Giving Away the Store
These days it seems as though retailers across all industries are relying heavily on price promotions to ramp up business and retain existing customers.
I've seen offers from $399 roundtrip airfare and hotel to Ireland, to my cell phone service provider offering a month of free service.
According to a study of U.K. consumers, shoppers are seeing the same discounting there. Fifty-seven percent of consumers have noticed a significant increase in the number of price promotions and special offers they are receiving through direct marketing channels. However 68 percent also said that the majority of these offers are completely irrelevant to them.
The G1 Solutions Group, which commissioned the study, warns that two-thirds of creativity and budget devoted to special offer campaigns is being wasted because it is promoting and discounting purchases that the recipient will either never make, or perhaps would have made anyway.
According to Andy Wood, managing director for GI Insight, said companies have been trying to keep or win customers by ramping up their use of incentives and price promotions, usually in the form of coupons or vouchers.
For example, premium supermarkets have been creating special offers to return a level of value to existing customers and keep them engaged, while value supermarkets have been using price promotions to try to attract even more customers away from premium stores, even if it is for only a small proportion of their spend.
"The current flurry of activity around discount and price promotions may be wasting a considerable proportion of its potential," warned Wood. "Fortunately, one-third of retail marketers are getting it right, taking advantage of the data they have gathered to personalize their coupon and voucher activity. Those who make the most use of the ability to vary and personalize text and images are likely to stand out in the marketplace and see soaring redemption rates."
Related Entries
