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Five years ago, we set out to create a better way for marketers to optimize the offers they send to engage customers throughout the customer journey. Having optimized over 6 billion unique offers, it’s safe to say we've learned a lot. And we’ve incorporated those learnings into Formation’s Dynamic Offer Optimization Platform, which we are proud to announce is generally available today.
What’s the big deal about offer optimization?
Every marketer today is familiar with optimization. They optimize ecommerce experiences, messages, and all facets of digital advertising. There are countless companies and people whose job it is to help marketers optimize programs. It makes sense. Marketers should ensure that any large amount of spend is optimized for ROI. Yet that same type of optimization has not yet occurred for promotional offers, despite how much money companies spend on those offers. The question is why not?
The urgent move to first-party data and granular customer insights
Granular customer insights used to be challenging due to the lack of customer data; however, investment in first-party data infrastructure by B2C companies has created a foundation for more advanced customer insights work. Longitudinal data about each customer and the continued development of artificial intelligence and machine learning is enabling B2C companies to develop granular customer insights at scale. However, there are still profound barriers to offer optimization.
There are three common reasons why companies have found it challenging to optimize offers: i) limitations on making offers relevant, ii) creating new offers is slow, and iii) ongoing optimization is manual. Solving these three problems has been the focus of our research and development for the past five years.
Challenge 1: Limitations on making offers relevant
Marketers have a lot of experience making messages relevant. They work on subject lines, copy, and creative images so that every message that is sent to a customer will resonate. So why does this approach fall short when it comes to offers? Simply, offers are different from messages. Offers require specific actions to be completed to earn a reward. In fact, the relevance of an offer requires that the action and reward be relevant to each customer. Ideally, it also means a marketer can customize the action and reward to each customer—and this is where the difficulty starts. Marketers need a system that allows them to easily personalize actions and rewards for each customer, yet their martech, commerce tech, and loyalty tech systems do not enable this.
Challenge 2: Creating new offers is slow
Creating an offer with traditional Martech, commerce tech, or loyalty tech takes significant time. Over the last five years, I’ve asked many marketing leaders and practitioners, “How long does it take to create and deploy a new offer campaign?” The answer is typically 10-12 weeks. It makes sense, given all the teams and systems involved: marketing to create the offer strategy, IT to code the offer rules, analytics to pull the audience, the channels team to ready each channel, and marketing operations to coordinate all the moving pieces. Consequently, the same offers are reused over and over again, and there are few variations, as each variation adds significant time.
Challenge 3: Offer optimization is manual
Marketers understand how to optimize, and the optimization process is simple: review performance, select high-performing variants to scale and learn from the results in order to improve subsequent offers. While the process itself is simple, it requires specialized analytics skills or resources and is incredibly time-consuming, with each experiment or campaign typically requiring several weeks to analyze. The more offers and offer variations you create, the more challenging optimization becomes.
A better way: Dynamic Offer Optimization
To solve these challenges, we’ve invented patent-pending technology to make it possible for a single marketer to create millions of unique and targeted offers with dynamic actions and dynamic rewards in minutes with machine learning. We’ve developed an offer engine that can manage and fulfill billions of unique offers in real-time. And we’ve proven that by focusing on making actions and rewards relevant, offers become far more engaging to your customers.
We have automated a new offer creation process so that marketers can create new offers 10x faster than they could before, even while creating millions of variations. Because of this speed, marketers can be agile, reacting to customer behaviors and trends quickly. They can recognize what’s working and what isn’t and quickly decide how to focus their efforts on offers that perform. Measurement and experimentation enable marketers to be aware of performance, to test changes, and to develop new solutions in response to experimental results.
We’ve also applied machine learning to ongoing offer optimization so that offer performance gets better over time and scales without human effort. Optimization that learns which dynamic actions, rewards, and offers perform best for each customer, ensuring maximum customer engagement and business impact.
Offer optimization is critical in today’s world
Existing customers generate the majority of a company’s profit, yet engaging these existing customers is becoming harder. Due to rapidly shifting consumer expectations sparked during the coronavirus pandemic, brands need to be able to react quickly and to experiment to ensure their offers engage customers. With the privacy legislation and positive steps by companies like Apple and Google and the coming changes to targeted advertising, it will also be harder and more expensive to engage customers on paid channels. Lastly, today’s customer expects to receive value when sharing their data (e.g., zero-party data), and their expectation for value is reaching new heights.
Offers provide a proven way to engage known customers with valuable content. Offers also provide a unique way to introduce customers to new products, new services, or new activities they may otherwise not try. But with today’s distracted customer, it has become more critical than ever that your offers are both relevant and valuable. Averages for both the reward and action are no longer good enough. By using dynamic offer optimization, marketers can easily create offers that are both relevant and valuable - making it possible to engage your customers, enhance your business, and increase customer satisfaction and loyalty at the same time.
Over the last five years, Formation has enabled our customers to send out more than 6 billion unique offers, and to do so with unparalleled relevance, value, and speed. We have learned so much in that time, and we are so excited to incorporate those learnings into our latest release of the platform.
With dynamic offer optimization, we can help marketers connect to their customers as individuals, building and strengthening each customer relationship over time--because we’re ultimately helping marketers achieve their vision of making commerce more personal.
See the platform in action