Going under the radar with sales promotion

05 December 2012 Stuart Evans Director, Global Loyalty Practice

As the internet levels the marketing playing field, brands that lack real differentiators are finding it tougher to compete, and harder to capture the customer’s attention with compelling reasons to click, engage, decide, buy and recommend. This means brands now have to focus intently on their differentiated strategy. If they’re a discount or commodity brand then they have to lead with price. But, for all the others, that’s a quick way to devalue the brand; they need to protect their ability to command a price premium, push the aspirational value of the brand, and differentiate on the features of the product and the strength of the relationship benefits they offer.

Yield protection and maintenance is perhaps the most effective way to increase profitability, as no brand wants to ‘trash’ its retail price. In low margin businesses, a small gain in yield can have much bigger profit impact than a large increase in sales, so price or margin protection is the key, long term. After all, once prices are lowered, it’s hard to raise them again.

So what’s the practical answer? Simple. Go under the radar on price. Your retail pricing must always be maintained (unless you’re clearing redundant stock) but you can target discounts at individual customer segments, which avoids cannibalising existing sales. And these discounts, whether they’re done with special offers, newsletter subscriptions, or complex segment-specific pricing strategies, are even more effective if positioned as a ‘relationship benefit’ attached to a loyalty programme. You can use these loyalty rewards to target different customer needs with discreet ‘under the radar’ preferential pricing – for example, a bundle deal or reduced rewards points redemption pricing.

But today’s consumer wants immediate benefits, so ‘Save and collect’ is no longer the game they want to play. It’s instant gratification they want. Digital currencies like Microsoft Xbox Points allow instant access to various services, benefits and even in-game features, while social currencies like Linden Dollars for Second Life and the eBay Plus Points trial proved the value of virtual currency that could be turned into cash or discounts. Moving on from their success, they have announced their recent partnership with Nectar using their points as a ‘currency’ which can earn and redeem ebay purchases.

I see the big wins in this space coming from virtual currencies that create unique and sustainable value for customers, using gated digital content and other virtual assets as a reward. And because it’s all individually targeted, it takes place under the competition’s radar. They’ll never know what hit them.


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