BrainTrust Query: Shoppers Are Changing. Sales Promotions, Not So Much
Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.
"Deal mentality" is not a fad. While the economy will eventually cycle back to better times, the impetus for many shoppers to seek the best deal will not soon be forgotten.
So how does "savvy consumerism" affect promotion?
First and foremost, short term, ad hoc promotions are becoming increasingly less attractive to loyal retail consumers and more unprofitable for both brands and retailers. Shoppers are learning how to manipulate promotions like triple coupons and percentage discounts or even one or two-day sales events. In the old paradigm, these programs attracted new shoppers and built transaction size within current shoppers.
Increasingly, savvy consumers restrain themselves from purchasing almost anything at regular price knowing that most full margin items will eventually be on deal somewhere else at some point in the future. What's worse, there is little or no residual sales effect. In fact, many won't be back until the next "give-a-way."
To build a successful sales promotion today, the retailer needs to change both the way they structure and measure these events. Here, a few suggestions:
- Design more promotions to last more than a week. Extending past the normal weekly time span for most retail circulars creates a point of difference and a reason to shop your store more than once during the promotion.
- Use customer data (if you have it) to both design and measure the impact of the promotion. If possible, focus the promotion on those categories and items where best shoppers index the highest.
- Involve as many departments and categories in the promotion as reasonably possible to encourage full store shopping.
- Focus on just a few types of events and themes throughout the year. Be known "as the place to go for ______" and not for the promotion du jour.
- Measure results and use learning to sharpen future promotions.
- Expand your success metrics from traditional measures such as return on markdown invested and incremental sales and traffic count to include campaign-oriented results such as multiple redemptions, incremental basket size and shopper frequency (pre versus post promotion period).
- If targeting is possible, offer a special version of each promotion to your best shoppers, providing special audiences additional benefits targeted uniquely to them.
- Finally, if your top competitor is already doing it, resist the temptation to join their party. Create something new that is yours to own.