Both

For the last couple weeks, Adam and I have talked about the concept of “offer stacking.” Going to hit it again here because it’s my favorite thing we’ve talked about yet. 

We started this “thread” by illustrating how stacking offers helps brands capture more margin,and then dove into how to weigh those discounts in light of incrementality. Both of these were theoretical in nature, but this week we have a real-life example to talk through. Last week one of our customers, Ben Perkins, made this LinkedIn post about a test he ran:

This is the type of test result I love going through with people. For one, it hits on this question of what to do in the event of a tie - it really forces you to think through your business priorities. One comment from Daryl Klingaman in particular hit on this: “How cool to know you have a dial now that you can move back and forth as the needs of the business change.”

But I also think there’s a piece in here that hits on the historical mindset of commerce and also goes back to Adam’s post from last week: That merchandising is static. What you offer today you offer to just about everyone.

Like Adam said last week, though, maybe you don’t have to move the lever back and forth,and pick just one option at a time. Maybe we can use personalization—a truly dynamic offer—to pull both levers at the same time and get even more benefit. Can we have our cake and eat it too? 

There are a couple paths to explore with this mindset: 

• What could we personalize or differentiate on-site? 

  • Ben could set his default option to the $125 threshold - taking advantage of the 10% profit lift there - but then dynamically reduce the threshold to $75 when he detects it’s a new customer (either through cookies or by targeting new customer campaigns. This helps him scoop up as many new customers as possible, who he saw prefer the $75 threshold, while maintaining as much margin 

• How can we use follow on offers to take advantage of these dynamics? 

  • Ben could set a $125 free shipping threshold to get the 10% lift in profit per visitor. Now, conversion rate isn’t as high as the $75 threshold, so maybe you take your profit “winnings” and use it to fund an abandoned cart offer - ie, an email that goes out to people who go to checkout but didn’t buy - that offers FREE SHIPPING to those who didn’t convert. You’ve found a nice way here to differentiate between your customers and their willingness-to-pay for shipping. You end up capturing even more conversions at a still better-than-control margin profile.

And, actually, there’s a third path (not too different from the second) where, instead of segmenting the offer by new and returning, you segment the offer by onsite behavior—in this case, cart value. If you were to take that path, you’d advertise $125 as the threshold, but “surprise” customers with free shipping at checkout, so long as they have $75 in their cart. 

The beauty of this illustration is that it shows there are paths for finding out whether you do, in fact, have to make a choice. Or whether your choice can be to do both. 

Ecommerce, traditionally, has lived in that static world that brick-and-mortar commerce has required. And where it hasn’t, or where the discussion has often focused, is on 1:1, hyper personalizations that feel both too theoretical and borderline utopian. But maybe those examples feel a step too far for people to adopt a more dynamic experience.

A lot of them are possible today, and you can use Intelligems to execute on them, but maybe the place to start is in the real life examples, like the one from Ben. It’s a lot easier to think about splitting shipping thresholds than it is to think about some far-off personalized vision board. So, maybe that’s the place to start.

And maybe the “uncaptured margin” diagram can be a forcing function for thinking in this way, because whatever helps fills those gaps is a win. It might just mean we need to change our mindset to get there.