Thought I’d jump on the Black Friday bandwagon to ask a question:
What exactly is the point of a promotion?
If we are talking Sales (Black Friday or whenever) then there used to be commercial business logic behind a sale, namely clearing out older inventory to make space for the new season’s stock. It was a win:win, the customer got product at reduced prices and the business cleared shelf and warehouse space ready for new ranges. It was also an opportunity for a business make a bit of a marketing splash. Nowadays, things have shifted. With 24-hour shopping and access to price comparisons on the internet, unless you have exclusive product where you can control supply (Apple!), the resulting free-for-all and price-transparency means your competitors know your ‘sale price’ almost immediately and everyone sees a ‘promotional’ price as, in reality. the real price you will always pay. If you can offer a genuinely discounted price, it is often only a matter of days, or even hours, until your competitors are matching your promotion. Customers are getting savvy too. There are a wide range range of smartphone apps which allow internet price checking even while they are out shopping! I appreciate there are rules about offering discounted prices but it just becomes a game where businesses rotate prices and stock recognising that in order to offer a discount they have to hold a ‘list price’ for at least 28 days – and during these 4 weeks they don’t really expect to sell any of those ‘list-price’ products When was the last time anyone bought a ‘list-price’ sofa from DFS? So have promotions and offers been devalued to the point that businesses feel they have to do them simply to trade? Or is there another way?
Use promotions to genuinely influence behaviour
If we accept that, in many cases, a promotion is simply a convoluted way to build an advertising message around what is actually a ‘regular’ price, should you simply accept that the normal price is the normal price and refocus your promotion on actually influencing buyer behaviour? Rather than simply casting your promotion to all and sundry, here are 3 ways to use real promotions to engage with real customers and prospects:
1. Get someone ‘over the line’
E-commerce businesses are only too aware of the issue of the abandoned-cart. A potential customer puts product in their ‘basket’ but then never checks out. they were clearly interested in buying but, for some reason, never completed the transaction. There is an equivalent in Business to Business where a prospect asks for a quote but doesn’t go ahead. In both of the above cases, a genuine promotion, targeted at the specific individual can be the thing to get them ‘over the line’ and give you the business. OK, there are people (savvy customers?) who will deliberately hold-off from completing the transaction in the hope that you might come back with the offer of a better deal but by personalising your offer, you are more engaged with your customer, creating a better platform for an ongoing business relationship.
2. Reward genuine loyalty
We always like it when people say ‘Thank you’ and in business it is no different. Every now and again it can be great PR to say ‘thanks’ to a loyal customer and recognise their loyalty, This could be as simple as saying thank you when you speak with them. If you go further and offer a voucher or ‘additional service at no extra cost’, these can cement a good business relationship long into the future.
3. Encourage returners
It is the nature of some businesses that can be difficult to build regular, repeat customers but even here, promotion can be used to maintain engagement. I have a personal example of a company who sell Mediterranean sailing holidays. I had a couple of great holidays with them 10 years ago but then children came along and sailing around on a small yacht for a week didn’t seem quite so practical! Over the past 10 years they have kept in touch. Invitations to visit boat shows, details of new yachts they were introducing, and yes, offers on holidays. All of these are interesting to me (rather than just pushy from them!) and even though I haven’t been able to take up the opportunity yet, we have started talking about going again now the children are taller than me(!). When we take the plunge, this company will definitely be on my shopping list.
The value of long term
With so many promotions and so much marketing focused on quick returns in the short term, the significant potential benefit of long term, loyal customers is easily forgotten. Building long term loyalty in the B2C/ FMCG world is undoubtedly getting harder as the retail market is often its own worst enemy but in niche markets, whether B2B or B2C, using real promotions to engage with customers and prospects can deliver real, sustainable benefit to your business Are you simply grabbing your share now or building engagement with your customers to secure your business in the long term?