Consumer Behavior - Post-Purchase Offers

Part
01
of three
Part
01

Consumer Behavior - Post-Purchase Offers

Types of offers that garner the best post-purchase engagement include: rebate offers, customer loyalty programs, reviews in exchange for gift cards and replenishment/reorder reminders.

REBATE OFFERS

  • Rebate marketing offers customers cash discounts and incentives, after the purchasing of the product. For example, The customer usually pays the price in full at the retail and then sends via mail or fills out an online registration for the rebate application, which is then mailed to them at a later date.
  • Rebates do not necessarily have to be only in the form of cash, they can also be in the form of another product being posted to an address after registering online.
  • One advantage that goes hand in hand with rebates is that the retailer gets a wealth of customer information that they would otherwise not have gotten without the information on the rebate form. This subsequently proves valuable in their email marketing funnel in the generation of future sales.
  • According to a marketing study, three out of four respondents are likely “most” or “all” of the time to submit a rebate form.
  • In formulating a rebate marketing promotion, it is important to bear in mind that studies have shown that the bigger the rebate, the higher the sales increases.
  • The more the effort the retailer places on the customer, the lower the retailer's sale. Therefore, it is profitable to design an easy-to-use rebate marketing program.
  • This means that the faster a customer can complete a rebate, the more likely the retailer's sales will increase.
  • Most marketing departments choose to use rebate fulfillment houses to outsource their rebate marketing programs because of the intensity of the rebating process.
  • When selecting a rebate fulfillment house, an online rebate submissions system will make the rebate process easier to use. This means customers will have access to confirmations, as well as a portal where they can receive status updates on their rebates.
  • A majority (75%) of the respondents to a Brightlocal survey mentioned that rebates are the most popular enticement when it comes to post-purchase loyalty to a particular brand.


CUSTOMER LOYALTY PROGRAMS

  • Loyalty programs are an excellent way of increasing a customer's post-purchase loyalty with a particular brand because programs offer multiple ways through which customers can be rewarded.
  • The most common loyalty program models are points program, spend programs, tiered programs, paid programs, and punch programs.
  • Point programs give customers points that they can redeem for rewards or free products/services. These are very popular considering that point-based programs are easy to enroll in and 73% of loyalty programs are based on accumulating points.
  • Spend programs allow customers to receive loyalty credit in exchange for the amount they spend. Successful spend programs are easy to set up and maintain.
  • Tiered Programs are another version of points programs, which give customers rewards based on their level of spending or points.
  • Whereas, paid loyalty programs rely on a monthly or annual fee that members pay in order to access to special services, discounts, or unique opportunities.
  • Lastly, punch programs reward customers with punches," based on their purchase of a particular product or service. Customers receive a punch for each purchase with the aim of receiving free-of-charge products or services of equal or less value.
  • Studies show that customer loyalty comes from repeat purchases and if satisfied with a previous product, 84% of respondents say they would purchase the product again after the original wears out.


PRODUCT REVIEW IN EXCHANGE FOR A GIFT CARD

  • When customers are enticed to write a product review in exchange for gift cards, they become advocates for the retailer's brand.
  • Customers' whose relationship with a business has been built through providing reviews spend more money and are the best way to market the brand to others.
  • A Brightlocal Local Consumer Review Survey found out that the majority (84%) of consumers value online reviews and personal recommendations equally.
  • Additionally, 76% of the top consumer brands used in their study feature user reviews on their website and product pages as a way to increase purchases.

REPLENISHMENT REMINDER/RE-ORDER


RESEARCH STRATEGY

We began this research by looking for information that highlights the type of offers that keep consumers engaged, even after their initial purchase of a product/service. To do this, we referred to industry-specific publications and credible news outlets such as BusinessInsider and Forbes. We found that Brightlocal has conducted a consumer-review study analyzing consumer behavior using data from more than 3,500 agencies to try to find the measures currently used by businesses to maintain post-purchase engagements that lead to greater customer loyalty to their brand. After a deep-dive of this report, we found other similar studies on consumer behavior, particularly concerning post-purchase engagements and attractive offers that keep consumers coming back to the same product even after the initial purchase.

For example, we referred to reports from firms such as L2inc, which gathers business intelligence and benchmarks digital performance of consumer brands, that provided us with more insights on digital research. We referred to studies that focus on post-purchase loyalty and found out that, in addition to customer loyalty programs and rebates, most consumers of top brands consider writing a review in exchange for a gift card as an attractive offer. The prospect of reviewing keeps them loyal to a particular brand, even after their initial purchase. Once we found several industry-specific surveys and analyses from credible firms and third-party researchers, we were able to identify four types of offers that are proven to garner customer loyalty to a brand after purchasing that brands' products.
Part
02
of three
Part
02

Consumer Behavior - Post-Purchase Offers Case Studies

Four brands with successful upselling techniques include Dollar Shave Club, McDonald’s, American Airlines, and Amazon.

1. Dollar Shave Club

  • Dollar Shave Club (DSC) attracts customers with its $1 per month price.
  • However, DSC convinces customers to spend more by offering three levels of quality.
  • Many customers at DSC end up spending more by choosing products with higher quality.
  • Studies show that when people are offered three price point options, they will most often choose the medium price option, followed by the most expensive option.
  • In addition, people are less likely to choose the cheapest option available most of the time when compared to mid-priced or expensive options.
  • Following the above-mentioned strategies/techniques, DSC reached a valuation of billion dollars within six years.

How to Emulate DSC's Success

  • Companies can emulate DSC’s success by attracting customers to their stores with low price point options. Then, companies can provide customers with three options with varying quality and price points. Since customers tend to go for mid-level or high-level price points as opposed to low-level price points, companies can successfully upsell to their customers.

2. McDonald's

  • McDonald’s aimed to boost its website sales and increase the average order value without running any new promotions or discounts on its site.
  • The company had re-introduced apple pies to the menu after a period of unavailability.
  • Thereby, McDonald’s decided to upsell the product along with other purchases.
  • When customers add items to their cart and are about to complete their orders, they would see a pop-up showcasing an option of adding apple pies to their basket.
  • The pop-up was targeted at 90% of McDonald’s total traffic.
  • During the campaign, the company witnessed an increase of 12.89% on the average order value compared to the previous month.
  • In addition, their conversion rate also increased by 7.64%.
  • Thereby, the company was able to upsell their apple pies without incurring additional business costs.

How to Emulate McDonald's Success

  • Companies can emulate McDonald’s success by providing an option of adding a different item at the time of order completion. Through this strategy, companies can introduce their new product offering and raise awareness without additional promotions or discounts. In addition, the company can reap the benefits of upselling an additional item during checkout.

3. American Airlines

  • American Airlines attracts its customers by offering rock bottom fares during internet searches to compete with other service providers.
  • When customers select a flight with the lowest rate possible, they realize there are numerous restrictions associated with the price point such as no seat assignment ahead of time", "at least $25 to check your first bag", "no same-day changes or standby", and "no chance of an upgrade".
  • As a result of these restrictions, customers start exploring various add-ons and higher-priced fares for more convenience.
  • Since the customers are deep into the booking process, 60% of customers continue the booking with add-ons or higher-priced fares.
  • According to Robert Isom, President of American Airlines, when customers are offered basic economy fares along with main cabin products, 50% of customers choose the higher-priced products for convenience such as free carry on bag.

How to Emulate American Airlines' Success

  • Companies can emulate American Airlines’ success by attracting customers by offering rock bottom competitive pricing. By applying various kinds of restrictions on the lowest priced products, companies can divert customers to higher-priced products that offer added convenience or value. Thereby, companies can upsell higher-priced offerings by providing additional features or convenience.

4. Amazon

  • Amazon focuses on upselling additional products by using its “frequently bought together” section.
  • During the product selection process, the company also displays additional complementary products that work seamlessly with the original product.
  • For instance, when a customer chooses the Canon Powershot Elph digital camera, Amazon automatically displays other items such as a flash memory card and compact camera cases as “frequently bought together” items.
  • Amazon has introduced upselling in its marketing strategy with the phrase “customers who bought this item also bought...” in 2006 which resulted in a 35% increase in its sales.

How to Emulate Amazon's Success

  • Companies can emulate Amazon’s success by displaying additional complementary products which can be easily integrated with the original product. In addition, companies can also increase the perceived value by displaying the benefits such as reduced overall cost for all items bought together. While upselling companies can also consider integrating products from different manufacturers or sellers.

RESEARCH METHODOLOGY

In order to find case studies of brands with successful upselling techniques, we focused primarily on case studies that provided metrics of success on brands’ upselling techniques. We came across numerous case studies, however, most of them did not include any success metrics and also most of the case studies where redundant in terms of strategies or techniques in the industry. Thereby, we selected the above-mentioned case studies which provide specific metrics of success for the brands about their upselling techniques. In addition, we selected these particular case studies because they are different from each other in terms of implementation methods and end-use industries.
Part
03
of three
Part
03

Consumer Behavior - Post-Purchase Offers Best Practices

Post-purchase upselling is a strategy sellers use to increase their customer's average order value. Some best practices when post-purchase upselling included personalizing the upsell recommendation, product feedback, and reward loyalty.

OVERVIEW OF POST-PURCHASE UPSELLING

  • Post-purchase upselling is a strategy sellers use to increase the customer's average order value (AOV).
  • E-commerce marketers collect info to learn more about the needs of buyers, and from this understanding, they pursue their buyers to purchase more products than originally planned.
  • E-commerce companies can either recommend another complementary product to the buyers or can encourage buyers to buy more things by offering some special discounts or offers.
  • Interestingly, the buyers only know about these offers after they have successfully completed a purchase.
  • In the worst scenario, the buyers ignore these offers. However, at least they have already bought something.

BEST PRACTICES

#1: PERSONALIZING THE UPSELL RECOMMENDATION:

  • According to Accenture's research, "75% of consumers are more likely to buy if the retailer knows their purchase history, recommends purchases based on that history, or addresses them by name."
  • Etsy and Amazon study data related to the browsing history and the purchasing history of each of their customers to come up with the most suitable products. When their customers purchase a product, they send their customers a purchased confirmation email and within this email is the list they had created for that customer. This encourages customers to choose and purchase more products from them in the future.

#2: PRODUCT FEEDBACK:

  • After each purchase, giving customers a chance to voice their opinion and post videos or photos of the products will help to improve the satisfaction of the customers and will help to tie customers with the companies. This will make customers more willing to purchase from companies.
  • Amazon is one of the leading companies that encourage their customers to express their opinion freely. They think this will help lure more new customers into buying their products. It also helps to tie the current customers to the company.

#3: REWARD LOYALTY:

  • All successful e-commerce companies know that it is essential to show their customers gratitude.
  • Besides saying "thank you," companies have to step their games by providing customers some special offers to increase customers' loyalty to their brands.
  • Again, Amazon has different programs to increase and reward the loyalty of their customers. These types of programs also help Amazon create whom they call "Brand Advocates." They believe that these loyalty programs encourage customers to purchase more and attract more and more new customers.

TOP THREE METHODS OF POST-PURCHASE UPSELLING AND THEIR CONVERSION RATES

#1: SENDING AN EMAIL:

  • This is the most popular and most effective method of post-purchase upselling, which the majority of e-commerce companies nowadays use.
  • They can send different types of emails to their customers from a product review email or a follow-up email, which recommends other products after a purchase.

CONVERSION RATES:

  • "Post-purchase emails have a 61.7% open rate, a 9.7% click-through rate, and 9.16% conversion from clicks. In addition, the use of personalized recommendations can drive a 28% increase in average order values."
  • According to CXL, from around 12.1 million follow-up emails and 24.5 million digital receipts e-commerce stores sent through their all-in-one marketing dashboard in 2016, they discovered the following stats:
  • An average open rate of 40.5%, a 6.4% click rate, and a 0.7% conversion rate across all follow-up emails.
  • An average open rate of 65.0%, a 10.4% click rate and a 1.4% conversion rate across all digital receipts.

#2: "THANK YOU" POP-UP MESSAGES:

  • A thank-you message pops up right after a customer finishes purchasing a product, and attaching with it, is a list of other interesting products.
  • Unfortunately, there are no official stats related to the conversion rate of using thank you pop-up messages for post-purchase upselling. However, pop-ups, in general, still generate a great amount of interaction with customers.

USEFUL STATS RELATED TO THE CONVERSION RATE OF POP-UPS:

  • According to Sumo's study of approximately 1.7 million pop-ups, the top 10% highest-performing pop-ups averaged a 9.28% conversion rate.
  • Some pop-ups even saw a 50.2% conversion rate.
  • Sumo also calculated that the average conversion rate for a pop-up message is about 3.09%.

#3: CUSTOMER SUPPORT/LIVE CHAT:

  • This is a method of upselling and also a method of post-purchase upselling. Customer support is a way to create and maintain a post-purchase communication with customers and can encourage customers to purchase more.
  • Unfortunately, after an exhausting searching process, there are no useful stats related to the conversion rate of using customer support/ live chat as a method for post-purchase upselling.
  • Still, customer support service, or to be more specific, live chat, is "a powerful (and underrated) channel for converting visitors into valuable customers."

GENERAL STATS RELATED TO THE CONVERSION RATE OF CUSTOMER SUPPORT/LIVE CHAT:

  • On average, 82% of website visitors who engage in a live chat conversation are likely to convert into customers.
  • A reply in the messenger to the customer can "increase the likelihood of conversion by 50%; one more reply makes that visitor 100% more likely to convert. A simple conversation with six exchanged messages makes a visitor 250% more likely to become a customer."

RESEARCH STRATEGY

The research team started by learning more about post-purchase upselling through several relevant sources through which we included some useful facts related to post-purchase upselling within our findings above. To find out about the best practices when post-purchase upselling, we consulted different qualified online publications.

To determine three best practices, we sorted through different articles of different marketing agencies. We found out that there is no official ranking list of 3-5 best practices. Instead, each source provides a wide range of practices. We scanned through all practices mentioned across different sources, summing up the number of times each practice appeared. After coming up with three best mentioning practice, we also cross-checked the list to see whether Amazon, a very successful company in terms of implementing post-purchase upselling, applied those or not, to make sure we were on the right track.

We found 11 sources that include info related to practices of post-purchase upselling, in which: Personalizing the Upselling List was mentioned in 7/11 of the sources, Loyalty Program in 8/11 of the sources, and Product Feedback in 7/11 of the sources. Other practices mentioned in the sources appeared less than five times. As such, we decided to choose the above three outstanding practices mentioned the most.

Next, to identify three methods of post-purchase upselling and their conversion rates, we only managed to provide all the required info of the first method, sending an email, since this is the most common method that most of the e-commerce companies are using. Because of its popularity, the stats related to it are more readily available and outrank other methods.

Since we could not find any official ranking of the top three methods, we decided to sort and scan through all the relevant sources to see what methods come up the most.

Based on ten sources related to methods of post-purchase upselling, email was the most popular, appearing in 7/10 of the sources. For two additional methods, unfortunately, during our research, the majority of articles focused only on how to use email as a marketing tool within the marketing strategy of post-purchase upselling. That made it difficult to determine two other methods. We had expanded our search to find more sources. However, the result was the same — all about email. Because of that, we decided to carefully scan through our current sources to pick out some outstanding methods that were mentioned very briefly besides emails.

We were able to pick out live chat/customer support, and pop-up/ thank you messages. These two methods were among very few methods that were mentioned briefly in different sources, and these two appear more than others (four times each). To be more specific, the other method we were able to find was 'sending replenishment reminders through a company's app' (which some companies send it through email — can be included within the email category). It was mentioned only three times across sources. Besides, we could not find any other relevant methods.

At this point, we had drawn out a list of top three methods of post-purchase upselling. However, we were unable to provide the specific conversion rate for pop-up messages and live chat. We had sorted through different articles from different high-profile online publications; only to confirm another time that e-commerce businesses use these two methods for post-purchase upselling. We then decided to check some different credible databases as well as some reports of credible platforms for any conversion rates of these two, but the search yielded no result.

After this, we then decided to broaden our search scope by looking for the conversion rate of pop-ups and live chat, in general, and found several useful information related to these two methods. We saw that the conversion rate of these two are quite good and from this piece of info we could somehow conclude that these two methods are useful for e-commerce companies to use within their post-purchase upselling strategies.
Sources
Sources

From Part 01
Quotes
  • "Essentially rebate marketing is offering a cash discount after the product has been purchased. For example, if you offer a $50 rebate on the purchase of your product, the customer pays full price at retail and then mails in, or registers online for the rebate which is then mailed to them at a later date. Also a rebate doesn’t have to be cash. It can also be another product. For example, if you buy a frying pan, you can get a free spatula after purchase through mail in, or registering online."
Quotes
  • " Three of four respondents indicate they would submit a rebate form “most” or “all” of the time. In fact, when offered the choice between a $50 rebate or an extended warranty valued at $75, 60 percent preferred the $50 rebate"
Quotes
  • " Enroll Customers in a Points-Based Loyalty Program Engage With Customers via Social Channels Encourage Customers to Become Brand Ambassadors via Referrals Leverage Email Marketing to Update Customers Delight the Customer on Special Occasions"
Quotes
  • "Your loyal customers are the best potential advocates for your brand,"
  • "Loyal customers not only spend more money at your business over time, but they also speak the most powerfully to others. Who better to learn about a business from than a person who’s there all the time"
  • "The first step in getting reviews from your most frequent and loyal customers is to simply ask without making it sound like a favor. "
  • "Get more loyal customers to ask for reviews from. There are many ways you can build up your loyal customer base, but the most obvious is to create a solid customer loyalty program."
Quotes
  • "A Brightlocal Local Consumer Review Survey found that 84 percent of consumers trust online reviews as much as a personal recommendation."
  • "76 percent of top consumer brands reviewed by research firm L2 feature user reviews on their website and product pages to drive purchases."
  • "A recent holiday shopping study from Vibes found that only 33 percent of in store-mobile searches were to compare the price of the product; while over 65 percent were searches for reviews or for more information about the product."
Quotes
  • "Replenishment emails really do work. According to industry research, they have an average open rate of 50-60% and an average click rate of 40-50%. They also have the highest click-to-open rate of any type of lifecycle email."
Quotes
  • "Key statistics from the survey include: 90 percent of retailers agree that engaging customers after they make a purchase drives new site traffic and revenue; 52 percent of retailers strongly agree. Among five initiatives, recommending new, related products brings the highest value for 40 percent of retailers. 87 percent of retailers agree that providing customers with proactive information about their orders decreases call center volume. Retailers identify price, internal resources, and availability as their biggest obstacles to moving forward with post-purchase initiatives."
Quotes
  • "Offer complementary purchases. In a dynamic eReceipt or a follow-up email, you’ll want to send your customer items that complement their purchase. A toy store, for instance, might want to send an email that allows customers to purchase batteries for their new mechanical toy. Ensuring a customer has everything they need shows them that you care about them post-purchase (and helps you get a re-purchase more quickly)"
  • "Send a replenishment reminder. If you sell items that run out over time, like shampoo, you can email out a reminder around the time they would need to repurchase that item. Depending on your email provider, you may even be able to allow them to make a purchase straight from the email. "
Quotes
  • "Replenishment reminders Replenishment emails are automated emails that are sent to customers when their product is about to run out so they can re-order. They’re useful for all sorts of products from makeup to pet food and are low effort – they can be fired out automatically with little ongoing management. This simple attention to detail enhances the customer experience by offering convenience and makes your brand a source of reliability."
  • "Reward loyalty Go beyond the thank you and demonstrate that you value their custom by inviting customers to be part of your loyalty programme. Email them with an invitation to join and lay out the benefits, be they an exclusive offer, VIP access to sales, or bonus points on purchases."
Quotes
  • "As per the Loyalty Report – 2018, 71% of respondents who were members of loyalty programs said that the membership was a meaningful part of their relationships with brands. Another 63% of consumers revealed that they modified their spending habits to maximize loyalty benefits."
  • "As per a 2018 study conducted by RetailMeNot, about 67% of savvy millennial and gen x shoppers confirmed that they were in favor of personalized email reminders about previously viewed products and personalized offers from brands and retailers."
From Part 02
Quotes
  • "Shaving accessories are not the most innovative or intriguing products in today’s technological world, but somehow, a small startup that sells razor blades through the mail managed to reach a valuation of a billion dollars within 6 years."
  • "Although customers are drawn to the $1 per month price, DSC is successful at convincing customers to spend more. By offering three levels of quality, many customers naturally choose higher quality and spend more."
  • "In fact, studies have shown that when people are given three price points, they will most often choose the medium price, followed by the most expensive. In this scenario, people tend to choose the cheapest option less often than the mid-priced or expensive options. "
Quotes
  • "McDonald’s wanted to boost website sales and increase the average order value, without running any specific promotions or discounts on their site."
  • "The team at Insider evaluated their current website offerings, and noted that the company had recently re-introduced apple pies to the menu after a period of unavailability. Insider suggested that they could harness this event and run an awareness campaign to let customers know that this popular item was back."
  • "Using Insider, the team at McDonald’s was able to quickly create an A/B test to promote the apple pies. Customers who’d put items in their basket and were about to complete their order were shown a pop-up, giving them the option to add apple pies to their basket."
  • "McDonald’s were so confident that this would boost sales, that they targeted the pop-up to 90% of their total traffic."
  • "During the campaign, the company saw an uplift of 12.89% on the average order value compared to the previous month. Not only that, conversion rate also increased by 7.64%, proving that you don’t need to incur business costs in the form of discounts to unlock value from your website."
Quotes
  • "The idea is to present you with a rock bottom fare during your dutiful Internet searches--something that looks like it competes with all the other rock bottom fares (including those from the rock bottom service airlines, like say, Spirit)"
  • "But then, once you've selected a flight and settled into booking, you realize the restrictions: No seat assignment ahead of time. At least $25 to check your first bag. No same-day changes or standby, and no chance of an upgrade."
  • "And so you start to look at the add-ons, and the higher-priced fares. Or perhaps you don't, and on the day of your flight you find yourself paying more to check bags. You're already deep into the process with American, so 60 percent of passengers stick with it, but find a way to spend more."
  • "Actually, if you compare the 60 percent upsell rate now to the number American Airlines president Robert Isom quoted to investors a year ago, it looks like American is actually doing better than it had planned."
  • "When customers are offered a basic economy fare and also see the main cabin product, 50 percent are buying up from that offering," he said a year ago. Now they think that's where they'll be even with the free carry on bag included."
Quotes
  • "For example, if you head over to Amazon and choose the Canon Powershot Elph digital camera, Amazon will automatically show you other items (a flash memory card and compact camera case) that are “frequently bought together,” as shown in the image above."
  • "But, in terms of marketing strategy, upselling is the real winner. When Amazon introduced the upsell in 2006 (using the phrase “customers who bought this item also bought”), their sales increased by 35%."
  • "If you shop for a BOB Revolution Stroller right now, Amazon will suggest relevant items, perhaps not even with the same online retailer, that work seamlessly with the product. That makes it more likely that you will buy both items."
From Part 03
Quotes
  • "At it’s core, upselling is a strategy used by ecommerce marketers to increase a customer’s average order value (AOV). It’s all about understanding your customers and using that information to persuade shoppers to buy more than they were originally planning. "
Quotes
  • "A post-purchase upsell is what ecommerce marketers use to increase the average order value. "
Quotes
  • "Give more thought to your post-purchase email sequences with these 5 key post-purchase email types. It will boost your conversions, nurture customers, and result in repeat sales. "
Quotes
  • "Did you know that it is 25 times much more expensive to attract new customers than to retain existing ones? Keeping your current customers happy is more valuable compared to spending time and resources finding new ones. Studies show that increasing your customer retention rates by at least 5% also increases your profits by as much as 25%. "
Quotes
  • "Once a customer has made a purchase, it doesn’t need to end there. With the right approach, this can be the beginning of a long-term relationship with customers. "
Quotes
  • "Customers that have a fantastic experience with a brand spend 140% more compared to those who feel they had a poor experience (HBR). Post purchase engagement is an excellent way to increase overall satisfaction. "
Quotes
  • "When we took a look at the 1,754,957,675 pop-ups in this study, we found a few choice nuggets about pop-up conversion rates (click to share them on social media) "
Quotes
  • "Upselling doesn’t have to be a dirty word. In fact, it can help you make your customers happier. "
Quotes
  • "Treat customer interactions with your customer support team as you would any other post-purchase communication. While you may not be the one doing the talking, it’s important that your brand identity and brand experience remain consistent in this channel. "
Quotes
  • "Having conversations with your website visitors really does pay off. "
Quotes
  • "Ecommerce brands are missing a trick when it comes to continuing the conversation with customers after their purchase. A lot of companies focus so much on achieving sales conversions that they neglect to consider the benefits of a post-purchase marketing strategy."