A university study found that financial incentives, such as coupons, are not always required to drive customers to try something new, including multichannel shopping. In fact, they can be counterproductive.
The study explored how stores can drive sales through more than one channel, for example, driving online shoppers to brick & mortar and vice versa.
Professors at the Department of Management of the University of Bologna (Italy) and Tuck School of Business, Dartmouth College conducted a field experiment with more than 30,000 customers of a major multichannel European book retailer.
The authors randomly assigned the firm's customers to receive one of four marketing campaigns. Customers received one of two messages: one stated the benefits of multichannel shopping while the other stated the retailer's value proposition. Each message either included a financial incentive or did not, yielding four campaign variations in all.
When the multichannel message included a financial incentive, the customer received three coupons, one for each channel. When the value proposition message included a financial incentive, the customer received three coupons that had to be used on three separate purchase occasions. Coupons were valid for three months.
Sources: Gap, JCrew, American Girl Dolls
The campaign that proved most effective at inducing customers to use more than just one channel was the campaign that combined the multichannel message with no financial incentive. The campaign generated a return on investment (ROI) of 93 percent, compared to negative ROIs for the other campaigns.
Surveying the respondents, the authors found the multichannel campaign with no incentive communicated the benefits of multichannel shopping without appearing manipulative, or only usable if various restrictions were met.
"The coupon incentives were quite reasonable from the company's perspective, but were restrictive and manipulative from the consumer's perspective," said Professor Elisa Montaguti, MBA director at Bologna Business, in a statement. "So the prescription for companies is simple — make clear what you're encouraging the customer to do, but don't come across as manipulating them into doing it."
The researchers believe the findings are particularly relevant in today's shopping environment, where consumers are bombarded with e-mails and website recommendations with purchasing incentives.
"In our case, multichannel shoppers are more profitable than they would be if they were single channel, but you can't force them into becoming multichannel," said Prof. Montaguti. "You have to convince them in a clear, straightforward manner."