Auctions aren’t simply about selling – they can also contribute significantly to brand-building. This is because customers do not just purchase goods when they engage in an online auction, but instead ‘win’ them. This small- but crucial- difference transforms what could otherwise be a simple or routine transaction, into a far more complex, and emotional, exchange. So, how can brands leverage auction technology to tap into that emotional element, and how can this help to market your business?

The power of the online auction

When we’re involved in any type of auction online, we bid, we wait, we check back in to see if we’ve  been outbid, and we often receive alerts to let us know if we’ve been outbid or if time is running out on the auction. These repeated moments of connection present numerous ways for brands, not merely to communicate with a customer, but to influence that behaviour. 

Several brands have already begun to explore loyalty point auctions. This has been successful in the sports market, where people are accustomed to seeing philanthropic auctions being held for clubs. For example, sportswear brands offering customers the opportunity to meet a famous athlete, or a football club auctioning off signed merchandise or exclusive behind-the-scenes access has been seen increasingly over the years.

However, during recent years, we have witnessed the evolution of the ways in which loyalty point auctions are being used. Customers who may be running out of loyalty points can be easily incentivised to collect more points in exchange for a number of actions. Filling out a form to provide brands with more data, tweeting about an auction, engaging or liking a post on a social media platform, or buying a season ticket early are all ways consumers can act to earn points. These tactics mean customers can be motivated to become brand advocates, and thus, to become a major part of a marketing drive. 

How to move those non-movers

A significant issue with loyalty schemes remains the large number of ‘non-movers’, that is, the participants at the lower end who may not have enough points for a meaningful redemption. Encouraging these people to actively participate is the key to a successful loyalty scheme, and something brands are seeking to solve. 

One way to tackle this issue and motivate inactive customers  is to award points in exchange for brand advocacy. Another strategy is to employ what is termed a ‘pay-to-bid’ auction model, which can be seen in ‘penny bid’ auctions, for example. Bidders increase on the previous bid by a penny. In this form of situation, the price is mostly inconsequential; the last person to bid wins and a ‘bid’ is purchased for a set number of points. This model enables loyalty scheme ‘non-movers’ to utilise their low level of points to buy the ability to bid for a notably discounted product which would usually be inaccessible to them. Such less active customers are happy to use points for this purpose, since the alternative is not to use them for anything. 

Maintaining customer communication​

When consumers leave an auction website, brands can also make use of tools for further engagement. The communication process does not need to stop there; customers can be contacted on many further occasions. Updates, outbidding warnings and auction-ending notices all provide more ways for brands to maintain contact and stay front of mind in a consumer’s mind. Such processes have been found to increase site visits and make it more likely for a brand to be selected by consumers. As well as this, however, brands can communicate other news or messages they would like to share with consumers.

Further, online auctions can serve as a valuable tool in building the profile of a brand’s sponsors. Any bidders who may have lost out on an auction are likely to be open to making a similar purchase to the one they have just missed out on, because of their emotional engagement with the auction. This is because of the‘ endowment effect’, a psychological phenomenon widely written about where the auction encourages us to connect the bid you’ve made to the sale item, letting the bidder fantasise about owning the item and therefore place higher value on it- and be more likely to want to own versions of it if the purchase falls through. As well as this, auctions can also leverage the principle of scarcity, where we overvalue things that we believe may run out. 

We are also influenced by the social proof of others bidding in an auction, proving that the sale item is important and valuable. For example, a bidder who has just failed to win a holiday or VIP flights can be directed to the airline’s website, or contacted via email with a discount flight or holiday offer. This can be leveraged to maximise sponsorship relationships so you can continue to place both your own, and your sponsors’ brands, front of mind. 

Though social and digital are leading the communication field, in this increasingly crowded online space, those brands who are able to integrate auction technology within a digital campaign will find themselves better placed to stand out and create meaningful, engaging and prolonged customer relationships. There is no doubt online auction technology, if leveraged effectively, provides a powerful marketing tool for any brand.

• London-based Perfect Channel creates intelligent, enterprise-level auction and trading technology solutions.