A decade ago, we never would’ve thought that the stagnant mattress market had anything valuable to teach retailers. Yet here we are in 2019, and the mattress market is booming: there are more than 200 players and, growing 6.5% each year, it’s expected to reach $43 billion by 2024. In this highly competitive and commoditized sector, where every brand is aggressively offering discounts, it’s exceedingly difficult to rise above the noise.
Consider this: it’s harder than ever for marketers to grab the attention of consumers. Recent data from WBR Insights shows that over 80% of marketing program owners in retail feel more pressure to meet acquisition and revenue goals than they did last year. In an effort to stand out, 75% of retail marketers are running either weekly or continuous discounts.
But that’s only adding to the noise.
People already receive 5,000 messages each day, and they’re tuning out. If running universal discounts for everyone isn’t the answer, what is? How do you break the cycle?
Personalize Offers to Consumer ‘Tribes’
One way retailers can acquire new customers in this noisy landscape is to reframe their discount strategy — to focus on owning and winning a “consumer tribe” like the military, teachers, students, and seniors.
Compared to a customer segment, a group of buyers whose only common denominator is shopping behavior (e.g. visiting a web site, making the same purchase), consumer tribes are socially connected. They have a lot more in common, including career, lifestyle and values, and naturally share information, products and deals. A trusted recommendation from a peer motivates them to act, fueling word-of-mouth marketing that drives down customer acquisition costs.
Engaging consumer tribes is known as identity marketing, and one way to do that is by giving them gated, personalized offers.
How To Make Identity Marketing A Competitive Advantage
Direct-to-consumer mattress company Purple is known for its innovative sleep products built on decades of research and development. Yet it’s a relative newcomer to the market, founded in 2015.
To stand out in a highly competitive space and tap into a new pool of buyers, the startup decided to focus on the military: a unified, socially connected group with 37 million members. The brand offers a 10% military discount for active and reservist military, veterans, retirees, military spouses and registered dependents.
Purple’s success with this strategy stemmed from four best practices:
Align brand and consumer values
When your brand values match up with those of the consumer, it creates a deeper connection that everyone can get behind. With mattresses made in a Utah facility that employs 800 American workers, Purple’s “Made in the USA” brand identity resonates not only with the tribe — the military customer — but also among all consumers through the halo effect. People want to support the military and notice brands that make an effort to do so.
Go deep with the tribe
A discount alone doesn’t drive acquisition. You need to embrace the tribe in multiple ways to create a connection. Purple did this by running special campaigns at Memorial Day and promoting their discount using relevant messaging and images that resonate with the military community.
Purple also used Facebook targeting to find military audiences for their initial offer, then created lookalike audiences to refine their targeting criteria and drive additional performance.
Respect consumer privacy
According to Deloitte, 81% of consumers are concerned about how companies use their data. And consumers are taking action: Forrester reports that 79% of U.S. adults use at least one tool to protect their online privacy and security.
Privacy matters, and it’s only going to grow in importance. With this in mind, Purple knew that with identity marketing, they didn’t have to sacrifice privacy for personalization, or personalization for privacy. Purple first invites all members of the military to participate, then uses a digital verification process to collect only basic customer data to confirm that consumer is part of the tribe. Once a military consumer opts in and accepts Purple’s invitation, the brand and the consumer begin a reciprocal relationship built on mutual trust and respect.
Purple can use zero-party data to facilitate deeper engagements with military shoppers, without the risks involved in maintaining personally identifiable information (PII).
Tap into viral sharing
Consumer tribes have strong networks that relish in supporting each other: 76% of the military learn about discounts from word of mouth. To harness the power of the tribe, Purple promoted the discount through channels like Facebook and Pinterest. And it’s working. Showing commitment to the military community led to a better customer experience, increased revenue, a 6X increase in conversion rates (compared to regular site traffic), and ROI of 25:1.
Purple also sees opportunity to replicate this success with other consumer tribes, and is looking to expand its personalized offers to first responders.
At a point in time when the industry needs to move beyond chasing clicks and cookies, it’s the more human forms of personalization that will resonate with consumers. Identity is a deep expression of who we are, and that’s what the future of personalization is rooted in.
Sai Koppala is the CMO at SheerID. Prior to SheerID, Koppala led a variety of marketing and product teams at global software companies like Google and SAP as well as start-ups like Proximity (acquired by Apple) and Apigee (acquired by Google). Koppala is an Electrical Engineer by training, with an MBA in Marketing from Kellogg School of Management, Northwestern University.