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How Retailers Can Stand Out in a Noisy Marketplace

A shopping mall filled with people. Retailers greatest customer acquisition challenge is standing out from their competitors.

How Retailers Can Stand Out in a Noisy Marketplace

by Bill Schneider
VP Product Marketing
Posted on Apr 05, 2019

It’s no secret that digital marketers, especially those in retail, are constantly grappling with how to acquire new customers. They know that programs that lead to success one quarter can fail to deliver results in the next one.

But what exactly are the challenges? And is there any hope that retail marketers can meet them?

The #1 Obstacle to Customer Acquisition Success is Differentiation

To better understand the obstacles, we commissioned WBR Research to survey 150 digital marketers about the pressures they feel and the channels and promotional tactics they’re using to stand out in a noisy marketplace to meet their goals.

The results were striking. Marketers in the retail industry are feeling the greatest squeeze, with 81% saying they’re under more pressure to meet acquisition and revenue goals than they were one year ago. And respondents across all industries said their single biggest factor creating this pressure was “competitive differentiation.”

The Dangers of Mass Promotions

Eight out of ten marketers surveyed said that promotions and discounts play a central role in their customer acquisition strategy, and the retail industry’s dependence on these discount is particularly pronounced. Seventy-five percent of retail marketers said they run either weekly or continuous discounts, and 69% believe increasing the frequency will boost sales.

And yet the majority of marketers surveyed believe that their mass discounting programs are preventing them from achieving higher conversion rates, and almost two-thirds expressed concern that running more discounts may devalue their brand.

Clearly marketers are conflicted about using mass discounts, and retailers in particular need an alternative that both protects their brand and incentivizes high-value customers to act. The good news is they’re searching for one—and finding an approach that’s both appealing and effective.

Two in three marketers are concerned that running more discounts will devalue their brand.

Marketers Are Searching for New Channels and Types of Promotions

Seventy percent of marketers are seeking new marketing strategies to differentiate their brand. And 78% of retailers said they would try or use segment-specific “gated offers.” Gated offers are exclusive promotions for individual groups such as students, teachers, or the military.

Unlike universal discounts, gated offers appeal to specific demographics. And because they’re exclusive to the group, gated offers see much higher conversion rates, and they are commonly shared, which drives down the cost of acquisition significantly.

For example, a consumer survey from Kelton research showed that 91% of shoppers would share a gated offer with friends and family. And roughly eight out of 10 consumers would shop with a retailer more often if presented with an offer that was truly exclusive to their “tribe.”

Why Gated Offers Elicit a Powerful Response

According to our research, the answer is clear: when consumers are given a gated, exclusive offer because of their life stage or professional field, they feel special and honored by the brand. And that motivates purchase behavior.

Gated Offers Increase Awareness, Customer Acquisition, and Loyalty

Many retailers are already seeing great success with gated offers.

Lowe’s provides a gated offer to military personnel and veterans, and the program generates 2-3x more engagement than the company’s other campaigns. And when Ryan Fagan, Lowe’s director of sales and operations planning, tied the program to the company’s MyLowe’s loyalty program, it brought in troves of new customers: “In a little over a year, we’ve seen millions of veteran customers enroll,” he said.

Target launched a gated offer giving teachers a 15% discount on select classroom supplies. The three-day promotion garnered widespread attention, including coverage in major national media as well as teacher advocacy websites.

And companies like Spotify, YouTube, CBS All Access, and Headspace are using gated student offers to acquire loyal, long-term customers. Subscription companies have found that graduating students who initially signed up through a gated offer program convert to paying full price at rates as high as 98%.

Eight in ten consumers would shop with a retailer more often if the brand gave them a gated, exclusive offer.

As we move further into 2019, there’s little doubt that mass discounting will, and should continue to be, a part of retailers’ customer acquisition efforts. However, retailers would be wise to also use more segmented forms of promotions designed to gain the attention and loyalty of particularly coveted groups of consumers. It’s a powerful way to differentiate your brand.  

Want to Learn How Gated Offers Can Help You Acquire Loyal Customers?

Download our e-book, The Definitive Guide to Gated Offers, or contact us.

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