August 1st, 2007
By Alon Werber - VP Marketing & Business Development
Every day, people are looking for new opportunities to satisfy their needs in a more gratifying manner. They want more options, more personalized services, and also want to feel like they’re getting a great deal. Just when you thought you could kick back and relax things keep escalating to new levels. Some recent projects we’ve been working on helped us realize that a successful promotion of a marketing offer requires much more than a single communication. In order to be successful you need to motivate your customers to climb the value path. And when we say value path, we’re talking about your value path, how to go about creating more value for your company.
Like all good relationships, much is invested in planning, anticipating the response, and being ready to take things to the next level when that happens. From everything we’ve seen recently we believe that the big trick to creating value is to generate a series of inter-connected interactions over a specific period of time in a synchronized way, instead of launching one-shot campaigns and hoping for the best. Hope doesn’t have a lot to do with it because in a valuable long-term relationship, you pretty much know which way things are headed and plan diligently to make sure things go your way. You keep your eye on the big goal at all times and everything flows from there.
So with the goal of maximizing the value of offers being deployed to customers in mind, the operator needs to go through a comprehensive process of informing the user, offering the special deal, watching the response, deciding how to respond to that response or non-response, and then start all over again. Now try applying that process to an entire series of interactions with your customers, and you’ll find yourself between a rock and a hard place. It’s not easy setting up a system that can react differently to different target audiences and ultimately get the maximum revenue out of each and every customer. But that’s what we do. Planning that series of events that will take place in advance, and preparing for all possible scenarios.
With the phenomenal mobile growth operators are experiencing in certain regions, having the ability to define and execute a complete value path sequence is rapidly becoming a basic necessity. Besides the fact that it simply takes up too much resources to set up and execute a single campaign let alone manually defining multiple campaigns, our experience proves that automating a sequence of inter-related campaigns delivers much more positive results in the long run.
So how do we do it? Here is a real life example for you. A segment of users were just randomly visiting a provider’s site to skim through the news and check out the weather. These users were not into gaming, so our goal was to create a situation that would expose them to this service. The whole point of course is to encourage them to buy on the spot and continue buying afterwards. So the first offer tells them about the service, giving them the possibility to download a game in a limited time frame such as from Friday to Monday, and at a special price such as Buy One Get One. Some of the people did not respond at all, while others saw it was worth their while to get two for the price of one during this weekend special.
The users were informed of the special offer through SMS, which is slightly intrusive, but effective nonetheless. The SMS described where they could find the special deal on the site and also presented the details of the offer. From that point onwards the messages become more focused and the pricing gets more sophisticated. For example people who are already on board buying will pay slightly more than those who are still contemplating the offer.
Now remember that we’re talking about random users here. We know nothing about their taste in this service. So essentially we had no means for defining this group except for the fact that they have no relevant history in downloading games at all. The only thing we have to go on at this point is the way that each one of the groups responded to the special offer. The value path defines how to divide them and how to relate to each group. Take the responders for example. We divided them into three groups of ‘spenders’ according to the overall amount they paid during the offer/promo; low responders, regular responders and super spenders. Each has different needs and different economic constraints, but having divided them into groups, using meaningful criteria, and making sure the next offer they receive is most suitable for them gives them more incentive to buy.
Then we take those users and define derivative offers for each “sub-segment” of low responders, regular responders and super spenders. Ideally, we want to be in a position to offer each of these groups a number of options. So how do you take an original offer and expand it into three derivative offers? That’s where the expertise comes in. We started with an offer of Buy One at Half Price, the second was Buy One Get One, and the third was Buy Two Get One Free. In other words, the sub-segment that purchased the most in the first round was offered Buy Two Get One Free, the middle spending group was offered Buy One Get One, and the third group that included some users who didn’t buy at all was offered the highest incentive of Buy One at Half Price.
This is how we can continuously motivate users to buy more using a simple process we like to call – “climbing up the value path”.
The beauty of all this is to make each group feel like they are being presented with a huge opportunity that they should take advantage of immediately. This opportunity is not a gift: that’s a big ‘no-no’ in this sector because once they get this service for free they will never feel like paying for it again. The trick is to present irresistible opportunities that users simply cannot ignore and feel they should exploit quickly. They ultimately end up buying more because they are receiving offers that are extremely relevant to their ‘life stage’ as a customer.
So just to recap. What we did is offer all the random visitors the same deal in the first stage. In the second stage we provided three different offers for three different types of spenders. And in the third stage we presented three more offers that were adapted to suit users who we converted from users with zero history to users with a sales history. In the meantime, we’ve gotten to know these spenders and we can leverage the segmentation developed in this round as a basis for future activities with those users. Pretty neat, huh?
Stay tuned for my next post where I’ll be providing some practical tips on how to do this.
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