Be careful how your structure that incentive
I’m not generally someone who games the system, but a recent promotion was one that I did game.
I’m a regular at LL Bean. Every year, I earn a few coupons, which are mostly based on sheer volume, but sometimes tied to specific promotions.
A few weeks ago, I got an e-mail, offering a $10 gift card - while supplies last - if I spent $25. I was about to go and place an order, so I was more than happy to hop on and see if I was in time for the $10 gift card. What I was ordering was three gifts, priced at around $40 each, to go to three separate addresses.
I had the three orders teed up when I read the fine print, which said that you could earn one of these gift cards per day.
Well, that was clear enough.
Click on Purchase now for gift going to my sister-in-law in Texas.
Keep in Shopping Bag for the other two orders.
The next day, I went in an ordered the Christmas greens and candles arrangement for aunt #1 in Chicago.
The next day, Christmas greens and candles arrangement for aunt #2 in Chicago.
Total expenditure on my part, about $120; value of the coupons coming my way $30. 25% give-back. Very nice.
I probably would have felt to guilty about waste of UPS fuel if all three of these items were for me, but they were going to totally separate addresses (even the Chicagoland ones are many miles apart), and having to get online for a couple of minutes three nights running was not big deal. So game it I did.
Sure, Bean’s offer is nothing much different than the come-on sales in physical stores. And certainly, since the coupons expire in mid-February (ordinary coupons are good for a year or so), it’s a smart idea for them to encourage folks to do some shopping in what is probably not a supremely active time of year for them. (At least for us New Englanders, by February, we’re sick of winter clothing and the smell of wet wool, but the weather hasn’t exactly been putting us in mind of khaki shorts and little cotton sweaters.) And I’m sure that LL Bean knew exactly what they were doing in allowing this oh-so-game-able offer to occur. The folks Down East are, in my book, pretty fair marketers, and they don’t need advice from someone with zilch-o consumer or retail experience (beyond being a consumer and having worked as a sales clerk in my youth).
But it did get me thinking about how careful you have to be when you do come up with special offers/sales incentives even when you’re dealing with boring old enterprise B2B products and services. This isn’t an arena I find myself in these days, but obviously every offer has to be completely thought through.
Is this the type of customer behavior we want to encourage? Does this offer have the potential to backfire and cause us all kinds of onboarding support problems? Are we cannibalizing next quarter’s sales to make this quarter’s look better, and will we end up with a net-negative impact for the year? Are we undervaluing our services - and placing too great a demand on them - by giving them away for free?
No right answer here - just a reminder that we all need to think a few chess moves ahead to what can happen when we make special offers. (Ditto for spiffs. Gotta really think through the sales behavior you want to encourage.)
Meanwhile, I’ll be happily spending my $30 worth of coupons on LL Bean.
The same, only different…
A new client - a VAR aiming to add more VA to their R - sent me a link to a brief article (by Robert DeMarzo) that he’d seen on Channel Web. Excellent reminder that you really aren’t differentiating yourself if you’re claiming that your differentiator is the same as the other guy’s. De Marzo cited a study from Everything Channel that polled a couple of hundred VARs, asking them to state what their differentiation/value proposition to their customer is.
Now, it may be that respondents were thinking “value proposition” rather than “differentiation” - after all, you can have one without the other - although a differentiated value proposition is stronger than one that’s not; and a less than valuable differentiator is, well, less than valuable. (Let me make this point perfectly clear: just because something is different - our font is Calibri! - doesn’t mean it’s worth a damn.) Whatever the case, the results came in that:
…the No. 1 answer was exceptional technical support followed closely by trusted adviser relationship.
DeMarzo added,
To me, those are assets every solution provider must have. But they really are not going to differentiate you long term because anyone can bolster their tech support staff or win over customers with a trusted adviser pitch.
DeMarzo and an audience of of VARs he was talking these results through with came up with some alternatives to the generic, non-differentiator differentiators from the study. He argues that what
…should matter more are credentials and certifications or a deep understanding of a vertical market or a VAR’s grasp of specialized technologies. Those factors along with an intimate knowledge of your customer’s business are the true differentiators.
I’ll definitely be keeping in mind as I work with my VAR client on their positioning. Not to mention when I’m working with other companies, VAR or not.
If you don’t have something to offer that provides true value to your customer - value that is not available with other products and services - you are inevitably going to end up differentiating on price. Now, if being the lowest cost provider is your strategic competitive positioning, bottom pricing is fine. But too often I’ve seen companies trapped into beating the competition’s low, low price - even when they end up losing money on the deal - because they can’t justify their offerings in any other way.
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Thanks and a tip of this blogger’s virtual chapeau to KC.
