By combining offers with other retailers or entities, retailers can avoid being victimized by the “adverse selection” of consumers who simply look for the largest discount they can find at a given time, Alex Rampell, CEO and co-founder of offer-based payment platform TrialPay, told attendees at the recent Retailer Roundtable event sponsored by digital gifting platform CashStar.
“Offering a massive discount just gets people to go elsewhere for a bigger discount,” said Rampell. “Those consumers do not develop into loyal customers.”
However, by enticing consumers who fit a retailer’s customer profile with combined offers, such as a promotion from Whole Foods that provided a free month’s subscription to the New York Times, retailers can help eliminate customers who only want a low price.
In addition, Rampell said digital gift cards can serve as an effective and traceable online inducement for consumers who are searching for a product that they can only buy offline, such as a fast food burger.
“Clicks on a banner ad for burgers don’t matter,” stated Rampell. “But a gift card proves its effectiveness.”
Rampell said an above-average online offer of a gift card to an established good customer can produce a click-through rate of more than 30%, compared with the .02% click-through rate of a typical banner ad.
In addition, Denee Carrington, senior analyst for Forrester Research, told attendees that mobile commerce is a bridge connecting the digital and physical worlds. Although today mobile commerce only accounts for 8% of e-commerce sales, which only account for 9% of all retail sales, she said retailers need to focus on it for a simple reason.
“Mobile enables access to the big prize,” said Carrington.
According to Carrington, Forrester data shows that U.S. mobile commerce will reach $90 billion in sales by 2017 and mobile commerce will reach a hockey stick-shaped point of inflection in 18 months, with adoption of in-store and proximity mobile commerce increasing at a 140% annual compound growth rate.