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Conversion Science – Offer Harmonics

Conversion science is the study and practice of getting website visitors to perform an action on a merchant site. Common activities include clicking a link, filling out a form, downloading a file, subscribing to a list, adding to cart, and eventually transacting a purchase. When we merge conversion science with customer lifetime value, we can arrive at a revenue and profit maximization model that recognizes:

  1. All prospects travel along a purchase path, or journey, with specific stages. A simple purchase path illustration might include awareness, engagement, subscription, conversion (purchase) and excitement.
  2. The most expensive part of the marketing process is identifying prospects with high purchase intent and then conducting the first-purchase transaction with them. But, if you only do this much, you have completed a costly promotion and not fully realized the full lifetime profit potential (value) of this customer.
  3. To maximize customer lifetime value and reduce the percentage cost of acquisition, we must re-sell this customer along their customer lifetime journey with complementary products and services along our product value ladder/hub. Upsells, down sells, and cross-sells dominate this arena.
  4. All sales require stage-specific offers to be made to the prospect. These offers may be as simple as “join our newsletter,” “buy our product,” or “add this” upsell. (For a list of 54 offers any merchant can make for their products, click here.)
  5. Once the prospect conducts a purchase, they cease to be called a prospect and are now your customer. Because customers have a higher trust relationship with you, we can place them on a lifetime value journey and offer them higher-value products.

Recognizing the principles above, Offer Harmonics is the synchronization of the perfect offer, through the right channel, for the customer’s position on the purchase path, along their customer lifetime value journey.

Consider the following example.

 

Company - Online Home Furnishings Retailer

Scenario One: Search Engine Cold Traffic Prospect - Identity Unknown

On-Site Search: Keywords indicate a prospect is searching for living room lamps

Prospect Activity: Several pedestal floor lamps are favourited but not placed in the cart. Floor lamps are of a high-end designer variety. Prospect leaves merchant site.

Merchant Strategy: Re-targeting

Method:  Merchant engages Facebook retargeting campaign with the following offer: “Still looking for designer floor lamps? See our newest collection.” or “Still looking for designer floor lamps? These are on sale.”

Prospect Activity - Prospect clicks through, identity is established (“Sally”), purchases 2-floor lamps.

 

Let’s now continue along the customer lifetime value journey. 

Scenario Two: Sally, a Recent Purchaser - Identity and Product Purchase Known (continued from the example above)

Merchant Strategy: Add-on. Premise - A need for home decor follows most lamp purchases. 

Method: Email outreach alongside Facebook re-targeting with the following offer: “See our latest hand-painted wall art. Under $200.” or “See our Saturday clear out specials on ceramic vases and decorative bowls.”

Customer Activity - Customer clicks through, recognizing the offer’s hyper-specific relevance. After additional nurturing, Sally buys some wall art.

 

Offer Message Categories

When considering what message to deliver at the customer’s journey stage, there are four primary offer message categories that we use, including: 

1. Transactional Attributes – This category of value propositions involves selecting, purchasing, delivering, and returning the product. Examples include free shipping, discounts, bonus with purchase, free returns, scarcity, etc.

2. Brand Narrative Attributes – Nothing sells better than a great story. A product’s brand narrative embeds this story deep in the customer’s mind helping to establish desire and preference for your product. Common brand narrative attributes can include:

  • User. E.g. The Chanel Woman
  • Country of Origin. E.g. German Sports Car
  • Tribe / Kinship. E.g. Apple Mac tribe vs. PC tribe
  • Use. E.g. Go where only a Jeep can go.
  • Mission. E.g. Tom’s Shoe’s mission is, “for every pair of Tom’s shoes purchased, the company will provide a pair to a child in need. One for One.”
  • … and many more.

3. Influence Attributes – Influence attributes seek to encourage the desired customer behaviour by introducing factors that suggest authority, celebrity, social proof, escalated status, etc. Common examples include user-generated content, testimonials, and reviews.

4. Functional Attributes – These value propositions are embedded in the product itself and describe what the product is and what it will do for you. Example words could include small, lightweight, strong, precision, exclusive, etc.

Here’s how we can use the Offer Harmonics framework in our stage-specific offer messaging. Our sample product is a fashion-forward, super warm, lightweight, premium outer jacket called Selenium.

Here are some examples of relevant messaging:

Transactional

  • “Buy a Selenium jacket and get free shipping until Thursday.”
  • “It’s our semi-annual clearance. All Selenium jackets are 40% off.”
  • When you buy this Selenium jacket, we will send you this scarf as a bonus.”

 Brand Narrative

  • “I ran out of gas while on the ice roads of Alaska. All I had was a lighter, a candle and my Selenium jacket. It kept me warm until help arrived.”
  • “Go from a business meeting at 2:00 pm to a night on the town at 8 pm. This one jacket fits your lifestyle.”
  • “Our designers know that modern fashion’s first rule is function first. And that philosophy is built into every jacket that we make.”

Influence

  • “Jay-Z knows style is nothing without function. Selenium is his jacket.”
  • “3,487 reviews, and a 4.93-star rating. Selenium is the best jacket we have ever made.”
  • “As seen in New York Style magazine.” 

 Functional

  • “You have never seen brighter colours. Here’s Selenium’s winter collection.”
  • “Lightweight, warm, and trendy? This jacket has it all."
  • “At just 435 grams, this is one lightweight jacket.”

We can use many more examples, each custom and distinctive to the customer’s situation, and position along the journey. We now need to take the next step, communication through a sequence of stage-specific offers.

 

Stage Specific Offers

Example Stages

Awareness – In the awareness stage, an objective may be to have the prospect visit our website product page to identify them through a tracking cookie.

Example offer message:

  • “Go from a business meeting at 2:00 pm to a night on the town at 8 pm. This one jacket fits your lifestyle. [click to see our latest styles.”

Engagement – At the engagement stage, an objective may be to identify the prospect through a tracking cookie path for ad-retargeting. This process allows us to establish the level of purchase interest. For example, Bob may only visit the homepage and not travel further. But David explores the site in-depth and even places items into the shopping cart but does not complete a purchase. We can therefore presume that David has a higher purchase interest than Bob. 

Example offer messages:

  • “I ran out of gas while on the ice roads of Alaska. All I had was a lighter, a candle and my Selenium jacket. It kept me warm until help arrived.”
  • Buy a Selenium jacket and get free shipping until Thursday.” [click to see our latest styles.]” 

Subscription – At this stage, the objective is to have the prospect self-identify and voluntarily provide their name and profile information (e.g. email address). 

Example offer message:

  • “Get Selenium’s seasonal special offers. [click to subscription form]”

Convert – The objective here is to get the prospect to buy. However, most prospects do not purchase on the first offer, and not all categories of offers will have the same appeal. We now have to determine the proper sequence, timing, and categories of offer messages to trigger a purchase response.

Here’s an example.

Yesterday, David explored the site in-depth and placed items in the cart but did not purchase. 

Example offer messages, categories and sequence: 

1) “David, you left three items in your cart. See them now.” [No Offer]

If David doesn’t respond, we send this message within two days. 

2) “David, you left three items in your cart. Use code FAST when you check out, and you will get free shipping by next Thursday.” [Transactional Offer]

If David doesn’t respond, we send this message within five days.

3) “David, when you purchase this Selenium jacket [display image of the item in cart], we will also give you this scarf (choose your colour). Also, use code FAST when you check out, and you will get free shipping by next Thursday.” [Transactional Offer]

If David doesn’t respond, we send this message within 15 days.

4) “Jay-Z knows style is nothing without function. Selenium is his jacket. See the new collection.” [Influence Message]

If David doesn’t respond, we send this message within 20 days.

5) “You have never seen brighter colours. See Selenium’s winter collection.” [Functional Message]

If David doesn’t respond, we send this message within 25 days.

6) “Did we ever tell you how we came up with the Selenium Jacket? It was born out of necessity on a lonely Alaska highway.”

 

Channels

Another vital consideration for offer messaging is the delivery channel, e.g., email, social media, display advertising, etc. With that in mind, the message series is continued, testing various offers, categories and channels until we determine the best sequence for purchase conversion.

 

Summary

Merchants must methodically apply a consistent process to be hyper-relevant and emotionally significant to their customers at each stage of the journey, from initial purchase to life-long raving fans. The right product, with the right features, with the right message and offer, through the right channel, at the right time are the keys to unlocking customer lifetime value.

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