Breaking the perpetual discounting habit
posted by Andrew Copeland - Network Director, North West • 27 Nov 2013 • 0 comments
Retailers who join in with perpetual discounting to win consumer share can run the risk of decreasing their recommended retail price (RRP) in the long-term. For example, voucher code discounts drive sales volume but when offered to the consumer too often, they build-up an expectance of the brand and the discount benefit can become diluted. Instead, retailers need to delight their consumers with an intelligently thought out discount rather than encourage them to expect a discounted rate.
So to retain the value of their brand, how should retailers be approaching their discounting strategy and what can they do to draw shoppers towards that final purchase?
Bridge the gap between online and offline
Retailers should be using discounts to bridge the gap between online and offline. For example, 44 per cent of consumers use a voucher code on their mobile phone when shopping on the high street. So, retailers should be using voucher codes to act as an accelerant – teasing shoppers into the store and enticing them to complete that final purchase. Likewise, 51 per cent of mobile shoppers search for a voucher or discount online, for a product they have previously seen in-store. By providing that voucher through a mobile-enabled partner, retailers can provide a mechanism for consumers to find the deal they want and transact immediately, increasing in-store sales.
Move towards data-driven discounting
Brands use consumer data to drill deeper into shoppers’ preferences. It’s important that brands treat each consumer as an individual when approaching them with discount offers. There are a number of factors to take into consideration, such as the location of the individual, gender, age and previous purchasing tendencies.
Data-driven discounting is not only more beneficial to the consumer; it’s also more efficient for brands to provide these personalised discounts, as opposed to casting a wide net. A consumer is more likely to take note of an offer that is directed at their previous purchase history and tailored to a consistent interest in particular products.
Assure your revenue through targeted discounting
It’s all about conversion. Use your data intelligence to engage with the consumer on a different level. As soon as you instigate a level of engagement from the consumer, you’re already on the path to purchase. For example, Performance marketing channels, such as price comparison sites and voucher codes, are usually the first port of call for price-conscious consumers and this is where retailers should be engaging with their customers.
However, a targeted, personalised approach to discounting is how retailers will assure and increase their revenue streams. Use consumer data in an intelligent way to really appeal to the shopper; this will ignite their interest in the product on offer as well as a long-term engagement with the brand. Publishers often hold more data on consumers than brands do so brands should be forging strong partnerships with their voucher partners and overlaying their data to develop the right offers for various consumer groups rather than a “one size fits all approach”. By understanding the numbers behind current voucher usage, brands can make intelligent decisions about how to utilise the discounting to their advantage.
As the world of discounting matures, retailers must reserve the ‘single event’ discounts to deliver secondary metrics (like clearing stock in a warehouse), rather than just driving month-on-month sales.
Perpetual revenue streams
In short, to break the perpetual discounting habit retailers need to think intelligently about what the consumer is doing and likely to do, to have a better chance of guiding customers to the checkout whether online or offline. In a sense, dropping perpetual discounting habits will help retailers towards a perpetual revenue stream, while protecting their brand.