52% of Promotions Go to Customers Who Would Pay Full Price: Study
A recent Revionics-commissioned study, "Indiscriminate Promotions Cost Retailers," has found that 52 percent of weekly or monthly promotions go to customers who would actually pay full price. The study, conducted by Cambridge, Mass.-based Forrester Consulting, probed into the emotional psyche of U.S., U.K., French, German and Brazilian shoppers to learn what types of retail promotions are meaningful and impactful.
Shoppers want personalized promotions, which help motivate their purchases
- 53% of shoppers surveyed said that they will wait for as long as they have to in order to obtain the right price
- 52% of grocery shoppers surveyed prefer to receive weekly promotional offers for products
- 40% or more of shoppers wait for the biggest discount in every category before they purchase
- More than 65% of shopper value/appreciate when prices are personalized to their shopping habits
- 59% of shoppers surveyed said that they would feel anger if the price doesn’t make sense to them, damaging sales and brand loyalty for the retailer
- 37% of respondents who received offers on items they would have paid full price for said that the offer had neutral or negative impact, with more than half of those saying that they would be less likely to shop that store or brand in the future, or that they reacted with annoyance
- 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
While historical data on promotions and customer preferences are plentiful, retailers often neglect to do effective promotion performance analysis, instead defaulting to easy but unproductive offers that have unintended negative effects. For example, 37 percent of respondents who received offers on items that they would have paid full price for said that the offer had a neutral or negative impact, with more than half of those saying that they would be less likely to shop that store or brand in the future or that they reacted with annoyance.
“It is interesting that 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, chief marketing and strategy officer at Austin, Texas-based Revionics. “We clearly see in the study results that unfocused offers fail to elevate a brand, and can even be damaging.”
The study also revealed item category nuances, such as shoppers' preference for promotional offers that synced with the frequency of their purchases; more frequently purchased items, like groceries, are more likely to benefit from daily or weekly offers. However, personalized offers have pitfalls as well: In the study, 65 percent of shoppers appreciated personalized prices, but 47 percent of those shoppers also noted that they would be upset if someone else received a better price.
Tech-savvy shoppers believe that retailers should use data analytics to provide targeted, relevant pricing and offers; 59 percent said that they would refuse to purchase an item if they perceived the price as arbitrary. But shoppers also accept price increases and decreases that remain within the “fair” range, as long as the pricing change is based on data science.
“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,” added Sullivan. “Conversely, retailers who fail to utilize these capabilities risk alienating shoppers, squandering scarce resources and undermining their brand – costly missteps that can prove fatal in an increasingly unforgiving retail landscape.”
Complimentary copies of the research findings are available from [email protected].