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Recently in Business Insider, Hayley Peterson argued that Tinder’s affect on culture is now affecting retail, as a generation of consumers accustomed to swiping for a more relevant romantic match are taking the same philosophy to the way they shop. More than half of U.S. consumers research purchases on their smartphones before buying, giving retailers just a few precious seconds to convince someone to choose their brand.
Because loyalty matters less in this environment, shoppers want to find the right product at the right time—at the right price. So if a retailer’s experience is deemed inadequate, the consumer will move on to another retailer who offers everything they want.
Much ink has been spilled over how retailers struggle to use promotions effectively to capture customer’s interest. J. Crew inspired not one but two sites that track its sale cadence; Macy’s offered deals 104 separate days in 2015, approximately one-third of the entire year.
The problem is a shopper base that’s been overly conditioned not to pay full price with the attention span of a caffeinated gnat. That genie is not going back in the bottle. That said, there’s a path to give customers what they want and keep revenue growing. And with attention spans whittled to just eight seconds, there are four things every retailer needs to do to succeed.
The Boston Consulting Group found that promotions account for as much as 45% of revenue for brick-and-mortar retailers, but 20–50% generate no noticeable lift in sales. Promotions are so rote for retailers that they don’t necessarily start with a goal in mind.
Begin by looking at what your business needs most: is it acquiring new customers, retaining an existing but wary customer base, or driving more revenue? Choose a priority and focus efforts in an upcoming campaign onto that priority. By making it clear to customers who you are and what you want to offer them, you’re putting their interests first—and they’ll notice.
For years, retailers treated stores and e-commerce as separate channels, with promotional channels—like email or, more recently SMS—considered distinct as well. That isn’t how customers see it. To them, your brand is your brand, and whether they encounter it via mobile messaging, email, m-commerce or in a store, it’s all the same.
Instead of seeing marketing to customers as omnichannel, brands need to treat each touchpoint as a stop along a path to purchase, versus a separate trail with separate results. Every time you approach a customer, you should consider yourself on a connected path that ends a purchase.
There’s a fine line between innovation and alienation—just ask J.C. Penney. Former CEO Ron Johnson’s decision in 2011 to do away with sales proved to be a bad match for its deal-hungry customer base. But Penney’s learned its lesson. In 2015, they began testing select concepts—buy online, pick up in store; adding appliances into its product mix; integrating Sephora—and asking customers for their opinion on the changes.
Giving customers what they want is not necessarily the key to retail success. Rather, innovation requires a retailer to understand its customer base and its motivations, and test concepts that fit into those needs.
The same approach can apply to promotional campaigns: using segments, retailers can test different types of promotion and content types to see what works best. If a retailer’s customer base likes discounts, retailers can test different levels to see what inflection point will allow their customers to feel as if they’ve received a bargain without having too great of an impact on margin.
Customer data can help here too—a good marketing platform will integrate browsing behavior and purchase data to provide a 360º view of a customer and make recommendations based on that view. If it becomes obvious that a customer segment prefers to purchase online versus in stores, a retailer can test complimentary two-day shipping versus a blanket discount.
“If you do what you’ve always done, you’ll get what you’ve always got.” Few axioms are as true as this one, particularly in the area of retail promotions. If a discount-driven strategy does not sell enough volume to offset the impact on margin, this is not an approach that will deliver long-term results.
Instead of testing new strategies or evaluating what’s not working, retailers stick to this losing proposition, which not only costs money but also devalues brands.
So what can a brand do to turn things around?
Consumer expectations have changed. Not only do your customers expect a seamless cross-channel experience, but they expect it to be best-in-class and to deliver what they want in literally seconds. Retailers stuck in old approaches to business, believing in five-year plans and discounting their way to profit, will find themselves left behind. Those that reshape their approaches will find themselves on the right side of their customers.
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