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Test Your Way to Success! Developing a Discount Campaign in Recurly

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blog_coupons-test-success2x.gifThere’s a rule of thumb when it comes to marketing: know your audience. This is a great rule in general, and it’s an essential rule for merchants designing a discount campaign to promote their subscription business.

Know your audience. Merchants need to know how their customers interact with their product or service. Is it an essential in the customer’s life or business, a necessary commodity, or more of a fun indulgence? Are customers highly loyal and highly engaged, for example, posting unboxing videos to YouTube when their box-of-the-month arrives? Or is the product or service providing a convenience that customers appreciate and will pay for?

How customers and prospects view a product also plays a role in the most effective way to discount it. Commoditized products, for example, tend to have a strong response to discounts but also high churn rates when the discount ends, On the other hand, products that are perceived as being unique or of “premium” quality or value generally don’t need to be discounted very much, and discounting them too much can actually hurt the brand. In this case, something more “exclusive” like invitation codes perform better.

A merchant that knows their customers and prospects will have good demographic information about them. They’ll know something about their customers’ media habits and the best ways to reach them with marketing messages. Knowing these things helps a merchant decide which delivery channels are likely to be most effective.

Finally, a merchant needs to understand the key factors that impact revenue calculations and projections under a subscription business model. Subscriber churn, payback periods, and customer LTV all affect campaign margins and profitability. Understanding these complexities will help target the right prospects who will deliver long-term value.

Merchants who have a good understanding of what drives their customers and prospects can work with Recurly to easily create a coupon campaign with an appropriate incentive to drive conversions.

Of course, another rule of thumb in marketing is test, test, and test some more. Having designed a marketing campaign and discount strategy, merchants should then test their assumptions. Using Recurly, merchants can create and run A/B split tests by creating two different offers that vary in one critical way. Perhaps one offer has a time limit and the other version limits how many customers can redeem. Or merchants can test how the discount offer is delivered, or experiment with the copy promoting the offer

Whatever is being tested, Recurly’s flexible coupon function provides a straightforward and effective way to test the offer before delivering it widely. Merchants create the test offers, send the two different versions to the test population, and when there’s a sufficient response, compare the coupon code redemptions in Recurly to see which version was the high performer. Then, merchants can launch the full campaign confidently knowing which version was best.

Recurly also enables merchants to update campaigns on the fly. If a campaign is proving to be very effective, Recurly lets merchants increase the number of redemptions. If it’s not performing as well as expected, merchants can extend the redeem-by date. And if they want to extend an expired campaign, they can simply restore the coupon and then use the coupon code again. With Recurly, merchants have the flexibility to make adjustments to their campaigns as they’re running them, to continually try to improve results.  

To get you thinking about your next discount campaign, download Recurly’s guide, “Ten Tips to Grow Your Subscription Business Using Discounts.”

And look for our next blog post in this series, where we’ll discuss how to design your discount campaign for the specific goals you want to achieve. 

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