Place an order, get a promo: Why brands are investing in post

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By Maghan McDowell

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Shopping online for a pair of jeans from Good American doesn’t end at checkout. After purchase, you’ll be greeted with an order confirmation — as well as the option to instantly add more items to your existing order — but only if you decide in the next few seconds. Like a digital version of an impulse purchase, it enables the unconscious ease of picking up a bracelet or a travel beauty item on the way to the physical checkout counter.

Customer retention has become as critical as customer acquisition for online brands up against a competitive field and changing marketing landscape. A new suite of post-purchase tech tools is designed to bring customers back for a second purchase or bulk up online orders at the time the order is placed.

That moment an order is confirmed is considered the most joyful in online shopping, says Elizabeth Buchanan, chief commercial officer of Rokt, which recently signed a deal to provide post-purchase offer technology to Asos. “You’ve committed, and you’re now thinking, ‘What do I do next?’ That confirmation page can be incredibly impactful. You are in a natural pause, and you’re also really engaged because you had your credit card out or you were really interested in what you were doing. It wasn’t like lean-back viewing. For the brand to reach out at that moment, it really is very opportune.”

Good American uses technology from a Shopify plugin to enable its post-purchase offers, such as a surprise discount, which wasn’t previously available, on a specific style of jeans or a best-selling tee. In addition to Asos, Rokt works with Lands’ End, JCPenney and Kohl’s. Brands including beauty brand Ilia and bag brand Béis use technology from Carthook.

“We see this strategy more and more,” says Natalie Thomas, director of strategy and client services at The Good, which advises brands on e-commerce strategy. Their popularity is partially because the design of the technology has come a long way, Thomas says, and the look and feel can now be customised to suit the brand ethos and better appeal to customers.

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Tools like these are well-timed. Fashion retailers, especially in the US, are facing tough macroeconomic conditions. In their recent earnings calls, Farfetch, Tapestry and Ralph Lauren reported declines in US sales. The aspirational shopper is pulling back, so brands are investing in existing customers in efforts to increase average order value and loyalty with those already in a position to make a purchase. Multi-brand retailers such as Farfetch and Mytheresa have stated that their top customers account for a disproportionate percentage of sales; Mytheresa has reported that about 26 per cent of sales come from the top 3 per cent of its clients, and for some luxury retailers, more than 50 per cent of revenue is driven by the top 5 per cent of customers. An upsell is more valuable than a one-off.

Many post-purchase upsell offers, such as this example from tech company Carthook, include a countdown clock that provides a sense of urgency.

This strategy is driven by its cost-effectiveness, the emphasis on customer loyalty and retention, and the goal of maximising customer lifetime value, which helps retailers navigate market saturation and competition, says Mani Fazeli, director of Shopify Checkout, which enables both apps and custom-built tools for post-purchase offers that are informed by who customers are and what they just purchased. “This approach allows retailers to optimise revenue from existing buyers and drive sustainable growth in challenging economic conditions.”

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Because of the current economic downturn, brands are also compelled to shift innovation and tech budgets to more tactical tools likely to pay off in the immediate term in place of more experimental technologies. At the same time, the cost of acquiring new customers has increased. The cost that an advertiser pays for one thousand views or impressions of an ad, called CPM, has increased 16 per cent on Facebook and 55 per cent on Instagram in the past two years, according to Insider Intelligence. Brands are increasingly prioritising quality over quantity, meaning they are interested in tools that increase average order values and build loyalty among existing customers.

“Anyone can throw money at acquiring customers,” says Ken Natori, president of The Natori Company, which primarily sells women’s intimates and apparel. Natori notes that startups flush with venture funding have flooded customer acquisition channels, driving up the cost and driving down effectiveness for all brands. Natori has focused on appealing to existing customers through post-purchase efforts, such as the option for customers to receive perks for referring friends and post-purchase emails that suggest complementary products to what they just purchased. The future roadmap includes tech that suggests products at the point of checkout. “It’s a more captive audience and one we are in control of.”

“Retention is the new acquisition. Acquiring new customers is so much more expensive, so instead of investing so much into new customers, brands are thinking about how to keep them and get them to come back,” says Bonnie Pecevich, director of product marketing of Pantastic, whose Carthook tool offers one-click upsells to “reconvert” customers. “It makes sense that when economic times are hard, brands are looking to get the most value they can out of their engaged customers already.”

When a customer checks out via an e-commerce site that is using Carthook, they are served a dedicated page before the confirmation page. This is where they might be offered an additional product — perhaps with a special discount and a countdown clock. The shopper can hit “purchase” to immediately add it to their order in a single click or just click “skip” without putting the existing order in jeopardy.

“The first thing that buyers look for immediately after hitting the ‘pay’ button is to confirm everything worked as they expected,” Fazeli says. “This means they’re fairly engaged for just a few moments before feeling satisfied and moving on to other tasks.” But increasing AOV and engagement is most successful when done “tastefully”, Fazeli adds, by prioritising only relevant and personalised offers — and even exhibiting restraint. “Merchants must be discerning to avoid overdoing it and overwhelming shoppers, or they won’t get the upsell or engagement.”

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Lands' End uses technology from Rokt that serves up offers from outside companies and brands; when people click, Lands' End can earn incremental revenue, essentially treating the post-purchase confirmation moment as an ad sales venue.

Having a single targeted offer helps prevent the “paradox of choice”, says Rokt’s Buchanan. “It’s about, ‘How do I optimise the revenue opportunity but also make sure not to drive the consumer crazy with 45 buttons?’ Often, less is more — when it’s relevant.”

Serving offers after a sale is confirmed helps circumvent retailer fears of cart abandonment and doesn’t add additional friction, Pecevich adds. “It’s low-risk for the merchant because the customer has already gone through the purchase flow.”

Most of these offers rely on time-based discounts that encourage split second-decision making, which makes the most sense at certain lower price points, Thomas says. “People tend to have more purchase hesitation as the prices creep up even if the offer is really good.”

For this reason, beauty is especially well-suited to this type of offer and tends to lead to high conversion rates, Thomas says. It also lends itself to “bundles”, different colours or trial-sized products, Pecevich adds. When in doubt, brands should offer a best-seller or hero item.

Most brands use this technology to increase average order values, but they can also increase the long-term value of customers and their loyalty, and often, retailers see returns immediately. Conservatively, on average, retailers will see 10 per cent more upsell revenue when they use Carthook, Pecevich says, and many can see up to 40 per cent return on investment in the tech. Retailers who use Rokt’s technology receive 20-30 cents additional profit for every transaction, usually on the purchase confirmation page, according to the company.

These tools don’t have to mean discounted products. “Some folks in the industry rail against flat percentage point discounting because it's just one strategy, it’s overused, and it doesn't fit every brand,” Thomas says, particularly luxury ones. One alternative is so-called “down-sells” of related, lower-priced products. But brands still might differentiate between a lower-priced product and an impulse buy. One brand that sold handbags tested recommending a coordinating wallet to people who bought high-end bags, but it didn’t work very well, Pecevich says, because wallets are a high consideration, very personal purchase — essentially, the opposite of an impulse buy. Instead, something that makes more sense might be a tote bag, an additional accessory, or a key chain.

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Post-purchase upsells expand beyond additional product offers with invitations to join loyalty programmes and more.

There is also a concern about selling items that are not wanted or needed, which could be seen as being in direct opposition to brand and consumer sustainability efforts. To that end, post-purchase offers can be something different than a product altogether, such as credit card offers, BNPL provider recommendations, app downloads, invitations to join loyalty programmes or offers from outside brands. Poshmark, for example, works with Rokt to surface offers from third parties and reports seeing high engagement rates with these types of ads.

Natori, which uses BigCommerce, offers perks for customers who refer someone during the post-purchase checkout confirmation and is planning to implement future tools that make product recommendations. In terms of sustainability, while Natori acknowledges that the most sustainable approach would be selling nothing at all, he views the complementary upsell as a way to consolidate shipments into one package, as the brand sells a range of goods, including shoes, bedding and loungewear. “It’s more sustainable to be shipping a customer five pieces than them buying five different things from five retailers or not buying them at the same time,” he says.

Brands are increasingly able to customise their post-purchase offers to make them more personal. Already, brands can specify multiple types of criteria to control which products they feature, Pecevich says, so that they make the most sense. If someone already is buying a certain beauty product, they won’t be served the same product as a post-purchase recommendation. Alternatively, if they buy a certain product that might call for a certain type of add-on, such as a complimentary clothing item, accessory or colour.

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Using machine learning to personalise offers is the “natural next path”, Pecevich says. “The biggest brands require it,” Thomas says. “When you have a ton of SKUs, it's too hard to tag everything, so they require machine learning.” She is “confident” that post-purchase offers will soon catch up to the need for applying machine learning to recommendations. Already, many tools offer the ability to apply certain “if-then” rules to the offers that aim to make them more relevant to what is ultimately shown to individual customers.

Rokt uses machine learning to serve much more relevant offers as customers continue to shop individual retailers. Buchanan says that, like with other uses of machine learning in e-commerce, the more a customer interacts with the brand, the more data that is collected and the more post-purchase tech tools can predict which type of offer is most likely to succeed. Ticketmaster, which uses Rokt, considers more than 30 data points, such as the customer’s zip code or the type of event. Asos will look at data points such as what the customer has previously purchased, if they are a frequent customer and if they have a loyalty programme membership. It can then match Asos’s objectives with specific customer profiles and adapt based on how certain offers performed for similar customers. “Every component of the message is optimisable,” Buchanan says.

Asos uses Rokt’s tech to reward customers with offers from more than 150 outside brands, says Asos Media Group director Elton Ollerhead, using algorithms that select the most suitable offer. One customer may see a free trial from Hulu, for example, while another might receive a discount at Hellofresh."

There is the concern, of course, that post-purchase offers get too good, meaning that shoppers hold back until after they’ve checked out because they are conditioned to wait for a deal — especially when brands, as in the case of Good American, discount their own products. But this isn’t really a bad thing, Pecevich points out. “A loyal customer might figure out the marketing tricks — but that is their goal to have a repeat customer. That is why they offer things afterwards.”

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