Back in 2012, Target analyzed a consumer’s buying habits and realized that she was pregnant. In an attempt at great customer service, the retailer sent out coupons for pregnancy-related products, presuming she would soon need them. There was just one problem: that customer didn’t know she was pregnant yet.
While the accuracy of this story has been called into question, it’s not entirely unbelievable. As personalized marketing gets more sophisticated, companies are increasingly trying to stay one step ahead of their customers’ needs and predict what they’ll buy next. That’s where the next best offer comes in: by predicting what consumers will buy next, companies can retain their business and become their go-to for all related products and services.
What is next best offer and how does it work?
Next best offer is a form of personalized marketing based on predictive analysis. In other words, the next best offer model predicts consumers’ needs and shows them offers and products based on their habits. When done well, next best offer makes it easier for consumers to buy something they were already thinking about, often at a special price to add additional value.
This is a sophisticated way for businesses to personalize their marketing efforts, a necessity in the modern landscape. Simply showing consumers a variety of products and hoping that something piques their interest isn’t an effective way to increase sales or retention; modern consumers expect a more tailored approach.
What are some examples of the next best offer model?
While next best offer is often associated with retail, it’s actually used in many industries. It typically uses machine learning and AI platforms to create the most accurate predictions and then tailor offers for specific customers. Here are just a few next best offer examples:
- Retail: A consumer buys an air purifier and is then shown ads for replaceable filters compatible with the exact model they just bought. If they buy right now, they’ll get 50% off. They’re going to need filters eventually, so they take advantage of the discount.
- Telecommunications: After analyzing a customer’s data usage, a cellular provider sends them a limited-time offer for a plan with more data. Since this helps the user avoid data overage charges, they accept.
- Mobile: A mobile game publisher’s analysis shows that players who get to a certain level are more likely to make in-app purchases, so they offer users nearing that level a boost. Players take advantage of the deeply discounted virtual rewards.
What are some best practices for next best offer analysis?
Being able to present consumers with the right offer at the right time is a critical part of personalized marketing. That said, it can go awry without a solid strategy in place. Here are some things to consider when implementing the next best offer model:
- Know your goals. What is the desired outcome of a next best offer campaign? Are you trying to increase sales, acquire new users, or boost retention? By answering those questions you’ll be able to hone your offers to meet your objectives while still giving the consumer what they need.
- Gather a lot of data. Precise predictions require a mountain of data about consumer buying habits, as well as the ability to analyze all of that information. Otherwise, you’re just guessing, and that’s not nearly as accurate or effective.
- Be sensitive. Not every topic is a marketing opportunity. Consumers don’t want to be bombarded with “special offer” notices when they’re going through crises or dealing with serious health issues. A next best offer like Target’s rumored pregnancy prediction could have disastrous results.
- Find the right partner. If you don’t have an in-house machine-learning platform, you may need to partner with another company to take your personalized marketing to the next level. Find a partner that knows your industry well and offers advanced AI solutions.
Personalized marketing is constantly evolving, but being able to deliver tailored offers and solutions to consumers is worth it. Data overwhelmingly shows that personalized marketing yields better results: more links clicked, more conversions tracked, more revenue generated, and better customer lifetime value optimization. Next best offer is just one way to personalize, but its importance shouldn’t be overlooked.
If you want to incorporate the next best offer model into your mobile strategy, wappier can help! Our advanced AI technology goes beyond typical marketing automation: wappier’s proprietary platform analyzes billions of data points daily and delivers recommendations in real-time. Want to know more?