Digital disruptors are shaking up traditional business models by looking at their industry with new eyes. And they’re taking that same approach with marketing, shedding outdated, ineffective tactics like universal discounts in favor of a more personalized and targeted strategy: gated, exclusive offers.
SmileDirectClub is the latest startup to disrupt the status quo by using this new approach in which promotions are designed for specific customer segments, then gated to make them truly exclusive.
Gated offers are a strategy that is both fresh and effective, leading to increased customer acquisition and long-term loyalty.
The End of Universal Discounts
Brands are struggling to break through a noisy marketplace. Eighty percent of marketers think promotions and discounts are important to boost sales, but mass discounts aren’t the answer. Increasing the level and frequency of universal discounts only makes it harder to stand out.
What’s the culprit?
In our customer acquisition survey , we asked marketers what prevents their promotions from achieving higher conversion rates. More than half attributed it to three factors:
- Consumer fatigue or conditioning to discounts
- A lack of differentiation
- An inability to target a specific segment
Brands like SmileDirectClub that are willing to break the mold are using gated offers to address all three issues in one fell swoop.
Tapping into Their Full Market Potential
SmileDirectClub is challenging traditional orthodontics with their at-home teeth-straightening service. Customers simply order an impression kit online, make a 3D mold of their teeth, and send it to SmileDirectClub. The company then ships “invisible aligners” that straighten customers’ teeth in an average of six months. The process costs 60% less than other options.
SmileDirectClub has already attracted more than half a million customers, but the market opportunity is still vast. Eighty-percent of Americans could benefit from orthodontic care, yet only 1% receive it each year—with cost being the biggest hurdle.
A customer acquisition plan that relied on universal discounts wasn’t enough to reach this wide audience. SmileDirectClub decided to leverage the power of targeting a high-value group—the military—with an exclusive promotion.
Targeting a Lucrative Customer Group
SmileDirectClub launched a gated offer giving $150 off aligner purchases and a free impression kit to all members of the military, including active duty, veterans, and immediate family members.
The company uses the SheerID Digital Verification Platform to implement the offer, which made the promotion both secure and easy to redeem.
During checkout, a customer simply clicks on a verification button and provides a minimal amount of personal information—including email, birthdate, and military branch—to opt in to the offer. SheerID then instantly verifies the customer’s military status. The process is a seamless, in-brand experience that makes it easy for customers to begin their engagement with SmileDirectClub.
Targeting the military with this kind of an exclusive offer represents a significant sales opportunity for SmileDirectClub. The military has 37 million members with $1 trillion in purchasing power.
4 Reasons Why Gated Offers Are a Winning Strategy
Gated offers like SmileDirectClub’s military discount help brands engage customers in ways that aren’t possible with traditional marketing tactics. Why? Because gated offers have four inherent characteristics that make them highly effective:
Gated offers are rooted in a person’s identity, such as their life stage (seniors), career (nurses, teachers), or affiliation (military service.) By crafting an offer based on buyer identity—rather than their recent online activity, for example—SmileDirectClub is connecting with customers on a deeper level.
Providing groups with an exclusive promotion based on a personal attribute, such as belonging to the military community, elicits strong emotions. Our consumer survey showed that gated offers make people feel rewarded, excited, honored, and special, which greatly influences their buying behavior. Ninety-five percent of military members are more likely to shop with a brand that offers them an exclusive discount.
SmileDirectClub’s successful business is built on its ability to customize a personalized product and treatment plan for its customers. Using an exclusive promotion to personalize an offer is the next logical step to support their customer acquisition goals.
John Sheldo, SmileDirectClub’s CMO, acknowledged that straightening your teeth is an easy thing to put off, but that “marketing can create the urgency to get going.” And personalized promotions do just that. Our consumer survey revealed that gated offers make 48% of buyers purchase sooner.
Other leading brands are also disrupting the market with personalized promotions.
Zappos is using gated offers that honor students, teachers, and the military and incite loyalty. And Purple is honoring the military with a special discount that helps the company stand out in the minds of service members as well as everyone who supports them.
Customers who receive a gated offer opt in to redeem it. This exchange gives brands both the information and consent they need to run ongoing nurture campaigns. SmileDirectClub facilitates brand loyalty by sharing things like partner discounts and inviting them to participate in photo shoots with professional photographers.
One of SmileDirectClub’s taglines is “Smiling is contagious. Join the club.” When a SmileDirectClub customer “grins and shares it,” friends and family get a discount and the customer receives a $100 Amazon gift card. There’s also an active group of SmileDirectClub members who share their journey by posting selfies on Facebook.
Gated offers fit in well with this community’s affinity for social sharing. Seventy-six percent of the military community say they learn about discounts through word of mouth.
And the best part of gated offers as a social tool is that brands don’t have to worry about them going viral and triggering unauthorized discounts. SheerID ensures that only those eligible for the offer can redeem it. This prevents discount abuse, which can be as high as 35%.
Brands See Gains in Customer Acquisition and Loyalty
SmileDirectClub is just one of a number of digital disruptors using gated offers to grow their business:
GrubHub, an online and mobile food-ordering platform, uses a gated student offer to boost customer acquisition and increase purchase frequency.
Purple, the direct-to-consumer mattress brand, is boosting customer acquisition with gated military offers that unite the company’s brand identity with one if its ideal segments. Purple has a commitment to “help people feel better” and give back to communities, and members of the military are poised to shop for a new mattress frequently because they change addresses twice as often as the average family.
Kettlebell Kitchen implemented a 15% Hero Discount for the military and first responders, and they saw incredible results. The number of new military, veteran, and first responder customers signing up for the company’s meal delivery service every week has increased by 83%. And the number of Hero Discount subscribers has increased six-fold.
Gated Offers Fuel Growth
SmileDirectClub is on a fast-track to growth. Aetna Dental is adding SmileDirectClub as an in-network option. The company’s recent partnership with CVS resulted in a total of 250 SmileShops, which greatly expanded the number of retail locations customers can visit to get 3D molds of their teeth. And Axios reported that SmileDirectClub is preparing for an IPO.
Gated offers are a smart, cost-effective strategy to support this growth by increasing customer acquisition and loyalty. Companies that implement gated offers with SheerID consistently report a 3x increase in conversions, a 2x increase in repeat purchases, and ROAS as high as 20:1.