Online shoppers can be a fickle bunch, with so many alternative retailers only a click away, so generating customer loyalty is a key challenge for advertisers. In the first of two articles looking at incremental sales, Owen Hewitson, Client Strategist at Affiliate Window & buy.at, focuses on the relationship between cash back sites and advertisers.
The most commonly-asked question by advertisers assessing whether a sale referred by an affiliate is incremental is: would I have got this sale anyway? For cashback sites in particular, the question is framed in terms of customer loyalty: is the cashback site taking the credit for customers that would have otherwise been loyal to our brand and gone straight to our site?
It is tempting to say however that loyalty has not been lost thanks to the cashback site but that it has been lost altogether. The key characteristic of smart online shoppers is not loyalty but fickleness. What governs their shopping habits is whether they can say they got a good deal. If they feel they cannot, they will look elsewhere until they can. The question of how incremental sales from cashback sites are should be examined in light of these changing shopping habits.
Cashback sites are as much the product of this change as they are the cause of it. Like retailers, cashback sites trades mainly on the loyalties they command amongst their members, and as such have a vested interest in making it habitual for customers to return to shop via them. Where loyalty is weakened, removed or diffused, it becomes more difficult to say whether ‘incrementality’ can be measured purely on the basis of whether the advertiser would have made the sale anyway. Given this, this article offers three alternative senses in which a sale from a cashback site might be judged to be incremental.
The first sense concerns the degree to which an advertiser can lure the customers of competitors to their sites instead. At competitive times of year such as Christmas, with competitors selling the same goods or services, the question of incrementality is complicated by the fact that some customers that would usually come straight to site are more likely to shop around, and could end up buying from a competitor. If new shopping habits make loyalty no longer such a serviceable term, advertisers working with cashback sites should look at their task as one of leveraging the loyalty such sites command over their members to the advantage of their own brand against their competitors. In this sense then, the cashback site should not be seen as the advertiser’s competitor for customer loyalty, but the battleground on which the fight for loyalty against other retailers is fought.
The second sense in which a cashback customer can be said to be incremental can be judged by looking at their spending habits onsite. It is not just new customers that are incremental: advertisers may want to compare all existing customers’ AOVs, average number of products bought, or average rates of return as benchmarks by which to judge the value of cashback customers. If two cashback sites promote the same offer in the same way, but one produces substantially higher AOVs than the other, it is clear that one is doing more to produce spend that would otherwise not have been driven. The key question is not whether the customer themselves is incremental (that is, new rather than returning), nor even whether the sale would have been made anyway, but whether the cashback site is pushing that customer to spend more, on more products, or more frequently.
The third and final sense in which incrementality can be judged is with respect to the cashback site member themselves. Once converted to customers, retailers have the opportunity to remarket to them independently of the cashback site; the latter can be used to acquire more of the same. Nowadays, cashback sites have vast amounts of knowledge about their members’ shopping habits which advertisers can capitalise on to ensure better-targeted campaigns. So what does the average cashback site member look like? Rather than the demographic data presenting them as income-poor ‘deal scavengers’ who resist buying without an incentive, of the two largest cashback sites in the UK almost half of their members earn over £50,000 (almost double the average UK salary of £26k) and the majority are in NRS socio-economic grades A or B. One high street department store profiled the customers their cashback affiliates referred over a given period. Whilst individually their referrals were different, collectively these customers transacted more frequently and spent considerably more than those from other affiliates. Certain sites that offer cashback through corporate intranets are also able to provide on-target demographic information for brands wishing to attract higher income earners. The nature of these corporate partnerships enables a reasonably clear link to be made between the employer and the income (or even geographic location) of the member.
The issue of whether advertisers can rely on cashback sites to produce ‘incremental’ sales must be taken beyond the question of whether the sale would have happened anyway. This question is unsuited to the shopping habits of today’s deal-literate consumer. Advertisers need to decide what defines for them incrementality based on their understanding of customers’ routes-to-market, and utilise cashback affiliates as tactical as well as strategic partners.
By Owen Hewitson
Client Strategist
Affiliate Window & buy.atwww.AffiliateWindow.com
