More Is Not Better: How to Effectively Target Retail Promotions

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More Is Not Better: How to Effectively Target Retail Promotions

Are there any retailers where you shop regularly but never pay full price? For instance, there’s a home goods store that my wife and that I visit every few months. While we’re loyal customers, we still check to form sure we have a coupon before heading to the shop. The retailer sends us coupons all the time, so it might be crazy to shop for anything without using one.

This is a typical practice among U.S. retailers. They send daily coupon codes or weekly promotions within the mail and through email. Sometimes these promotions will be for the maximum amount like 40 or 50 percent off the complete store. And as savvy consumers, we’ve all learned to attend for those coupons before we buy.

These promotions certainly drive purchases, otherwise, retailers wouldn’t send them. But retailers that operate like this have found themselves stuck in a very regeneration. Customers have learned to attend for a coupon to create their purchases, so retailers have to send more coupons to drive identical sales. But, of course, they’re leaving money on the table through their frequent discounting. What can they do?

Rely on segmentation to deliver more targeted promotions.
There’s nothing wrong with running regular promotions to drive purchases. The matter is that these coupons are often sent indiscriminately to everyone within the retailer’s database. While each coupon drives lots of sales, there are unintended consequences. Shoppers that may are willing to pay the full price can access and use the coupon, which the retailer loses money on each of these transactions. Also, shoppers who are only curious about buying once in a very while can become overwhelmed with the degree of coupons sent to them via email and unsubscribe — that the retailer loses future revenue from those shoppers.

To avoid these pitfalls, retailers should aim to send promotions only to shoppers that you just believe need them so as to convert — to not people who don’t — and choose the foremost relevant promotion for every person. this is often certainly a lofty goal. If it seems too challenging, start heading therein direction by targeting your promotions through better segmentation.

To start simple, begin by testing different promotions for your high-value customers and your new email subscribers. for example, you’ll send a broad discount to your new subscribers to encourage immediate action, but send each high-value shopper an email that promotes new items in their favorite category. you will find that a lot of these loyal customers are willing to get new items without a reduction.

Faster Than We Can

Then you’ll be able to start segmenting further. Create a segment of shoppers who have purchased within the last 90 days and run a promotion to encourage them to create a repeat purchase. Create a segment of shoppers who have only purchased in a very store and run a promotion to urge them to shop online. Create segments of shoppers who regularly shop in certain categories and supply them with a coupon for an acquisition in a very new category that’s relevant to them, but where they haven’t purchased before.

At this time, you’ll have one major concern: how does one decide which promotions to feature on your eCommerce website if you’ve emailed different promotions to different groups? Will it confuse shoppers?

To overcome this challenge, you ought to leverage website personalization to make sure that every person sees a promotion relevant to his or her segment. instead of announcing a 40 percent sale off everything to everyone on your homepage, you’ll be able to personalize a prominent area of your homepage to point out a relevant deal for every person. First-time visitors may be shown one promotion, while loyal shoppers can see another, etc. And if you’ve sent someone a promotion via email, you’ll be able to make sure that the correct promotion is displayed on your website thereto the same person so there’s no confusion.

Take your promotions to the next level with machine learning.

If you’re a touch more advanced, you don’t have to leverage manual segmentation to accomplish this result. you’ll use machine-learning algorithms to select the most effective promotion to deliver to every person. With this approach, you’ll be able to feed the algorithm some different promotions or offers — like a coupon for 10 percent off a particular category, a reminder to hitch your loyalty program, an announcement of latest arrivals in a very specific category, etc. — and permit it to select the foremost appropriate one for every person reckoning on what you recognize about everyone. While this might seem more complicated than the segmentation process I described earlier, it’s actually a neater, more automated and scalable approach.


There’s no reason to send the identical promotion or offer to everyone on your email list each day. once you can deliver better promotions to your audiences, you’ll be more likely to have interaction with your customers, instead of spam them with irrelevant promotions. Focus instead on building loyalty through relevance and value.

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