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Anyone in the D2C space has experienced the ebb and flow of revenue through the use of promos, sales seasons, and the constant influx of buyer behaviors. More than any other type of business, eComm and retail are dependent on trajectories and financial KPIs to continue to perform and meet cash flow. Understanding how to prepare, meet the audience, and continue to build also provides support with creating a stronger brand reputation – even outside of the promotional season.
One of the tactics every eComm business uses is to make up for cash flow with the use of a promo. This is especially common with campaigns for emails to try to ignite those who are not active but have been acquired by the lead. Flash sales, monthly sales, seasonal sales, off season sales, warehouse sales, and site wide sales tend to become the center of attention for many of the marketing initiatives that take place inside the email channel.
But is the sale approach every month the best approach? It takes a certain amount of revenue to acquire a lead. When that lead is acquired, you’re then committing to losing a certain amount of revenue from them by activating them through sales. Before deciding when and how to do the next promo, it’s important to calculate the amount you’re spending not only through the acquisition that takes place, but also with the continuous offers that don’t bring as much profitability as you would wish for back into the business.
Look at how much revenue each promo costs before deciding if you want to run another version of the promotions you are setting up for the month or the quarter.
D2C brands often dig themselves into a rabbit hole by questioning why they would send a campaign unless they send a promo. In the email channel, a promo usually outperforms a regular send by over 50%. If you make an average of $10,000 per email, then the promo will most likely return an average of $20,000. For most businesses, this amount of return is worth the cost. However, what is often missed is how that will play out when it comes to long term and engagement over time.
If you continue to send promos and constantly hit your audience with the same percentage off, you run into audience inundation. Accounts that regularly do this deal with 3 central issues:
* Brand Value – The more promos you have the more you are seen as a “cheap” brand. The jeans that were almost $200 are always discounted to $75. That means you aren’t really in the same category of luxury anymore.
* I can get it tomorrow – A large driver with the D2C industry is urgency and impulse. When promos are consistent, they take out that key element of being able to reach the audience. The result is someone determining they should wait until the next larger discount.
* Audience Inundation – Audiences aren’t always interested in seeing a promo. Brands are respected because of the educational element. There is something you offer that others don’t. When you don’t engage with an audience in this way, they become inundated with the promos and disengage with the information you are sending.
The long-term impact of revenue-driven promo decisions leads to 1 thing – relooking at how each marketing channel is effectively handled for brand reputation, management, and engagement. When you engage with your audience instead, using CVR and CTR (email specific) as a driving force, it adds more value to your audience and supports growth over time.
There are key elements that help to drive engagement-based campaigns and to help leverage results. Divide your engagement rules into different pillars as a start and determine how your audience responds.
Education: This pillar is for anything brand-related that lets the audience know more about who you are and what you do. It can also include things like “how to”, brand recommendations, ingredients, main uses of, etc. The education pillar works most effectively for those in the awareness stage who are still learning about your products.
Interests + Psychographics: From demographic information to psychological responsiveness, tuning into your avatar will help you to redefine what you provide as a business. Interests can be pulled from CDPs and predictive analytics as a start and can extend to things such as surveys and loyalty programs. Income levels, age, hobbies, etc are all engagement-style campaigns that pull your audience in and let them know you understand them.
Digging deeper into psychographics is one of the key ways to work with your audience. What are the psychological and emotional behaviors that make someone tick? Looking at their fears, joy, anxiety, reward focus, etc allows them to connect with you at a deeper level. Master this category and you can use engagement at the same level as promos and expect similar results.
Cross-Channel: Taking best of performance and using this content in other places is a way to win. Instagram and Tik-Tok posts, combined with responses that may outperform or press that is taking place is a way to tune the audience into what you are offering and to give them the opportunities to build trust through the use of social proof.
A promo is a promo. It will always expect a revenue return that doesn’t seem comparable. But, when you go outside of the box, you may find the luxury, exclusivity, and a brand voice is a much stronger way to engage with your audience.
When you measure the results of any engagement set of campaigns, look at it from the angle of profit and loss versus revenue by channel. The metric should be inclusive of how much you may have not made by offering a discount vs. the AOV of those who buy at full price. With optimization and finding the right triggers for engagement, you will find that the differences in revenue are not dramatically different and can sometimes outperform.
Not only will you be able to measure differently, but you will have extended ways to optimize. You may find that a series of campaigns or a set theme will help you to continue to build while allowing your consumption of information to take on a different tune to your audience. Expect your results to build over time while supporting you with the best results.
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