Promotions should vary by audience
I ran across this great Forrester Research study, “Using Promotions to Cut Through Ad Clutter” and thought some choice tidbits were worth sharing….
AD-WEARY CONSUMERS STILL VALUE PROMOTIONS
In today’s climate of marketing message overload, marketers are constantly looking for ways to stay relevant to consumers who avoid ads. We looked at consumers’ use of and attitudes toward promotions today and compared them with those in 2001 to see how promotions should fit into the marketer tool kit. We found that promotions work for marketers because they:
Appeal to consumers. Consumers value promotions more today than they did in 2001. Nearly half of consumers — 47% — are always looking for promotions, and 74% more consumers make time for promotions today than they did five years ago. Most importantly, promotions drive incremental sales activity. Today, almost 50% more consumers than in 2001 are likely to buy more in order to take advantage of a promotion.
Drive awareness and purchase. Promotions work best at the ends of the marketing funnel. Online promotions drive awareness for about one-fourth of promotions users. Twenty-three percent say that promotions sites like CoolSavings introduce them to new products, while 18% use promotions from new retailers.
Cross generations and gender. Men and women of all ages value promotions — especially flat discounts and free shipping. Preferences for other promotions vary by age and gender. Women and younger consumers prefer free merchandise, while consumers aged 55 and up favor mail-in rebates. Loyalty programs are the least well-regarded promotion. Only 25% of men and 29% of women value them.
Marketers Should Embrace Online Promotions
Online promotions engage consumers. In fact, 58% of all promotions users heard about the last promotion they used through an interactive channel like display ads or email marketing. And Forrester expects this trend to grow as consumers adopt new media. Almost one in 10 online promotions users already embrace emerging channels like blogs and RSS. Why adopt interactive promotions? Because they provide:
Access to attractive customers. Online promotions users make more money, are better educated, and go online more than offline promotions users. Although on- and offline promotions users are the same age and gender, online promotions users make almost $10,000 more annually and spend $73 more online per quarter. Plus, they shop online regularly, and 40% are college-educated.
Ways to track customer response. Interactive channels solve one of marketers’ greatest challenges with promotions: closing the loop between offer and sale. Tracking codes can be written into online promotions to tell merchants when particular offers are redeemed on- or offline. Plus, incorporating coupon redemptions into user profiles provides additional data that marketers can leverage to target future promotions. Alamo Rent A Car targeted previous car renters with a “free day” offer to encourage incremental three-day rentals. Users could book via email, Web, or phone. But the coupon — with a unique offer code — had to be presented at car pick-up for redemption.
Two-way customer conversations. Interactive promotions help marketers listen and react to customer responses. Using promotions to respond to customers’ previous behavior not only improves promotions‘ relevance and profitability, but it also creates a dialog with customers, making promotions part of a relationship marketing strategy. Peet’s Coffee tested free shipping offers to consumers with different order sizes to see where it had the greatest sales impact and profitability. Offering free shipping only to customers ordering more than a certain amount increased the company’s revenue per visit by 21% and encouraged visitors to venture deeper into the site to increase their basket size.
The more strategic use of promotions to engage new and existing customers in an interactive dialogue will position promotions as a prime player in the cross-channel marketing mix. We expect that:
Promotions will secure a spot in the online marketing suite. Left Brain marketers tuning in to the relationship building power of promotions will look to incorporate promotions data holistically into their marketing databases. But simply layering more data onto their growing mountain of consumer data doesn’t make the data usable. Marketers will need help structuring, managing, and analyzing promotions data alongside the behavioral and demographic elements they already have. This means that promotions data will tie into the online marketing suite to enable more integrated messaging across interactive channels. We expect Web analytics companies like Omniture to partner with online promotions developers like Promotions.com as they build out their platforms into the foundation of the online marketing suite.
Newspapers and circulars will retrench or RIP. As broadband penetration increases and marketers realize that online promotions can be targeted behaviorally and contextually, as well as by location or demographics, investments in newspapers and circulars to deliver promotions will plummet.
Marketers will use Social Computing to guide promotions strategies. Consumer engagement with Social Computing technologies like blogs or social networking sites like Facebook is intensifying. Blog readership is up 100%, and use of social networking sites has nearly doubled since 2005. Adoption of these tools makes it easier than ever for consumers to share their take on products with peers and marketers. We certainly expect marketers to tap this energy by increasing promotional incentives to encourage viral marketing. But we also anticipate marketers to use buzz to inform when and how to use promotions. If the vibe about Tide is strong, Procter & Gamble may shift its promotional spend from that product to another one that is in greater need of a sales catalyst.