What are Gated Offers?

Gated offers are targeted, gated promotions designed for members of a particular group based on their occupation, life stage or affiliation, such as “college student” or “member of the military.” Done correctly, the process for redeeming a gated offer is protected by digital verification, a step that checks consumers’ credentials against authoritative data to confirm their eligibility.

It’s important to understand that verification of a buyer’s eligibility occurs only after they’ve expressed interest. Rather than chase buyers based on inferred clues, marketers create a gated offer based on known attributes of a target segment and invite them to engage.

When brands promote a gated offer to the eligible target segment, they give buyers control over the exchange, which leads to higher conversion rates and an increase in brand loyalty.

How Gated Offers Help Boost Sales

The book Influence: The Psychology of Persuasion references a study that found when participants were told of a limited-time sale on a product, they bought three times more than they did when there was no time limit. Researchers also told participants that only a few others knew about the sale.

Ultimately, researchers found that information about the scarcity of the offer and the exclusivity of the sale made shoppers buy six times more than customers who were unaware of the time limit.

The Growth of Gated Offers

Gated offers are a powerful tool for enticing consumers, and they impact where and how consumers shop, how much they spend, and even how likely they are to make a purchase. When surveyed, consumers said they find gated offers extremely appealing.

Gated offers inspire shoppers to take action:

• 94% of shoppers would take advantage of one.
• 91% would share one with their friends or family.
• 68% say they carry more weight than traditional coupons.

Gated offers evoke highly positive feelings in shoppers:

• 54% feel rewarded.
• 47% feel excited.
• 35% feel special.

Gated offers drive purchase behavior:

• When introduced to a brand through a gated offer, 82% of customers returned for additional purchases.
• 58% of consumers who would use a gated offer say it increases their likelihood to purchase.
• 40% would spend more during checkout when using a gated offer.
• 48% say a gated offer would speed up their purchasing decision.

Gated vs. Ungated Exclusive Offers

It is common practice to promote a sale or special offering as “exclusive”, but this benefit exists in name only. When an “exclusive” offer is ungated, customers outside the exclusive group often wrongfully take advantage of the offer. Offers that are truly exclusive are gated to ensure that only qualified buyers can redeem them.  Shoppers access gated offers through a verification process in which they must provide personal information in order to redeem the offer.

Fraud is a legitimate concern surrounding exclusive discounts. Many companies find that customers and employees take advantage of exclusive discounts they may not qualify for. Allowing consumers to redeem an exclusive offer they’re not eligible for  not only impacts retailers’ margins, it also lessens the appeal of the offer to the intended audience and makes them feel less sought after or special.

Verifying Eligibility for Gated Offers

In a survey conducted by Kelton Global, 68 percent of consumers said gated offers have greater appeal than discounts intended for everyone. Shoppers find gated offers very appealing, but they are also extremely sensitive to the process of being verified for one. Nineteen percent said that they would devalue companies that allowed the fraudulent use of exclusive offers.  Of this 19 percent:

• 80% would lose trust in the brand.
• Over half (53%) would shop there less often.
• 33% would recommend their friends and family shop elsewhere.
• 21% would even share negative sentiments about the brand through online forums or their social media profiles.

According to the Kelton Global Survey, 9 out of 10 Americans are concerned/confused with some part of the verification process for an exclusive offer. One major obstacle is asking consumers to provide too much data, or data that’s too personal. Eighty-four percent of shoppers were willing to provide their email address, but only 18 percent said they would provide their social security number.

Additionally, consumers don’t always trust the objectivity of the brands they shop with. Fifty-seven percent said they would rather be verified by an independent third party than a brand’s customer service representative.

Guarding Gated Offers

When you restrict something of value, fraudsters will inevitably try to take advantage of it. Most brands experience discount abuse between 30-35 percent – which ranges from malicious abuse to consumers’ belief that taking advantage of an exclusive offer is a little “white lie” (e.g. the so-called student who still has an .edu email address though she graduated years ago.)

This level of fraud kills margins and erodes hard-earned brand value. Almost 20 percent of customers said that knowing a brand allowed customers to wrongfully redeem an exclusive offer would negatively impact how they interacted with the brand.

Simply put, the most reliable way to combat redemption fraud is with digital verification – matching customers’ data with reliable, authoritative source records that confirm customers are in fact are part of a target group.

Digital verification delivers a genuine stamp of authenticity for the lifetime of the customer relationship. Once you’ve protected the exclusivity of an offer, the benefits of verification flow through each stage of the customer relationship – from acquisition through to retention.

Wrongful redemption of exclusive offers through shared passwords and credentials is a rampant problem that siphons off revenue.
In a recent shopper study, 59 million Americans admitted to redeeming a gated offer they knew they really didn’t qualify, most often through using a code or link forwarded to them by a friend. Companies that use digital verification to protect their gated offers eliminate this discount abuse. They also acquire more customers at lower cost.

Marketing with Gated Offers

One reason gated offers are so popular is that they’re truly exclusive, which is essential to the success of the offer and the company providing it. When shoppers know a brand allowed an “exclusive” offer to be wrongfully redeemed, they lose trust in the brand. Verifying a shopper’s eligibility increases the integrity of the offer in the eyes of consumers.

Customer acquisition costs continue to rise. Facebook and Google, which make up 25 percent (and growing) of the global advertising market, continue to get more expensive. By one estimate, Facebook’s costs grew 136 percent. Gated offers, while typically thought of as a conversion tool, can also be a valuable driver of new customer acquisition. That true exclusivity is at the heart of why gated offers work: they tap into a deep sense of tribal belonging that makes members of the target group feel honored and special. And rewarding shoppers for who they are motivates conversion, inspires loyalty, and sets a brand apart.

Audience Targeting

In today’s crowded market, it’s much harder to break through the noise and get noticed by potential customers, especially if you aren’t targeting the specific groups you want to attract. By using gated offer to reach certain customer groups, such as students, teachers, seniors, and the military community, you can cut through the chatter and hone in on that groups’ individual needs.

Gated  offers, while typically thought of as a conversion tool, can also be a highly effective and inexpensive driver of new customer acquisition. For example, teachers go out of their way to shop at brands that have exclusive offers for them and they share the offers broadly within their network.

Gated offers can also help you rise above the noise with high-value segments:

• College Students: The global total of college students is 180 million college students, and they have $523 billion in spending power. Brands often covet young consumers, and providing a deep discount for college students accelerates acquisition and paves the way to easily convert them to full price when they graduate. When given access to a gated offer, 91 percent of students would be more likely to shop with the brand and 94 percent would shop with the brand more often.
• Teachers: The U.S. has 4.8 million teachers who spend $1.5B out-of-pocket annually on school supplies. According to our recent survey, 88 percent say they actively search for exclusive teacher discounts for both classroom supplies and personal items, and 83 percent said they would chose a retailer that offered a teacher discount over one that didn’t.
• Seniors: Don’t overlook the senior segment. There are 109 million seniors in the U.S. and they have $3.2 trillion in purchasing power. Seniors buy over 50% of all consumer goods, yet only 10% of marketing dollars are spent targeting them. A third of seniors shop online, and according to our recent survey, 87% say a gated offer would make them more likely to shop with a brand.

The Benefits of Data Control & Privacy

Eighty-three percent of Americans have concerns with the types of data collected while being verified for a gated offer, and more than half  (56%) worry about brands using that personal information without their consent.

With opt-in, or “consent-based,” models like gated offers, consumers have the opportunity to decide when to engage with you and what information they want to share in exchange for access to your products, services, information – and discounts.

Only 8 percent of consumers want you to use data such as social media likes and clickstream behavior. And only 17 percent want you to use clickstream behavior from their website. A recent consumer survey that we conducted revealed that more than half of Americans (51%) worry about the security measures being taken to keep their personal data safe And 57 percent said they would rather be verified for an exclusive offer by an independent third-party than a brand’s customer service representative.

Consumer fears about exclusive offers are allayed when the verification process is instantaneous, and when brands use a third-party to complete it. The value of keeping their personal information safe has become paramount. So much so that nearly two-thirds (63%) of Americans say knowing a brand wouldn’t share the personal information needed to redeem an gated offer is extremely important to them.

Delivering a Streamlined User Experience

Digital verification that uses authoritative data sources is essential for protecting gated offers. It gives companies confidence that their verification process that’s accurate and reliable, and it allows shoppers to opt in to the discounts they want without sacrificing the personal data they hold dear.

Third party verification can make offer redemption easy by reducing the time it takes. Nearly one-third (32%) of users concerned with being confirmed for an gated offer attribute their anxiety to the length of time it takes to complete the verification process.

Promising Ongoing Discounts

Many brands offer occasional special promotions to drive sales. This is a proven tactic that may give short-term revenue a boost, but when it comes to driving loyalty and incremental revenue on a long-term basis, those offers have to stick around. Evergreen (continuous) offers that target teachers, students, military and other segments not only positions a brand as “military-friendly” or “teacher-friendly”, it also keeps those customers coming back to make repeat purchases.

The national retailer Target found that on average, normal customers visit their site three times within a typical year. However, after a national retailer added an evergreen military offer and loyalty program, their military customers began returning twice as often as their average customers.

Target’s year-around offer to this specific customer group not only helps to drive revenue, but gives them the identity of a military-friendly brand which boosts long-term loyalty.

Ensuring a Quality User Experience

Customer experience is more important than ever, especially when it comes to ease of use. Customers expect a frictionless experience from the moment they enter your website. The more restrictions they face, the less likely they are to convert. L

Lengthy or complicated checkout forms accounted for approximately 39 percent of U.S. cart abandonments. A 2012 study conducted by WorldPay found that 25% of its 19,000 consumer sample abandoned their purchases due to a complicated checkout experience. And omnichannel shoppers have a 30 percent higher lifetime value than those who shop using only one channel. When you make your verification process simple to complete and easy to access on any device, you’ll see great results.

Guaranteeing Robust Offers

Targeting customers with gated offers has a host of benefits, as explained above, but none of them will materialize if the offer quality is low. Even with good intentions, a 5 percent reduction on a full price order can have the opposite effect and make military or teacher customers feel undervalued and insulted.

In a survey of nearly 538 US teachers, 87 percent said an offer of 25 percent or above would get their attention. According to one teacher who took part in the survey: “If it’s just a measly 10 percent, I actually think it is so little as to be insulting to the financial duress teachers are under.” Unconditional free shipping is also viewed very favorably, with 90% of teachers indicated they would likely make a purchase.

Protecting Gated Offers with SheerID

You can acquire and retain more customers by providing target audiences with gated offers and using digital verification to protect the offers and make them easier to redeem. SheerID’s Digital Verification Platform easily verifies high value segments, and gives customers the experience they want while protecting your offers from discount abuse.