The European Union's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) are two privacy regulations forcing brands to rethink how they engage with their audiences.
Yes, brands can continue to collect data, ensuring they get the right permission and are transparent about how they intend to use it. They can use that data to create personalized experiences. But let’s be completely honest, the data isn’t always that good, or handled adequately to enable the best personalization. And a lot of the personalization happening today isn’t really that “personalized.”
It doesn’t matter that brands have been trying to figure out personalization for years now. It’s always going to be a struggle when the brand has to figure out who a person is and what will make them want to convert. It can be done; I’m not saying it can’t. But there are other approaches, and SheerID offers one of them.
Targeting segments with gated offers
I spoke with Sai Koppala, CMO and Bill Schneider, VP Product Marketing for SheerID, a digital verification platform, about their platform and how it helps brands create a different kind of personalized experience through gated offers.
A gated offer works like this:
- A brand targets a specific segment of its market, such as small business, military, teachers and so on with a special offer across their channels.
- Someone goes to the offer and has to verify they are a part of that segment by providing information about themselves.
- The visitor is verified and gets the offer.
A couple of examples: Spotify offers a 50% discount to students, T-mobile provides discounts for members of the military and their families, and Target offers a discount for teachers. SheerID delivers the capabilities needed to verify the customer meets the criteria of a defined segment and a hosted solution that embeds these gated promotions within the brand’s customer experience.
First, SheerID provides an identity verification service. Koppala said it connects to over 8900 data sources (some direct, others third-party aggregated services) to look up a consumer’s information and verify they do belong to a particular segment. For example, SheerID connects to a military database to confirm a customer is a member of the military community (active duty, veterans, retirees, reservist/national guard, registered dependents), and it does this without requiring a social security number. It also connects to student and teacher registration systems.
Schneider provided the example of a telecom offering discounts to employees who work with partner companies. If there is a way to verify a consumer belongs to a segment, SheerID can help verify it.
Some brands SheerID works with only use its verification API, while others also take advantage of a hosted platform for providing the offer (most fall into this category). Once the consumer is verified, the brand decides how to fulfill the offer. It could be immediate access, a one-time verification code or something else.
Schneider outlined several stages that brands might go through to build gated offer programs:
- Stage 1 is a pilot program where a brand is trying the tactic out to see if there is demand. He said most pilots turn into dedicated programs (stage 2).
- Stage 2 is the dedicated program, where the pilot is extended to include additional spending, additional verifications, and a “dedicated page for SEO, email and social campaigns.”
- Stage 3 focuses on program optimization where the brand extends the program to additional segments and works to optimize the sales process.
- Stage 4 is the Go to market strategy and the highest level of commitment where the brand demonstrates a strong commitment to the customer segment. T-mobile and Lowe’s commitment to the military are great examples.
Why do gated offer programs work?
According to SheerID, gated offers see higher conversion rates. Schneider said a brand could see three times the conversion rate compared to other tactics, and get a return on investment of 18-1 and 20-1.
A gated offer also works well with privacy regulations because it requires explicit consent. Consumers self-identify and proactively choose to provide their information in exchange for a good deal. Another benefit is that consumers who are part of a group (tribe) are more likely to share the offer with others in their community, bringing even more customers to the brand.
Leveraging a service like SheerID helps brands prevent fraud as well. Often, when gated or exclusive offers are given, consumers find a way to get around the verification process - sometimes by sharing coupon codes or using someone else’s information. SheerID found that brands have experienced discount abuse between 30-35%, something they could avoid if they included a verification process as part of the gated offer.
Koppala did say that gated offer programs are not applicable everywhere. He said the brand needs to understand its target audience and figure out how its brand message aligns with the segment. To truly make that segment or tribe feel special and want to purchase from the brand, it not only needs to provide offers that are better than what they might offer consumers usually, but they have to make a commitment to that segment and show it in their messaging.
The gated offer approach has plenty of benefits over traditional personalization approaches. If there are segments of a brand’s market it wants to build strong relationships with, then the gated offer approach makes a lot of sense and is built into their loyalty programs.
That doesn’t mean the brand still shouldn’t implement other personalization approaches and both Koppala and Schneider didn’t think it was an either/or situation. If you have identified segments of your market you want to cater special programs to, then this approach should work very well. It’s something to consider as you evaluate your marketing strategy.