Don't Discount the Benefit of Discounts in 2014

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Don't Discount the Benefit of Discounts in 2014

By Jake Weatherly, CEO of SheerID - 02/19/2014
Just as the last two months of the year mark the single biggest shopping season and an opportunity for retailers to end the year strong, the first couple months of the new year provide an opportunity to kick off a revitalized plan for increased growth and revenue.

While the holiday season had 94 percent of consumers indicating that discounts would be an important deciding factor when they went holiday shopping, according to Accenture's annual holiday spending survey, the first quarter is still a great time to implement a discount system to keep those customers coming back time and time again. But in a landscape already overloaded with offers for free shipping, price matching, and flash sales and BOGO deals, how can apparel retailers use discounts to differentiate their brand from the competition and reach more customers for growth in 2014?

Connect with customers on a personal level
People respond well to customized messaging. A personalized approach can deliver five to eight times the ROI and create a sales lift of 10 percent, or even higher, according to research recently published by the Harvard Business Review. Personalization can take many forms, including product recommendations based on recent purchases, coupons to commemorate birthdays, and exclusive offers to segmented audiences.

The Buckle, which sells well-known brands such as OBEY, Fossil, Hurley, Puma, and Oakley as well as its own exclusive jeans and apparel, recently launched an exclusive 10 percent discount for the military community. Qualified United States military service members and their family who are eligible for the discount simply create a Buckle account and log in to access the discount. As part of the registration process, the individual's military service is verified by SheerID, and The Buckle stores information in its CRM about who is eligible for the exclusive offer and who isn't.

This strategy gives loyal customers who served the ability to receive emails and other customized marketing messages throughout the year, including patriotic holidays such as Veterans Day or Memorial Day. SheerID studies show that 94 percent of military spouses, service members, and veterans notice and appreciate companies that are military-friendly. By offering the military community truly exclusive deals as a thank you for their service, The Buckle is able to connect with these customers on a new level.

Increase buzz about your brand
Another benefit to offering an exclusive discount to a targeted audience instead of simply putting products on sale is that exclusive special offers go viral quickly within tight-knit communities such as military families, teachers and students on college campuses. Apparel retailers that have launched college student discounts have seen as many as 14,000 qualified consumers order from their web sites within 48 hours of announcing a new student discount.

Ivar, a retailer that specializes in ergonomic backpacks, launched a new military discount for Veterans Day in 2013 and also experienced the effect of positive buzz. The brand's newest offer for current and former military members is deeper and richer than any other discount the company currently offers — 25 percent off plus free shipping — the deal garnered coverage on blogs, apps, and web sites that are popular in military circles like The Military Wallet, Military Times, TransitioningVeteran.com, and Discount Soldier as well as local coverage in Dallas, Denver, San Diego, Redding, Columbia, S.C., and Camp Pendleton. A SheerID survey found that 81 percent of military community members find out about military discounts through word-of-mouth, and 86 percent of college students tell their friends when they learn about a new student discount.

Target new customers through niche communities
Retailers that are interested in increasing incremental revenue and reaching new customers this year may also want to consider creating exclusive offers such as the one Karen Kane has for teachers, college students, and military. As word spreads within highly engaged communities, excitement grows and traffic to retailers' stores, web sites, and apps increases.

Companies such as Karen Kane, Ivar, The Buckle, and Fathead that offer military discounts have found that up to 70 percent of customers who successfully redeem a protected military offer are new customers.

While many shoppers are looking to buy for spouses, friends, and family members on web sites and in stores where they don't normally shop during the holiday season, it's fairly common for new customer numbers to spike during November and December. The difference between those new customers and the new customers that retailers can reach using exclusive offers throughout the coming year is a foundation laid for loyalty due to a personal connection with the brand, or having heard about the retailer from sources they know and trust.

This breed of new customers is more likely to become a long-term, repeat customer and evangelist for the brand than the average holiday gift buyer. The SheerID survey showed that 85 percent of military community members and 69 percent of college students say they're more loyal to companies that offer them exclusive discounts.

The new year is an opportunity to start fresh. By offering truly exclusive discounts to targeted groups of customers now, retailers can cut through the noise with a message that really resonates with their target audience early to ultimately drive loyal customer shopping habits to create incremental revenue throughout 2014 and for years to come.


Jake Weatherly is CEO of SheerID, a technology firm that helps companies protect their special offers by instantly verifying customer segments online.