Before continuing to read this article, try this experiment. Look through the promotions folder in your email and count how many messages you received in the past 24 hours that have either a $ off or % off discount included. I knew I’d see a lot but the results blew my mind - over 100 messages, 90% of the total, included an incentive and more than half of those mentioned the offer in the subject line itself.
Throughout my time in eCommerce, I’ve been continually baffled by the lack of differentiation in offers that brands put in front of their customers. These discounts erode margin, do not stand out to customers, and all look the same. Unless brands innovate their offer strategies, they’ll continue to see limited revenue and suppressed open rates.
However, there is another option for brands - using impact as an incentive. This article will explore three reasons why brands should consider using charitable donations instead of traditional discounts to drive revenue and build customer loyalty.
1. Consumers care about social impact more than ever.
In today's world, customers are increasingly looking to do business with brands that share their values. According to a recent study by Salesforce, over 70% of consumers say that they would not only pay more attention to but spend more money with brands that have aligned values to them. And at the same time, 89% of these same consumers say that they’re skeptical of brands' social impact efforts and are afraid they are just ‘greenwashing.’
By aligning with charitable causes that connect with their community, brands can demonstrate their commitment to social responsibility, and create a sense of shared values with their customers.
A great example of this is Parade, one of the fastest growing D2C brands. With every purchase, Parade lets its customers make a donation at no extra cost to them to causes such as mental health, racial equity, and sustainability and track the impact of their purchases on specific goals over time. This allows them to move impact from an About Us page in the footer to something its customers can interact with for every purchase.
2. Lifting AOV, Cart Completion, and Loyalty
When consumers can give back with every purchase, they are more likely to add additional items to their cart and complete their order. They begin to do the mental math in their head that “the more they buy, the more they support causes that matter to them.” This creates both guilt reduction and leads to a higher share of wallet.
In one A/B test we ran for a partner, providing a donation with each purchase lifted average order value by 15% and cart completion rate by 17%. This led to a ROI that was double their targets, allowing them to scale this channel and give back even more.
On the loyalty side, consumers are more likely to keep shopping with a brand when they can track the cumulative impact their purchases are making. This is where many charitable giving campaigns fall short - a lack of transparency and tracking for the customer. However when done effectively, consumers are up to 30% more likely to make a second purchase with a brand when they are aligned with those values.
3. Margin Management
Many brands are shifting from growth to profitability and as a result are looking to pull back on the size of incentives. However it’s a catch-22; so many customers are primed to these discounts that if a brand pulls back on them completely, sales will plummet.
What’s great for marketers is that social impact provides an opportunity to wean off incentives and still provide considerable value back to your customers.
For example, instead of offering 20% off, try offering 15% off and a 1% charitable donation. In testing we’ve done, consumers respond to the latter offer just as strongly as the former. They feel they get two incentives to make a purchase while also having the opportunity to give back to causes that matter to them.
And the best part for marketers? This approach reduces the amount of margin a brand is giving in discounts by 20% and there’s plenty of other variations of this too (e.g., double impact days).,
In conclusion, social impact shouldn’t be just a nice to have for brands today. It’s a need to have as brands navigate the new normal of adjusting to profitability and standing out in a crowded competitive environment. Giving back with each purchase is a great first step to do this, although the hope is brands are able to support their communities even more through the additional revenue driven by this approach.
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About the author: Stan Rosenberg is the Head of Sales at Beam Impact, an industry-leading platform that helps brands incorporate social impact throughout their marketing funnel to drive incremental revenue. Beam works with 150+ brands including Roots Canada, Parade, Ikea, and Instacart. For more information, feel free to contact Stan directly at stan@beamimpact.com
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