How Retailers Can Leverage Shopper Empathy to Increase In-Store Sales
It’s no secret that in order to create great customer experiences and maximize sales, it’s imperative to have a deep understanding of the motivations that drive your customers’ buying behaviors and preferences. This is true across the entire path to purchase — from advertising to point of sale and beyond. So far, this is “motherhood and apple pie” to any marketer.
But one area where shopper empathy is systematically overlooked is “trade promotions,” or those offers you might see on the shelves of your grocery store or in the insert of your Sunday paper. And this is a big deal — trade promotions represent a collective $300 billion of industry spend each year and influence upwards of 60% of purchases, depending on the category.
Despite this high level of investment, most promotions fail to deliver significant ROI. This is in part because the industry has historically lacked an effective way to test promotions before they hit shelves. It also hints at a lack of understanding of which offers truly resonate with consumers and influence them to make purchases. It points towards a significant untapped opportunity around “shopper empathy” – a deep understanding of the social, behavioral and cognitive drivers that underlie consumers’ wants, needs and preferences with regard to the shopping experience.
At Eversight, our customers have tested thousands of offers with real shoppers on digital platforms for the purposes of informing in-store promotions, uncovering a host of fascinating insights pertaining to shopper empathy. Here is some advice on how retailers and brands can work together to gain a better understanding of shopper empathy and leverage it in developing more relevant and effective promotions.
Beyond Truth in Advertising
It’s commonly understood that marketing language must be truthful to resonate with shoppers. However, regardless of truthfulness, overly general or irrelevant offer language (such as “buy now and save” or “get more value”) can actually hurt the performance of an offer by as much as 60%. Vague language, as in these examples, can be confusing, distracting or even irritating to consumers. You certainly don’t want consumers wondering what an offer actually means.
Offer language that sends a direct and relevant message to consumers, on the other hand, performs best. For example, when timed correctly, language like “make summer last!” or “start your spring off right,” can make an offer perform better. In a test aimed at identifying the optimal promotion for a popular beverage, highly relevant call-to-action led to more than a 20% lift over an identical promotion with no offer language.
In retail, it’s common knowledge that consumers like to buy certain products together, e.g., hotdogs and buns or chips and dip. One test found that combining two popular products that were commonly consumed together increased the effectiveness of an offer by as much as 50%, even at the identical price point for each item. It stands to reason that offers bundling such items will outperform offers for each item individually, but what about less obvious bundles? This is where shopper empathy plays a key role.
For some groups of consumers, bundling certain products together — even if those products are seemingly unrelated — leads to a significant lift in sales. Often times, these preferred bundles are less intuitive than hotdogs and buns (think milk and bread), which is why experimentation is essential when looking for the optimal promotion. When bundles resonate with consumers, particularly less obvious bundles, the incremental lift can be significant.
When Timing Is Everything
When it comes to developing promotions based on a deeper understanding of your consumers, one of the most important aspects is getting the timing right. “Timing” in this context can mean seasonality, time of the month, or even the day of the week. Seasonality can impact the kinds of products that are consumed (e.g., ice cream or hot chocolate), as well as consumers’ price sensitivity and responsiveness to promotions. The time of the week or month impacts factors related to work, family and other obligations. Together this drives the “what, where, and how much” of consumer purchases.
One of our clients found that the effectiveness of a promotion varied widely depending on its timing in relation to the typical paycheck cycle. By offering deeper discounts in the later part of the month (long after many consumers received their paychecks) they could drive higher sales volume.
Another client found that the effectiveness of various pack sizes in their offers varied widely based on the time of year. Gathering-oriented events such as The Superbowl or 4th of July were more conducive to promotions featuring larger pack sizes and bundling, whereas other times of year favored promotions that required a smaller total purchase — this mattered much more than discount level.
You Can’t Make This Stuff Up
The kind of insights I’ve shared above can increase the effectiveness an in-store promotion by 20-50% or more. However, this knowledge can only be uncovered through explicit experimentation. We know from developments in behavioral economics that shoppers today make decisions in seemingly irrational ways, influenced heavily by emotional, social and behavioral drivers; and perhaps most importantly, we know that they are increasingly seeking an experience tailored to their specific wants and needs.
As evidenced by the abysmal ROI of today’s promotional landscape, it is no longer sufficient to treat consumers as homogenous, rational utility-maximizers; simply providing bigger discounts is no longer enough. The time has come for a deeper understanding of consumers. The time has come for shopper empathy.
Jamie Rapperport, the CEO and co-founder of Eversight, has 25 years of experience as a software entrepreneur. Prior to founding Eversight, Jamie was co-founder and executive VP at Vendavo, a leading B2B pricing technology company.
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