Robin Coles
Robin Coles 26 February 2021

Higher Promotional Returns are Available to Retailers that Can Automate Management and Execution Across Channels

In 2020, Covid-19 forced many retailers to pursue promotional and loyalty programme activity using luck rather than judgement. This is entirely understandable given the upheavals that sent shock waves through even the most organised stock management and sell through strategies, and the difficulties of appealing to customers whose shopping behaviours have become so unpredictable and changeable.

As we look ahead to 2021, it will be imperative to review last year’s activity because many retailers will recognise a number of outcomes that will not be sustainable. Return on investment in promotions will be lower, stock turn is likely to have slowed and overall lifetime value across the customer base is also unlikely to have grown.

The good news is that research from XCCommerce shows the way ahead in terms of what customers need.

72% agreed that in this time of financial uncertainty retailers should offer more promotions and 69% agreed that if two retailers are offering the same product, one with a promotional discount and the other without, they would always choose the retailer offering the promotional discount regardless of whether they have shopped with them previously or not.

In terms of loyalty, 62% said they were loyal to those retailers and brands who consistently offer promotions. Add to this the fact that consumers became more adventurous during 2020. McKinsey’s consumer-sentiment survey found that more than 75% of Americans had experimented by buying new brands from new places or otherwise changed how they shop, as a result of the crisis.

So, we have consumers wanting promotions and being prepared to try new things. Yet retailers are continuing to waste money chasing business by not using insight into their customers and by not running promotional activity in a consistent way across the many channels those customers are now using.

The research supports this view when it found that almost two thirds (62%) are interested and respond well to offers and promotions that are targeted specifically based on likes and dislikes and previous purchases. This suggests that a better understanding of what the customer wants will reap much higher rewards – both for the shopper and for the retailer.

In terms of how consumers are accessing promotions, the research shows that retailers need to plan and execute them consistently across channels, rather than having a different strategy for each.

The majority of consumers (52%) accessed promotions via email in 2020 but, despite non-essential retail being shut for significant portions of the year, 36% still accessed promotions in-store via promoted offers. Printed promotions delivered via the post (coupons, mailers, and catalogues, for example) accounted for 23% of the total, mainly to do with postal marketing making a return for locked down consumers.

The channel mix has changed, and this is unlikely to return to what it was, given how much retail has shifted online. In fact, by combining figures from the US Census and the UK Office for National Statistics (ONS) including grocery, ecommerce now represents 40% of retail spend – a marked uptick on pre-pandemic levels.

In addition to understanding channel mix, retailers will also benefit from understanding the differing behaviour by age. As an example, 20% of 18-24-year-old accessed promotions via SMS, while 21% of 18-24 year-olds accessed offers through television advertising.

Promotions via push notifications from a retailer’s app were accessed by 24%, rising to 33% of 24-35-year-olds. And for loyalty, promotions received as part of a scheme or programme were accessed by 28%, and this was highest amongst older users – 41% of shoppers aged 65 and older.

This complex and changing promotional landscape requires technology that automates the management and execution of promotions across channels, enabling a higher return on this investment, particularly on stock in distressed channels, such as underperforming (or closed) stores.

In 2021, by automating the management of promotions, retailers will be able to respond more quickly to emerging opportunities focused on inventory, peak events, new customer segments, and new channels.

Longer term, marketing can concentrate on tasks that are usually put on the backburner, notably, recovering lapsed or inactive customers, developing new techniques, such as product and service bundling, and crucially, working more closely with customer and digital teams to produce more effective and targeted promotional offers.

The benefits of this, automated process will be expressed through better marketing KPIs, higher average order values, increased lifetime values, fewer returns and faster stock turns.

2021 is the time to do these things, there is simply no time to waste

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