation rates are likely to be much lower.

 

Now, for many specialty retailers this tactic may appeal, but you should consider a few things when moving forward with this tactic:

 

  • Although those that ‘sign up’ are likely to be quite interested in engaging with you this way, many more won’t, because they’ll see this as just more emails cluttering up their inboxes, notwithstanding all the ‘cool’ discounts and ‘special’ offers you say they’ll receive in the future.

 

  • Another challenge with this approach is that it generally doesn’t reach past those customers you see at the cash register.

 

Offering Discounts on the Next Purchase

 

This tactic entails providing a future discount on a customer’s next purchase or receiving a particular item such as a gift card. This can be a good tactic as you’re providing a reward for ‘signing up’, but you need to be careful about the cost.

 

Let’s say you’re offering a 10% discount off their next purchase as your incentive. Would you be happy if their next purchase was $1,000, costing you $100 for their contact details? Okay, we’ll fix that by putting conditions on what they can buy to restrict your likely outlay; now they can only use their discount on items up to $50. Oh, and does that restriction include ‘non sale’ items too?

 

Walking in your customers’ shoes for a moment, you might be more interested than just signing up with no incentive; however, are there too many conditions and restrictions – isn’t it just too hard? Not to mention, you don’t attract the non buyers in your shop.

 

Cross sell opportunities with other brand or stores!

 

If your operation is part of a much larger group that operates other retail stores, providing discounts to other stores within the group can work very well in acquiring customer details and also driving traffic to your group’s other stores.

 

Once the cost of acquiring a customer’s contact details throughout the group has been determined, you should also consider what cost would be acceptable to drive traffic between stores. A 10% discount even for a high ticket can be effective because you could be achieving 2 sales for the group. And, if the customer didn’t use the discount for the other store, acquiring their details didn’t cost anything.

 

If you own just one shop, you can use this tactic by working with other non competitor retailers who also share the same customer demographic. This can be very cost effective and can still be applied to non buyers, because whether they used the discount offering or not you’ve still acquired their contact details for nothing.

 

Competition Draws have a lot of appeal for customers, and if done well, retailers too!

 

One of the best ways to capture contact details from customers and non buyers alike is to invite everyone that walks into your store an opportunity to win something for nothing. Aside from appealing to their desire to get a bargain, it also provides customers and non buyers with a larger ‘perceived’ incentive to offset the ‘pain’ of parting with their contact details.

 

Of course, not everyone will enter a contest but you’ll capture many more customers, and non buyers, this way than most other tactics. And, you still have another opportunity at the cash register to offer those buyers (and high value customers) another incentive, if necessary, to provide you with their contact details.

 

Some considerations in conducting competition draws you need to think about are:

 

  • Having a prize of sufficient value and appeal to attract the attention of everyone that walks into your store.  When choosing a prize for your competition, you’ll need to consider the demographic and psychographic profile of your customers to find a prize with the broadest appeal. It doesn’t make much sense to offer something up as a prize if it doesn’t have broad appeal, does it?

 

  • What can you afford? Successful competitions are heavily promoted in and out of the store leveraging existing advertising materials and channels to drive greater participation. The higher the participation rate, the lower the acquisition cost, because you’re spreading fixed costs across greater numbers of customer contact details.

For instance, let’s say that you offer a prize valued at $5,000 and annual traffic flow of 30,000. With only of 23% of your traffic entering the free draw your cost per acquisition would come out to under $1, and provide you with 6,900 records, as illustrated below:

 

Competition Costs
Prize cost

$5,000

Hand out cards* (est.)

$1,000

In store display (printed posters etc.)

$750

Total Costs

$6,750

Cost of Acquisition
Annual Traffic

30,000

participation rate**

23%

Competition Participants

6,900

Cost / participant

$0.98

 

*We suggest using contest hand out cards as a means of in-store promotion of your competition. Hand out cards with all the information of the prize draw and a URL to your online entry form is an easy way to promote your competition to both buyers and non-buyers. It also allows people the opportunity to enter the competition at their leisure.  You might also consider providing access to an in-store kiosk or laptop for those shoppers who are willing to enter the competition while in your store.

 

** If your competition rate is just slightly higher, say in the case above: 25%, the cost per participant (contact details) comes out to $0.90 and you generate another 600 customer contact details! This highlights the need to have all your in-store staff promoting the competition to everyone that walks into your store.

 

  • Depending on what types of prizes that appeal to those visiting your store and the costs involved with running your competitions, you need to consider if you should run your competitions monthly, quarterly or bi-annually. Running competitions each month or quarterly does add more costly, more time and energy. Generally speaking, bi-annual competitions seem to fit the right balance and depending on the appeal of the prize can save you more in the long run.

 

  • Compliance issues to meet legislative requirements.

 

Each state and territory within Australia requires businesses conducting trade promotions (free competitions) follow their rules. Before you conduct any competition or trade promotion you must ensure that you are in compliance with the rules of the respective state or territory that you’re operating in. If you conduct the competition throughout Australia you’ll need to comply with each jurisdiction’s requirements.

 

You should also make sure that any competition or trade promotion you conduct also complies with the various federal and state legislations regarding the conduct of such competitions, especially with respect to privacy and spam.

 

It is strongly advised that before you conduct any competition or trade promotion you do your due diligence and seek professional legal help to ensure that you are compliant and that the records you do generate through your competitions and trade promotions can be used by you for the purposes you intend.

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