The surge of social deal sites has made significant headway in the retail marketplace, but the question still remains — do these types of promotions create shopper loyalty? In order to find the answer, retailers must implement strategies and processes that allow them to understand promotions from the shopper’s perspective and in turn ensure the effectiveness of targeted offers.
Cognizant Business Consulting, a provider of information technology and process outsourcing services, recently conducted research to understand shopper likes and dislikes regarding promotions, including where they look for them and what types of messaging are most effective.
In its first annual Shoppers’ Promotional Experience Study, the company surveyed 2,034 shoppers in March 2011 via an online survey. The respondent pool included 54% women and 46% men. The average respondent was 45 years old and had a household income of $59,600.
Retail TouchPoints had a the chance to catch up with report author Johan Sauer, the Assistant VP of Consumer Goods Practice at Cognizant Business Consulting, for additional insight into consumer demand for value and service, and what tactical measurements retailers can take accordingly.
Retail TouchPoints: There is an increased emphasis — in general retail and throughout the study — on customer centricity. How can retailers more effectively segment consumers based on expressed views, preferred promotion type and previous shopping history?
Johan Sauer: Many retailers have well-established frequent shopper card programs that provide the foundation for building customer-centric capabilities. Leaders are capturing consumer responses to various offers and adding this data to each customer’s record. This “closed loop” model, together with shopping history, provides the data foundation on which companies can build segmented customer groups, develop tailored programs and drive growth.
RTP: The report notes the “radical shift in focus from product to consumer, as consumers grow increasingly demanding of value and service.” How can retailers cater to this?
Sauer: Value (low prices) and service (high cost) are, at face value, mutually exclusive. Retailers need to experiment with service offerings, ask consumers what they value and what they might be willing to pay for. Surprisingly, some of the services they value may not be high cost. For example, ordering on-line with in-store pickup reduces stock handling time and improves customer satisfaction. Allowing returns of online purchases to brick-and-mortar outlets saves shipping costs and in-transit damage, while providing an opportunity to satisfy the customer with an alternative product. Our advice: Try it, measure it, expand or drop.
RTP: To that end, the report notes the importance of understanding promotions from the shopper’s point of view. What are some of the steps retailers can take?
Sauer: Cognizant’s study on emerging consumer promotion trends indicated that, while consumers are willing to try new promotional vehicles, they are not at all satisfied with their experiences. Likely reasons include offer complexity, “clumsy” experience, too many clicks, too much work for the value delivered, etc. One idea is to have a team of average associates test each promotion offer. Is it easy to participate? Do all the links work? Did the retailer deliver as promised? This approach will help ensure that future promotions are in fact beneficial from a shopper’s point of view.
RTP: The report indicates shifts in where and how consumers prefer to locate and redeem offers. Can you expand on how these shifts will impact manufacturers’ promotion planning, execution and measurement capabilities?
Sauer: Manufacturers need to continue building their current promotion management and analytics capabilities. Manufacturers will need to design and run structured experiments to fully understand the impact of these new vehicles on business performance. Execution of these new capabilities should be lower cost and more highly targeted versus current mass-market tactics. Measurement should be much more exact as these tactics are targeted to individuals, capturing specific individual response models, allowing for more targeted offers, better response and higher ROI.
RTP: Not surprisingly, the study validated that Facebook and Twitter are an integral part of millennials’ communication patterns. Will consumers increasingly look to these sites for promotion information? If so, why?
Sauer: Our view is that consumers will indeed continue to adopt Facebook and Twitter delivered promotional offers and interactions. Across all age and income groups, email was favored as a promotion delivery medium. We believe this is due to the ubiquitous presence of email. As consumers become more familiar with these new media, we expect them to enjoy widespread adoption just as email has.
RTP: Can you expand on some of the action items for retailers in the report (such as trade promotion optimization, review of digital marketing structure, and leveraging shopper promotion insights)?
Sauer: Retailers are increasing their use of private brands to create differentiation. As they do, they, rather than manufacturers, will need to develop and optimize promotion plans. To do so requires the same sophisticated trade promotion modeling capabilities used by manufacturers.
Integrated digital marketing requires a number of sophisticated capabilities. In many organizations, these capabilities are spread across multiple agencies, banners, regions and even stores. To gain full marketing insight, an integrated approach will provide new levels of consumer insight as they click through your site, based on a centralized research capability. This integration should also reduce non-working digital marketing ad spend by over 20%.
Click here to download the complete Shoppers’ Promotional Experience Study.