Bidding to win: How auctions can hammer home engagement

Perfect Channel builds bespoke, cloud-based and scalable auction platforms, helping businesses sell goods and services for the maximum value. By Phil Bird, CEO of Perfect Channel.


In the digital world, what many brands are now seeking is active engagement from their target market. We can communicate with customers through email, websites and social media, but how can we get them to engage with us… and keep coming back for more?

An exciting new mechanism is emerging to help us do just that – the online auction. New technology is now being developed to transform a simple online transaction to an exercise in brand building. Auctions can generate complex and emotional engagement from customers, stimulate competition, open up channels of communication and result in a ‘win’ for the customer. And the auctions don’t have to be monetary. Participants are willing to bid more aggressively with loyalty points than their cash equivalent. When it comes to loyalty schemes, dormant members are one of the biggest challenges, and encouraging active participation from ‘non-movers’ is often key to the success of a loyalty scheme. With auctions, low levels of points can be used to bid for something which would normally be out of reach, and when the alternative would be to do nothing with these points, users are often happy to use them in this way.

Lowest unique bidder auctions provide a way for fans with low levels of loyalty points to get involved, while highest bidder auctions develop into an exciting, competitive and exclusive platform for high-value customers with large numbers of points. For high-value customers, the engagement opportunity provided by an online auction is emotionally very different to redeeming a set number of points for a reward. Because the lots are offered uniquely to auction participants, it creates aspiration that can be difficult to achieve in a conventional equity programme.

Different models can also be used depending on the engagement goals. The penny-bid auction model lets bidders increase on the previous bid by a penny or single point, but the duration of the auction is significantly reduced. In this scenario, the price is largely inconsequential and the last person to bid wins. Loyalty scheme ‘non-movers’ can use their low level of points to buy the chance to bid for an experience or discounted product that would otherwise be out of reach.

More tools for engagement can be leveraged off the back of the auction itself. Customers running low on points can be offered more, in exchange for providing additional information about their habits, tweeting about the brand or auction or clicking ‘like’ on Facebook. Emails about watched auctions, outbid emails and other alerts allow the delivery of brand-specific messages or cross-sell opportunities. And by the nature of an auction, participants expect communication, so these messages are likely to be viewed and acted upon. Participants want to feel they’re getting something special through building a deeper relationship with a brand and online auctions are a powerful way to harness that.

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