Study: Irrelevant promotions are killing customer loyalty

BY Deena M. Amato-McCoy

Retailers that don’t target promotions are leaving profits on the table, and sacrificing customer satisfaction.

There is a big disconnect among retail promotions and the consumers receiving them, as 52% of weekly or monthly retail promotions are going to customers who would happily have paid full price, according to “Indiscriminate Promotions Cost Retailers,” a study from Revionics.

Despite having extensive data on historical promotions and shopper preferences, retailers who neglect to do effective promotion performance analysis default to easy but unproductive offers. For example, 37% of respondents who received offers on items they would have paid full price for said the offer had neutral or negative impact. More than half of these shoppers said they would be less likely to shop that store or brand in the future, or that they reacted with annoyance, the study said.

“Many of these unproductive offers come via email, a medium which retailers may find easy or inexpensive to use especially when delivering personalized offers, but which still carries risk if used indiscriminately,” said Cheryl Sullivan, Revionics’ chief marketing and strategy officer. “We clearly see in the study results that unfocused offers fail to elevate a brand, and can even be damaging.”

Today’s tech-savvy shoppers believe retailers should utilize technology and data analytics to provide targeted, relevant pricing and offers. In fact, 59% of shoppers reported that they would refuse to purchase an item if they perceived the price as arbitrary. They accept price increases or decreases that remain within the “fair” range if they are based on data science.

Shoppers also prefer promotional offers synchronized with the frequency of their purchase. More frequently purchased items, such as groceries, household essentials, personal care products, and convenience products, are the most likely to benefit from daily or weekly offers, according to the study.

When determining the right promotional offer, retailers should tread cautiously.  Although 65% of shoppers appreciated personalized prices, 47% of those shoppers stated they would be angry if someone else received a better price, the study said.

“Retailers who leverage machine-learning based price and promotion capabilities have a clear advantage in delighting their customers with meaningful, carefully crafted prices and promotions,” Sullivan said. “Conversely, retailers who fail to utilize these capabilities risk alienating shoppers, squandering scarce resources and undermining their brand – costly mis-steps that can prove fatal in an increasingly unforgiving retail landscape.”


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