In today’s digital era, the perception of promotions has changed drastically. It wasn’t long ago when people who cut coupons from newspapers were viewed as “penny pinchers.” Fast forward a few years into 2016 and modern shoppers now relish the opportunity to redeem vouchers via their smartphones, allowing them to benefit from the best available prices.
Indeed, a growing number of shoppers are now looking for new ways to save in order to buy more and shop smarter, while also having more disposable income. Finding the best possible price has become the ultimate goal and consumers are taking pride in being savvy shoppers, and paying less than their peers for the same products.
In today’s highly competitive, tech-enabled environment, retailers must be increasingly smart to cut through the price-comparison noise, maintain the best margins and emerge victorious on the other side of checkout. Deal seekers and savvy consumers aren’t going away, and while retailers have tried various routes to reduce reliance on promotions, the results have been mixed. Discounts will continue to remain an important part of the retailer promotional mix as a way to engage shoppers. However, while three out of four retail marketing decision-makers say that it’s just as important to be strategic with promotions as with the other aspects of marketing, only 16% feel that their own promotional plans really are highly strategic.
So what can advertisers do to implement promotions more strategically and get the most value out of them?
Optimising the process
According to research from Forrester, vouchers are now the preferred savings tool for shoppers, more than twice as likely to influence the purchasing decision than seasonal sales. As many as 58% of UK consumers say that vouchers are most likely to influence their purchase decision, compared to only 25% with sales.
From a consumer point of view, this is not surprising. While sales are available to everyone, they are not regarded as exclusive. Vouchers, on the other hand, are considered personal; they are only available to the savviest shoppers who have made an effort to obtain them. Indeed, nine out of 10 shoppers confirm that buying something with a voucher gives them a feeling of pride and satisfaction.
For the retailers, this makes vouchers a win-win situation. As well as being preferred by consumers, they are also an opportunity to introduce price elasticity. The better price will be available to those who have put in the effort to seek out a saving and who need that nudge to transact, while those who don’t go the extra mile will pay full price for the same product.
What’s more, retailers can also protect their margins – vouchers typically offer lower discounts than sales and are not used by all customers for their purchases. There is also the possibility to allocate unique codes, capping the number of vouchers that can be used.
The objective defines the strategy
Contrary to popular belief, vouchers are not only a conversion tool but can influence every stage of the shopper’s journey, from initiating discovery, to triggering the actual purchase decision and influencing which product to buy, the basket size and where to shop.
At every step, a good deal can make a difference. According to Forrester, 44% of UK shoppers are somewhat or very likely to try a new brand and 31% are somewhat or very likely to switch brands when they receive a voucher, offer or online promotional code. Over half (53%) also say that digital vouchers often close the deal for them when they’re undecided. In other words, promotions can help refine the consideration set.
In order to affect a successful voucher strategy, retailers must clearly define their KPIs. Every objective, whether it’s to encourage upsell and cross-sell, fight cart abandonment, increase the AOV, push particular product categories, acquire new customers, reactivate dormant or lapsed customers or drive footfall in-store, must be identified upfront as the campaign mechanisms will differ depending on the goal. Marketers must therefore consider their objectives carefully before jumping into action and be sure to tailor their campaigns around their business needs.
Digital promotions are no longer reserved for the online space but can also be an efficient way to drive footfall in-store and develop multichannel sales. Today’s shoppers think about brands, not channels. They don’t understand why they can use a voucher online but can’t redeem it in-store, or why a product would cost more on the high street than via the online store when shopping with the same retailer; they want the same experience from a brand, no matter what platform they engage on. However, many retailers are still working in silos and while three out of four shoppers expect to find the same prices online and in-store, 38% of the leading omnichannel retailers in the UK still don’t provide consistent product information and prices across the different touchpoints.
At VoucherCodes we have seen that when we run multichannel campaigns for our partners, between 30% and 85% of the generated sales happen in store, with online sales typically increasing as well. Making shopping feel seamless not only encourages them to come back to the high street, but builds consumer loyalty to brands, which ultimately helps drive all sales. Promotions have the ability to become a real vector of purchase both online and in-store, and allow the buyer to feel valued by brands whenever and wherever they shop.
Don’t overstep the mark
Over the last decade, mobile devices, connectivity and innovation have changed dramatically how we communicate and interact with each other, brands and the wider world. This has brought, and continues to bring, endless new opportunities and challenges for retailers. Other than the possibility to engage with your customers in new ways, it also unlocks a large stream of valuable data which, among other things, allows marketing teams to enhance their relevancy and relationships with consumers through personalised offers. However, there is a fine line between bringing value and being creepy, so how can retailers make sure that their promotions are personalised without overstepping the mark?
Most importantly, brands must be transparent in their communication to customers. One way in which they can get a head start on this is to give consumers the power to state what their preferences are, for example, when they opt-in to receive location-based messages, and redefine this if these should change over time.
In addition, consumers should be able to opt out of communications that aren’t relevant to them. A new mother, for instance, should be able to opt out of offers targeted to pregnant women. As with all communications, consideration of how the customer will react to promotions is key. By understanding previous purchasing behaviour or products they’ve viewed online, retailers can use this type of data to enable their promotions to be very targeted and grab the shopper’s attention.
Staying in control
With such promising possibilities on the horizon, now is the time to embrace the opportunities that digital technology offers for reaching and engaging an existing audience and expanding an untapped customer base. Mobile and digital technologies can be leveraged to implement an even more strategic use of vouchers:
- Vouchers can be tailored to each individual with single-use codes, in particular to reward loyal customers or to attract new ones
- Vouchers can be capped to a maximum number of redemptions to protect margins
- Vouchers can be targeted to a specific audience
- Vouchers can be used to drive footfall in store to increase high-street sales
- Vouchers can be used to target specific locations thanks to geo-location technology and track engagement for instance by sending push notifications to people in specific shopping locations
On top of that, vouchers can also be used in a test and learn approach, alternating or combining different types of offers to drive specific KPIs. The results are trackable and deliver invaluable insights which open in the long-run the way to more personalised and data-driven promotions.
A long-term halo effect
The good news for retailers is that digital promotions do not only help with conversion, but also positively influence consumers even after the actual purchase has been made. Essentially, consumers have a sense of gratitude towards the company whose promotions they have used: 66% of shoppers feel positive about brands offering digital vouchers, offers or online promotion codes and 62% are likely to tell a friend about a brand that uses vouchers, driving word-of-mouth and awareness. 59% also stated that are more likely to be loyal to a brand that offers vouchers.
This all goes to show that promotions can have a lasting impact on loyalty, brand advocacy, and the likelihood of future purchases. While crafting offers for limited time spans is a great way to create a sentiment of urgency from the consumer, it’s equally important that shoppers perceive them as an outstanding ‘can’t miss’ deal.
To win customer loyalty, brands must clearly communicate what they stand for and always be consistent with that message, regardless of the channel. While vouchers can be used as a quick win panacea to drive sales, retailers who fail to integrate them into the bigger picture are missing huge opportunities.
Using vouchers strategically not only extends the sales cycle but connects with shoppers on a personal level, while allowing them to feel rewarded without devaluing products through deep discounting, and maintain a longer-term relationship.