Email marketers apparently just love to lower their margins and leave money on the table.
The mania for discounts is driven to a large degree by the standard practice of blasting emails to every possible email address. When presented with a business downturn, the Pavlovian response is to blast out discounts. The more discounts the merrier - too bad, though, about the impact on the bottom-line.
In reality, customers are not the same. Some will buy from you without regular discounts, some will buy from you with minimal discounts and some will require on-going discounts.
The trick is how to figure out who requires what. For decades in the offline world, marketers used Recency, Frequency and Monetary value (RFM) segmentation to resolve this issue. RFM can be used only even more effectively because it can be automated.
One of our customers decreased the amount of discounts they give out by 40% within a few months and was able to delay offering Holiday discounts by 6 weeks. How? Simple, they used RFM to segment the customers and give discounts to sale shoppers but not to their most engaged customers who are more interested in being first in line for the latest trend.
How will this play out for you? Well, you won’t know until the next time you feel the urge to blast and you just say - "No! I'm going to be a smart business person instead."
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