Tony Effik, chief strategy officer, Publicis Modem
After initially poring through the mountain of voucher codes available online, I headed offline to an electronics store near our Baker Street office to buy an urgently needed replacement wireless adaptor. The store manager, sensing I needed a bargain, discretely offered me a £5 discount. I ended up getting a £10 reduction and went home proudly knowing I had got a better rate than I would have done with any of the voucher codes. I discovered later my wife had bought our last one for less.
The shrewd operator in all of this was the store manager. He intuitively knew the rules of differentiated pricing, and he knew when to make a blanket offer rather than a targeted incentive. His discrete personal offer meant he didn’t have to make a margin-eroding sale, unlike many voucher code issuers such as Dixons and PC World. Differentiated pricing is an art form and, like my store manager, airlines are the grandmasters. When you buy a plane ticket you frequently end up sitting next to someone who paid half as much, but sitting in a cabin behind someone who paid ten times more.
Equally as smart is Game.com, which recently used vouchers to drive pre-orders of a Wii bundle. Now a stampede of retailers has joined the goldrush to cash in on the explosion of online voucher interest. However, my Baker Street store manager would say many online retailers aren’t champions of differentiated pricing. In April alone, there were 450,000 searches for the term ‘voucher code’ on Google, matched against millions of results. Dixons, for example, has 233 current search results and unfortunately many of its voucher codes simply use the same formats as they advertise in-store, such as £10 off when you spend over £295. They miss the opportunity to use vouchers to push customers up the food chain using data, instead using them indiscriminately to attract disloyal ‘rate tarts’.
These random voucher offers should become smart voucher programmes that target high-potential and high-value customers, as Amazon and Tesco have been doing for years. Both companies still use blanket vouchers but most of their offers are discretely distributed via targeted emails and personalised site content. Both also know many people will still pay RRP, so they target only some with tailored voucher-based pricing in exchange for loyalty.
If anyone is a little confused about what to do next, there’s a smart guy working on Baker Street who could help. And I don’t mean me.