Figure 7-1. Best Buy, which is well known and has site appeal
Which store would you select? What are you willing to overlook for an incentive? Our research shows that about 75% of customers will even overlook some security issues when presented with a compelling incentive.
Does this mean that all the concepts we have discussed in this book are meaningless if an incentive is present? The reality is that you can increase conversion rate tremendously just by offering incentives on your site, but this may not be the best “business decision” in terms of giving you a strong ROI. You need to position and present incentives in a way that gives customers great value without overlooking the benefit that you will get. By following all the concepts we’ve discussed in this book and positioning incentives correctly throughout the site, you will not only achieve but also surpass the results you are looking for.
Incentives come in many forms, but all types of incentives offer some sort of financial gain for the customer. Incentives include:
Lower prices and greater savings
Freebies
Buy one, get one free opportunities
Product bundling
The ease of comparison shopping and accessibility to multiple stores has weakened the phenomenon of store loyalty online. For the majority of online shoppers, determining which store offers the better overall deal will drive their purchase decision. In Chapter 8 we discuss tactics that can help you promote store loyalty. However, we’ve found that a “good deal” has a stronger influence on the buying decision, especially during a time when every dollar counts. It’s important to remember that the user tends to select the better bundled site experience from entrance until checkout, and incentives enhance an otherwise average site experience. Customers are unpredictable, and sometimes it’s external factors (beyond your control) that result in contradictory motivations to regular buying patterns.
Incentives are, as defined in most dictionaries, “an expectation for customers to behave a certain way.” Essentially, they are factors that motivate and persuade buyers to take action and make a purchase. Incentives come in all forms and sometimes even appeal to the buyer’s moral sensitivity. For example, when Haiti was devastated by an earthquake in 2010, many ecommerce companies pledged that a percentage of their customers’ purchases would go toward aiding victims of the quake. This type of incentive persuaded customers to make the purchase, not only in order to satisfy the need they had, but also because it was a good thing to do. Moral incentives tend to help remove guilt a customer may be feeling about a purchase because by making the purchase, the customer will be “donating” to a good cause.
Although some online incentives are designed to appeal to customers’ morals, most provide customers with some form of financial compensation. Offers of “free shipping” and “10% off your purchase” provide money-saving opportunities. Some incentives offer added value to a purchase, such as “buy one, get one free.” Stores use incentives to achieve any the following goals:
The goal of these incentives is to encourage customers to select your “store” instead of your competitor’s. This is the main reason for incentives, and it is most prevalent during the holiday shopping season and other seasonal events. The key for most stores is to determine how to outdo their competition by offering a more lucrative offer. Also, restaurants use this incentive during slow times of day, when they experience the least amount of foot traffic. Subway, for example, discounts subs during the dinner hours because the restaurant receives little foot traffic at that time of day.
These incentives encourage customers to select one product over another. For example, many large superstores, such as Wal-Mart and Target, incentivize their generic-brand products with lower pricing over brand-name products. Because every penny counts due to the economic downturn, customers are drawn to generic brands.
This type of incentive is commonly used when companies want to move older merchandise out the door to make way for new products. Of course, it’s important that the discounts make sense, especially when you’re promoting to a broad audience. For example, a local expensive furniture store was planning a remodel and decided to conduct a closeout sale. As its products typically cost more than $20,000, a discount of 50% did not feel like much of an incentive for the broader general market. The sale was supposed to end within a week; at the time of this writing, months had gone by and the company still had not been able to move its expensive merchandise.
Companies provide incentives to create buzz about their offerings. This is especially apparent with companies that are just starting out. They will offer very low prices and special free gifts to get people in the door, and then again if those visitors refer their friends and family. Many telecom companies use this type of incentive to increase their popularity and reach. HandbagHeaven.com offered 30 lucky customers free handbags when it first opened its doors. The promotion got a lot of buzz and interest from users on social networks.
