Saturday, January 15, 2011

Getting Outside The Promotion Loop

Promotion is a very effective and easy way to boost sales. Indeed, when you offer to customers some discounts on products, they tend to respond pretty well to the stimuli. Nevertheless, and that is what has been seen during this economic downturn, when you start increasing the number of promotions you deliver, the less effective they become, and you enter into a vicious spiral which is difficult to leave.

This vicious spiral is created when competitors start to grow their amount of promotions. The more they are offering vouchers, the less they are effective, but the more they tend to make, as they find it profitable, and the only way to convince shoppers to buy.

I read a very interesting article about Emmanuel Casabianca, which is the CEO of Telemarket, one of the most important grocery online retailer in France. Hence, they have set up a commercial strategy which prefers to offer products to customers rather than discounts and % off. Why? As he explains, when you offer a discount to some customers, they take it, but they forget about your gesture very fast, whereas when you offer something, it seems to remain in customers’ memory more permanently. Hence, they offer in some occasions for customers which spent over 80€ a basket of fruits, or a full breakfast.

That reminds me also something about a concept which is “always exceed your customers’ expectations”. If your customer expect a voucher to come to your store that means your business model is not reliable. Customers should come to your store because you deliver good service and/or a good product. Now, you should also always exceed their expectation, and by giving them a little extra, you may increase a lot customers’ satisfaction.

This reminds me also something else. In November, two of the largest retailers in France, Carrefour and Auchan, around the same period of time, proposed to customer to collect some cartoon cards, in order to boost the traffic in their store. A study showed that traffic has been high thanks to these cards, and that actually customers were basing the choice of the hypermarket they were going to due to the cards they were collecting.

If you really think about it, the marketing investment in cards is very low, compare to the price investment you may use to promote some of your products.

If you want to get out of the promotion loop, and strengthen your customer relationship, you should consider more offering gifts, presents to your customers, than the price.

What do you think about it?