Personalized promotions: increase loyalty without dropping prices
The economy is struggling to recover from total quarantine restrictions. Not surprisingly, low prices have become especially important for consumers. Race to the Bottom pricing is a losing strategy for retail.
Today we will talk about why retailers are better off focusing on personalized promotions and how they help maintain and even increase loyalty to the retail chain.
Why are personalized promotions in the spotlight?
The headlines in the media scream about the increase in food prices, and the price tags in stores tacitly confirm this fact and alarm consumers. In our omnichannel mobile world, shoppers can shop through many touchpoints, allowing consumers to be more selective. And yes, the price is now coming to the fore, becoming the main driver of demand! In such conditions, it becomes extremely difficult for retailers to fight for the loyalty of visitors.
The desire to reduce prices becomes natural. But the strategy of endless reduction in price management and endless promotions will not lead to an increase in the share of consumer wallets. A great counterbalance to this strategy is personalized promotions, which increase customer value and loyalty to the retail chain over the long term.
Retailers combine bulk deals with personalized promotions
In retail, an awareness has been formed that the advertising budget should be invested strictly in target brands and directions, while the best marketing strategy should be applied. Retailers want to make sure that their promotional investments add value to the right target audience segments and maximize the value of the cart. Simply put, retailers want to spend money on promotions that will effectively impact sales, profits, and customer impact.
Another clear trend is that retailers are looking to allocate costs efficiently and striving to find a balance between investing in bulk promotions and personalized offers. Passing a promotional coupon to a buyer who is likely to use it is a key part of personalized promotions. The question is what resources a retailer has to spend to organize targeted offers versus traditional mass offers.
In addition, based on the example of Western retailers, it can be noted that companies are striving to create a reputation for themselves as reliable suppliers of goods in their region and for their community. At the same time, when a region is distinguished by problems in the economy or with the health of the population, the provision of a price category that meets the expectations of consumers becomes a particularly important promotion mechanism.
Massive promos and personalized promotions work in tandem!
Increasingly, retailers around the world are adopting an integrated approach to managing promotions, blurring the boundaries of marketing budgets for mass and targeted promotions. To allocate funds for a new marketing unit, retailers are increasingly using artificial intelligence (AI). This approach allows you to process data and receive recommendations for marketing activities in both segments. AI, with historical data from loyalty program management systems and sales data, enables the development of the best recommendations for leveraging investments to achieve holistic results.
When historical data is not available, as in the case of a pandemic, AI provides operational knowledge as the situation evolves. This approach allows the business to respond quickly and create appropriate advertising responses. Dealing with this manually takes a lot of resources and working hours.
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Increasingly, three performance metrics are used to measure marketing goals:
- impact on sales;
- impact on margin;
- influence on the buyer.
While the first two are clear, have long been used and can be counted, the third is still intuitively included by retailers in the evaluation criterion.
When a retailer has the right data, clear sales figures, margins and customer impact, adjustments will be verified. For example, this is how you can identify cases when the wrong promotion technique was used or the price was overpriced. Also, the data helps to identify where mass promo has turned out to be too niche or not received enough distribution.
Oftentimes, a personalized promotion can be the best tool or run in parallel. AI capabilities allow you to confirm that in a specific case, a targeted offer will be the best solution.
AI-powered solutions save time on personalized promotions and allocate investments profitably
A personalized approach can be implemented without AI by distributing marketing proposals to target audiences based on loyalty or price sensitivity. But AI allows this work to be done more efficiently with recommendations for budget allocation. Retailers can develop a strategy and build hypotheses, but a scientific approach allows them to accurately assess their effect.
You can also personalize marketing offers manually, which takes a huge amount of time. With the use of AI, the scale is dramatically increased and the resources of the retailer are saved.
Do you want to increase your loyalty? Make your ads effective by increasing personalization
Targeted offers make the client feel valuable. This effect cannot be achieved with the help of mass promotions. As a result, with point promotions, you can significantly increase the loyalty and turnover of the retail network, which is impossible with a simple price reduction.
Retailers can use AI to target funds for offers that are relevant to their visitors. This will enable ad campaigns to be deployed that are clearly valued, predicted and optimized. To summarize, well thought out, customer-centric strategies will provide decades of endurance to retail chains.
Make your promotions effective!
IT solutions from C4R for managing loyalty programs allow you to create a large number of messages via SMS, e-mail and instant messengers in real time. Automation systems help to contact the customer base through any of the channels and make targeted offers that maximally take into account the preferences of buyers.
Interested in solutions for automating pricing in retail, have questions about consulting and audit services for retail? Ask our consultants at +38 (044) 492-67-00 or fill out the form below. We will definitely call you back!
Based on materials from symphonyretailai.com
prepared by Iryna Poberezhna,
Content Manager Consulting for Retail
