We recently wrote a report on ‘Product Promotions: How to Win New Customers and Keep Old Customers Without Giving Away the World’, which shone a light on the overcrowded world of discounts, offers and loyalty schemes.
Once upon a time you’d probably save your pennies up for the one solitary week of sales in early January, or the middle of summer. Today though, shop windows are plastered with ‘Sale’ signs almost year-round. Even if you could find a time where no one’s hosting a sale, there’s a growing culture of constantly rewarding loyalty across most industries.
And there’s no surprise that this discounting trend is growing. Every week we receive news that another high street retailer is closing stores, the competitive markets are forcing even the big brands to make dramatic changes to hang on to their share of the market.
So how can brands get consumers’ attention and, ultimately, get them through the door?
It’s not always the biggest sales and most dramatic discounts that get attention, there are certain strategies that grab attention more than others. Knowing these details can save your margin, without sacrificing the volume of sales you’re after.
But does this strategy vary industry to industry and by the level of existing relationship between the customer and retailer?
We surveyed 250 consumers in each of three key industries: groceries, high street clothing and health & beauty, to discover how they most want to be incentivised and rewarded.
Lesson 1: Absolute value discounts rule
Absolute value discounts came top of the most enticing product promotions across two of our key markets. Regardless of whether the consumer is new, or has been shopping with the brand for a while, offering an absolute monetary amount off their purchase is the incentive most likely to encourage supermarket and high street clothing shoppers into store.
Supermarkets have become savvy to this in recent years, offering absolute value discounts at the till when comparing the price of your shop in a competitor’s location. The 21st Century equivalent of cutting coupons out of the newspaper, but not just for little old ladies.
Lesson 2: But they don’t rule all industries!
Fascinatingly, the story changes when we look at the health and beauty market, where both new and existing customers prefer to be rewarded with free product samples. In a market where products have a relatively long shelf-life, consumers like to try before they buy.
Clearly, consumer preferences respond to the type of products on offer, and insight as to the product promotions your own brand should run should be nuanced enough to capture the market-specific preferences. There are obviously some products it makes more sense to offer as freebies than others, but try thinking outside the box to grab attention and prove the quality of your offering.
Deliveroo have gained great popularity directly from providing physical pop up versions of their online service.
Lesson 3: Use volume discounts and percentage off to reward loyalty
Across each of the three key markets we looked at, consumers prefer volume and percentage off discounts when they’re already a customer of the brand in question. When you’ve hooked customers with great quality products and services, these strategies can help you increase retention rates, but wouldn’t necessarily work to bring customers towards your brand in the first instance.
It makes sense when you stop to think about it, you wouldn’t invest in bulk-buying a product for volume and percentage off discounts if you weren’t already convinced you loved the product (otherwise you risk being left fighting your way through 100 rolls of scratchy toilet paper).
Lesson 4: Quality & value for money mitigate the need for discounts
When asked to name a brand consumers would be happy to shop with, even if there were no product promotions running, consumers mainly named brands which they identified as good value for money and as providing high quality products.
In fact, eight of the top nine brands named (the top three brands in each of the three markets) were seen as preferable to highly-discounted competitors because of the quality and value offered. The only exception, Tesco, was highly rated because of the familiarity of the products offered.
To find out who the top 9 brands were, be sure to check out the full report!
Lesson 5: If in doubt, slide into their inbox
In each of the markets, consumers ranked email as the channel by which they would prefer to receive product promotions. This varied significantly from the real-life ways they receive these offers, with post a particularly highly-used but unliked strategy.
For the full statistics and results from our product promotions surveys, and further insights into the way consumers do (and crucially, don’t) like to be incentivised and rewarded by brands, read the full report here.
Alternatively, if you’d like to gather bespoke insight regarding how consumers would most prefer your market or specific brand to reward their loyalty, get in touch with us to get started.