Upgrade Your Promotions Strategy in the AI-Era through Shopper’s Data

Overview

Here is an eye-opener for most retailers and brands out there – a large percentage (30-40%) of your current promotions may not actually be helping you to accomplish your business objectives. In fact, they may be working against you. When you objectively analyze your promotions strategy, you will learn that some promotions are not helping you to drive traffic, drive revenue, or even drive margin. They may even be encouraging counter-productive behaviors like cherry-picking, pantry loading, and offer stacking.

The Challenge of Mass Promotions

When it comes to mass promotions in particular, success can be an illusion that is difficult to dissect and analyze. Most retailers and brands expect, assume, and sometimes even see a semblance of success – but are never sure of how successful their approach to mass promotions has actually been. What is even worse is that if promotions are not working, the cause of failure is not always evident.

Without looking at the big picture, selecting the best success criteria for promotions can generate a lot of internal debate. What to promote, when to promote, and how best to promote remain the essential questions.
The three most common “old school” reasons for promoting are:

Repeating something from the past where an item or set of items was promoted at the same time and in the same way last year.
Being motivated by the allowances or rebates funded by the brands that sponsor these promotions. Despite the brand funding, it is not uncommon for some promotions to be out of step with the retailer’s own strategy, let alone the needs of shoppers.
Retailers execute promotions because they see their competitors promoting identical or similar items, and they assume that those promotions must be successful otherwise why would that competitor run the promotion in the first place? This can be a race to the bottom.

This problem of ineffective mass promotions has been plaguing retailers and brands for many years. Without a data-driven approach, promotion evaluations are often driven unintentionally by conformity bias.

Considerations for Better Promotion Planning

An effective promotions strategy should establish clear success criteria, whether that be to drive revenue, drive traffic, drive profit, or drive basket composition, all while simultaneously pleasing targeted customers.

To elaborate, at a macro level, promotion planning can be broken into two main areas:

Mass Promotions – available to all shoppers and can include: 1.) digital or print based circulars, mailers or flyers which may run on weekly or monthly cycles, 2.) temporary price reductions (TPRs), which may run over longer, multi-week time periods, and 3.) brand sponsored coupons.
Personalized Promotions – these can include segment-based or individually-targeted offers and they tend to be more prevalent in retailers with strong loyalty programs.

Whether you are doing Mass Promotions or Personalized Promotions, these decisions need to be based on three key considerations:

Knowing your market
Knowing your customers
Knowing your brand partners

Knowing Your Market

Each store, region, and channel present unique promotional planning considerations. Understanding Competition: If you are running a retail chain in a region that is dominated by a fierce, more-sizable everyday low-price leader, your promotional decisions can be the most meaningful contributor to your business results. Instead, it is essential to execute a promotions strategy that emphasizes your unique value proposition.

Knowing Your Customers

Knowing your customer, and personalizing promotions for them is increasingly considered table stakes for retailers who wish to succeed and grow.

Conducting Personalization at Two Levels – at the Segment or Individual Level

Segmented, Personalization of Mass Promotions: Leading retailers are getting far more sophisticated in curating offers that are individually relevant. This data can be used to determine which products should be promoted in a specific region, when, and at what price point.

Individual 1:1 Personalization: Providing a unique and targeted offer to a customer based on their purchase history is the best way to illustrate that you know your customers.

Knowing Your Brand Partners

One of the primary objectives in mass promotion planning is to find ways for all stakeholders to win including the retailer, the shopper, and the brand partner. The reality is that with 30-40% of retailer promotions being ineffective, everyone must be open to new tactical approaches that are data driven.

What Can You Do to Boost Your Mass and Personalized Promotions Strategy?

Most retailers are well-aware of the challenges and pitfalls involved in planning and executing promotions across channels. With the emergence of Artificial Intelligence, there are a plethora of new, highly scalable, and accurate capabilities when it comes to reevaluating your mass and personalized promotions strategy.

Facilitating the free-flow of data and intelligence, breaking the barriers of people and data silos: Your organization should be on the same page with clear data-driven insights.
Driving time and location-based personalized promotions is crucial.
Enabling operational excellence for optimal promotion execution is key.

How Can Hypersonix Help Make Promotions Successful?

Hypersonix goes beyond traditional analytics to deliver a holistic solution for retailers with real-time insights on promotions. From identifying the right products to promote, to the right personalized messages and optimized offers.