Think twice before you sent out that next email blast offering a retail discount. Consumers are turned off by ill-conceived promotions, according to Demystifying Price And Promotion, a global study by Forrester, commissioned by Revionic, released today at NRF 18.
How bad can promotions be? Bad enough so that people are being offered discounts on things for which they would have paid full price.
Of those polled, 26% have received such promotions weekly, 26% monthly and 10% daily.
Worse, almost half ignore daily and weekly promotional offers. That includes 19% who get them daily and 28% weekly. And 23% don’t use monthly offers that come in.
“The studies found that 47% of promotions which are sent to shoppers are not even used and 52% of weekly or monthly offers and promotions go to customers who would have happily paid full price — a substantial loss of margins for the retailers,” says Cheryl Sullivan, chief marketing and strategy officer for Revionics.
She adds, “To provide effective promotions, it’s critical that retailers leverage science-based analytics and promotions to ensure they have optimal offers via their customers' preferred channels. We learned that 31% of shoppers do not even respond to digital promotions, which means retailers need to leverage AI science to get it right as consumers are extremely loyal to their preferred channel.”
That said, consumers do show loyalty to retailers who get it right.
For example, 61% will return based on trusted pricing of products based on availability. And an equal percentage are swayed by speed of delivery.
In addition, 59% value the quality and variety of items, and 51% are influenced by free shipping.
Of course, price is the top priority when consumers shop online.
For those who shop at off-price discounter, price is a primary factor for 69%, and quality for 45%. For DIY shoppers, 51% are affected by price and 39% by quality.
Price is a factor for 74% of fashion buyers, and quality for 66%. Seventy-four percent of grocery shoppers are persuaded by price, and 60% by quality.
However, 35% will wait until the price is reduced. And 18% will buy a similar product at the same retailer. But 12% will not purchase at all. And another 12% would purchase a different product from a different retailer.
Of the consumers polled, 76% have shopped at a discount store in the last six months. What drives them there? For 86%, it's price, and for 52% quality. And 26% are driven by variety, and another 26% by convenience.
But again, target your promotions carefully.
“When retailers use a 'one size fits all' approach to promotions, they’re missing the mark and spending more money than is necessary. Instead, retailers should design the promotions that are most appropriate for different groups of customers in context,” Forrester says.
So what should you do? Apply science to systematically meet customer expectations.
First, assemble two years of worth of basket and transaction data, including product attributes like color and silhouette. Next, analyze customer behavior to determine each customers’ price and promotion sensitivity. Finally, integrate a price and promotions engine into your campaign process.
Forrester surveyed 1291 consumers in the U.S. UK, Germany ,France and Brazil.