46% of people are deal sharers, 46% are deal takers and 8% are outright rejectors of deals.
So claims a recent study from Experian that segmented the American population by their attitudes to deals. This is really interesting for online retailers both when thinking about referral and about discounting in general. Certainly it suggests that blanket discounting campaigns are potentially very wasteful. As Experian put it, "retailers give deals to those who don’t need or seek them, ultimately missing out on profits that were theirs for the taking." The report clearly shows the benefit of segmenting your audience for both incentivised referral and discounting into groups that will react to your message and incentive in a similar way to each other.
The Deal Seeking Segments
To summarise the study, Experian classified the population into 5 segments:
They represent 18% of the population. This segment is always seeking the best deal whether it be online or offline. They tend to be younger and love shopping. They are frequently online and heavily engaged in social media and they are comfortable sharing their favourite brands on social media. They are almost 2.5 x more likely to say that they trust the information they see about products on social media and to actually buy something when they have seen it promoted on social media. They are also highly influential within their social groups. They are more than twice as likely to claim that their friends come to them for advice about what to buy, both in person and online. They see themselves as trendsetters and have the potential to multiply a brand's message by word of mouth. Offering discounts can be an effective strategy since they use vouchers from all different channels at higher than average rates, especially vouchers from the Internet and email (where they are 46% more likely).
Offline Deal Seekers
The represent 13% of the population and are rapacious deal seekers through traditional channels. Offline Deal Seekers are consumers who love deals and look for deals where they can find them (although they are unlikely to look online). Half of this segment are over the age of 55 and 2% are retired. They are highly social but their influence declines online as they are less likely than average to use social media. This segment is very price sensitive, with 43% agreeing that they are highly consumed by getting the best deal. Offline Deal Seekers are also more likely to observe that vouchers and discounts are a way for them to try new things.
Representing 14% of the population Deal Thrillers always seek the best deal, but prefer offers from their favorite stores. Deal Thrillers love getting a deal. However, these shoppers are 57% less likely than the average population to say that a coupon or sale would encourage them to try a new store. They love to get deals but don't want to put in any extra effort to do so. They’re quite loyal to their favorite stores and brands and are convenience oriented. What they really want is to visit as few stores as possible, but come away with the product they want at a price feeling like they got a bargain. This segment is a bit older, with a mean age of 49. 56% of Deal Thrillers are male. Retailers don’t need to always offer discounts to Deal Thrillers but when they do they should require minimal effort on the part of the shopper. Retailers can't be complacent with these customers. They need to feel like they're continuing to get a good deal or they'll walk. Deal Thrillers are also influential customers who can make great sharers - provided you keep them feeling good about your brand - though their influence declines when transitioning to the online sphere.
These people make up 12% of the population. While not actively seeking a deal they will take one when offered and even shop a new store to get one. Deal Takers are less-motivated shoppers who will accept a deal if it is offered, but are less likely to actively seek one out. Though Deal Takers are not looking for the best deal, they are 24% more likely to try a new store if they are offered an introductory offer. And while vouchers and discounts may be a good approach to attract this group, they need to be heavily advertised as Deal Takers are unlikely go out in search of them. This group is often influenced by social interactions, both online and offline. Deal Takers are very active on social media and highly influenced by it. They are 31% more likely to click on links from social media and 17 percent more likely to take note of reviews. They also have the highest spend of all of the segments and so are worth trying to reach.
34% of the population are Deal Indifferents. The are unethusiastic about shopping and are unlikely to change their behavior because of a deal. Generally they don’t care if they get a good deal and care more about convenience, quality and brand. Retailers that employ a “mass- discounting” strategy will be wasting money on this, the largets of the segments. They are open to brands shared by a friend where it helps to increase the convenience of deciding on which brand they should trust enough to buy from.
8% of the population. These people are the most deal-averse group and they want convenience more than anything else. They dislike shopping. Deal Rejectors are 40% more likely to say that they rarely go shopping and when they do they just get what they need and then leave. They are 61% less likely than the general population to share brands on social media and 59% less likely to trust information they receive through social media channels. 58% of this segment are men and tend to be older with 47% being over the age of 55 and 40% are retired. That said they have a higher-than-average discretionary income and so shouldn't be given up on.
Our Key Takeaways
Here's what we took from this report at Mention Me:
- Segmentation in incentivised referral is valuable. Offering different incentives to different segments make sense.
- That said, determining the segments to conform to the attitudinal segmentation here is tricky. To an extent the attidinal segmentation conforms to demographic segmentation but it is not perfect and even that is difficult as an online retailer. It's more likely a mixture of average order value and use of coupons in the past will be a better steer.
- Within society there are some natural sharers and there are some natural takers. The key to successful referral is getting all the sharers to share and helping them get to as many Deal Takers as you can.
- The demographic of a brand will influence sharing behaviour. In this study the Deal Seeker Influentials were found to be younger.
- That said, means of sharing offers offline (such as the Mention Me mechanism to share by name) open up sharing to the Offline Deal Seekers.
- Price and discounts are not everything. For the Deal Indifferents, convenience is more important than a discount. This fits with the dynamic in incentivised referrals. An incentivised referral is not really about the incentive. The incentive is just to reduce friction in the sharing and to increase conversion when a new customer comes to a site. The real benefit is the new customer getting an introduction to a business they can trust which means less temptation to look elsewhere and improved conversion.
Source: Experian Marketing Services, Deal Seekers Report, as part of the Consumer Speak Series, Jan 2014.