With the overwhelming number of shopping choices flooding a potential customer’s senses, retailers have to get creative with their acquisition and retention strategy. Resorting to everyday low prices or a one-size-fits-all sales approach isn’t the solution. One singular retail model isn’t the key to success.
Having said that, promotional retailers have the best chance to survive this “retail apocalypse.” By using dynamic offers to “surprise and delight” their customers, whether they are shopping online or in-store, retailers can reclaim their marketing stack.
Promotional offers, coupons and personalized discounts are all ways marketers can strive to optimize price for customers, as price is ultimately the most important thing for customers in today’s economic climate.
There are a few ways to affect price — such as lower the sticker price of an item, execute a temporary price reduction, or initiate targeted offers that provide specific discounts to different types of customers.
But dynamic pricing shouldn’t just be for savvy e-commerce retailers. If retail marketers focused on leveraging dynamic offers for in-stores sales then I believe they could accomplish the same outcome, perhaps with greater results.
Strategically, retailers can leverage offers to acquire customers, retain them, or both. Many retailers believe that special discounts should be reserved to win new customers as part of the cost of customer acquisition. Others believe deal-seekers make the worst customers, and they’d rather win them at full price before using special discounts or loyalty incentives to ensure ongoing loyalty.
The flaw with this all-or-nothing thinking is that uniform treatment of new or existing customers is simply wrong. Retailers should use promotional offers in a more targeted way for attracting and retaining certain types of customers. Not every customer will pay full-price. But not every customer needs to get a discount either.
Step one: Stop offering the same discount to everybody. One-size-fits-all discounting is a great way to be average in the eyes of customers, because that’s the customer’s perception of how the retailer sees her. I don’t believe a retailer would see a benefit to creating this perception among its customers.
Step two: Figure out what data you have that can help you identify price sensitivity among new and existing customers. This is where digital marketing data can provide almost everything you need. The data, if captured and analyzed properly, can provide an instantaneous and accurate read on each customer that is engaging with you digitally. You just need to know what to look for.
Step three: Ensure you have the proper back-end and front-end systems to handle dynamic offers. The back-end systems need to provide a way to create banks of single-use dynamic promo codes and barcodes — for in-store use — for different offer values — think 5 or 10 percent off, 10 off $100, buy one get one half off, etc. The front-end systems — think digital marketing software like an offer management platform — need to provide a way to secure, deliver and measure these unique offers and codes across any customer touchpoint.
Step four: Ensure you have the expertise at the table, likely within the digital marketing function, to coordinate between the internal systems or teams and external marketing efforts, channels and technologies to execute the hyper-targeted offers being contemplated. It’s important here to gain organizational alignment around how marketing resources and targeted promotional efforts will be leveraged to drive online and off-line sales as part of a true omnichannel strategy. Too often within larger multichannel retailers, departmental and profit and loss turf wars torpedo this plan before it even gets off the ground. Maybe this should be sorted out before step one.
Step five: Coordinate a marketing plan across online and off-line tactics to ensure any offers are messaged generically in print — direct mail is an exception assuming it’s a targeted offer to a customer — and explicitly delivered digitally. For example, a magazine ad might typically say something like: “Save 15 percent with code save15.”
Going forward, your print ads will message savings opportunities more generically with something like: “Visit us online for savings starting at 10 percent” or “Visit us online for savings up to 25 percent.” Digital delivery of the specific offer — either via web site, email or social — provides the flexibility for brands to respond instantly to customer signals and maximize the chance to convert a customer while offering the least discount necessary.
We are in the age of data-driven marketing, customer centricity, omnichannel and all the other buzzy trends transforming the retail landscape. While promotional offers may not be required to win the retail game, retailers engaging in promotional efforts should consider modernizing their tactics and strategies to compete in today’s brave new (retail) world.
Jonathan Treiber is chief executive officer and cofounder of RevTrax, a data-driven marketing platform.