Tuesday, October 29, 2019

Preventing Email Channel Cannibalization by Affiliate Marketing

Have you ever taken a step back and looked at your own shopping habits and tried to understand how they impact the way you evaluate digital marketing performance at your company? I know I’ve developed a tendency to stop at checkout—no matter what website I am on—and search the Internet for any available coupons.

From what I’ve seen with some of our clients, this is a common behavior among online shoppers. If you’re not careful, it’s also a behavior that can wreak havoc on your channel attribution, hurt your profitability, foster price-sensitivity, and undermine the integrity of your customer data. Let me explain how.

Consider This Scenario...

Your email marketing team sends a perfect email with highly relevant and engaging content. The subscriber clicks through and puts one of the email’s featured items in their cart and starts the checkout process. Then they see a ‘COUPON’ field and realize their email didn't have an offer code, so they decide to search online for one. They leave their cart and find a coupon code on an affiliate network like RetailMeNot, CouponCabin, or DealCatcher. They then click through from that link and apply the coupon and complete the checkout.

This email channel cannibalization presents a few major problems for brands:

  1. It harms email attribution. Despite actually driving the transaction, your email channel won’t receive any credit for the sale if you’re using last-click attribution, which the majority of retailers do.

  2. It costs you margin. Not only do you pay a commission to the affiliate on that transaction, but the coupon also has a direct impact on the transaction margin. 

  3. It reinforces your subscribers’ price-sensitivity. By rewarding your subscriber with an online coupon that’s better than their email’s offer, you’ve made them even more likely to search for online coupons in the future before making a purchase.

And that’s not the only scenario that results in these issues. For instance, a subscriber gets an exclusive offer via email but can’t remember which one it was in, then decides that it’s easier to search online for a coupon code than go back through their email. Or, a subscriber gets an offer from a targeted email, but finds a better one when searching online, so they use that one instead. 

Or, even worse, a subscriber finds a better offer online than what they received via email, but it requires a new email address, so they create another address just to get the better acquisition offer. In this case, a fourth problem has been created:

  1. It hurts your customer data integrity. Your customer data has been harmed because a single customer now has data attached to two different email addresses as the primary identifier. Multiple records for the same customer undermine your ability to fully understand that customer and create relevant, targeted messaging for them across channels. 

Use cases like these can add up, but there are ways you can prevent this.

Steps to Prevent Email Channel Cannibalization

In working with our clients, here are some of the practices and processes we put in place to stop affiliate marketing from hurting the email channel. Depending on their individual circumstances and goals, we mix and match these solutions:

1. Reduce coupon code competition. 

Take an omnichannel approach to coupon codes by using the same codes across all of your channels. Make sure that any offer that’s available online, especially from paid and commission-based sources, are also readily available in your owned and granted media channels like your website, emails, and texts.

2. Reinforce exclusivity in your more valuable channels like email.

Email marketing is a highly valuable channel because of its unique and powerful characteristics, which include that it’s the best retention channel. When your customers become subscribers, they’re making a commitment to you. Return that commitment by giving them offers that are better than what they find in your affiliate channels with no commitment at all. 

Consistently deliver better offers through email and over time you’ll train your customers not to waste their time searching for a better coupon—and perhaps stumbling upon an enticing offer from a competitor—because they’ll know they’re getting the best offer available by being an email subscriber.

This approach also gives you more flexibility to be more aggressive since email allows you to be very targeted. For instance, you could deliver your richest offer to your inactive subscribers, particularly those who are not converting through other channels. That offer would have maximum impact but have limited scope. 

3. Use single-use and account-based promo codes. 

Especially for your high-value discount codes like the reengagement offer just mentioned, mitigate the impact they have on your margins and customer behaviors by making them single-use, unique codes. This eliminates promo code sharing and focuses your discounts on the intended subscribers.

Some brands even take this a step further and tie these unique promo codes directly to a single account. Usually this is done in parallel with a loyalty program to uniquely identify the person and ensure they are the only one eligible to use the offer.

4. Pre-populate coupon code fields.

In many cases, it’s simply the presence of an empty coupon code field that prompts subscribers to search the internet for a code to put in it. Eliminate that visual signal by pre-populating coupon code fields when a subscriber clicks through an email that includes a promo code. That’s also the user-friendly thing to do, as it avoids frustration should a subscriber check out without using the code and then realizes it and feels cheated.

5. Diversify your attribution modeling. 

Are you still relying solely on last-click attribution? If so, you’re not alone. Many companies do. However, it’s important to recognize that this gives you a distorted view of how your various channels are driving sales. 

In addition to looking at last-click, we recommend measuring first-click attribution to better understand where customers are starting their buying journeys, and measuring linear attribution, which gives equal credit to every channel a customer engages with prior to converting. One single model isn’t necessarily superior to the others, but they each provide a different point of view into how your customers are engaging with your brand.

If you’re not ready to utilize more sophisticated attribution methodologies, it could make sense to at least take steps to do a traffic analysis to understand general trends of what paths your customers are typically taking. For instance, how are they shopping across channels? What’s your page bounce rate for your checkout page? What other pages are seeing high bounce rates?

Consider running a backwards analysis on a group of conversions. Look for patterns or similarities, and then determine what the attribution implications are.

Use these five tactics to prevent email channel cannibalization by your affiliate marketing activities. Given the intense competition and margin pressures in retail, brands can’t afford to give away margin lightly, and certainly don’t want to further train their customer to be price-sensitive. These tactics can reverse these bad customer behaviors and teach subscribers to trust the value of your email offers again.


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