Sales promotions are becoming more creative as simple discounts become less appealing to consumers who are beginning to recognise them as a widely used sales tactic.
In fact, consumers are becoming so savvy to the ways that retailers run discount promotions that they’re now far less likely to purchase a product that was previously discounted and has been returned to its standard retail price.
Rather than purchasing at full price, consumers would rather wait until the product is discounted again, or else seek a better deal elsewhere.
Consumers forced to re-apply discounts in order to boost sales diminished revenues in what is commonly known as the ‘boom-and-bust cycle’.
Retailers can avoid getting caught up in this cycle by exploring exciting and innovative new ways to attract consumers into purchasing their wares.
However, just as discount promotions can easily lead brands into a margin-reducing cycle, even the most attractive of promotions can fail to secure a sale if the seller hasn’t engineered the promotion around the basic principles of consumer psychology.
Brands and retailers competing for sales could harness consumer spending power with these essential principles.
1) Give to Get
Also known as the reciprocity principle, the concept of giving to get can play into the hands of the retailer when executed in the form of the gift-with-purchase promotion.
This promotion model requires the retailer to offer a free gift alongside the product that the customer is purchasing, such as a complimentary pair of high-end headphones when a new sound system is purchased, or a pair of premium brand sports sunglasses as a gift with a new mountain bike.
Sure, this might seem a costly strategy but it has proven to be very profitable for retailers who require customers taking the offer to apply for the free gift after a specified time period.
Enlisting the services of a promotions consultancy enables the retailer to run this type of promotion risk-free, safe in the knowledge that only a pre-calculated percentage of purchasing customers will actually get around to applying for the free gift.
2) Promote Exclusivity
Everybody likes to feel special, so why not make your customers feel like members of an exclusive club?
This promotional model doesn’t actually require the retailer to establish any form of club, but by inviting the customer to be one of only a limited number of people to take advantage of an exclusive offer, they’re likely to seize the opportunity.
Whether the retailer offers cashback or a free gift to the first one hundred people who purchase a product, or creates a limited run of unique versions of a popular product, customers are likely to make the purchase and cherish the feeling of exclusivity.
Not only does this create a stronger bond with those customers who purchased, it also encourages brand loyalty from those who missed out and are likely to continue to shop with the retailer to take advantage of any similar offers in the future.
3) Promote Urgency
Urgency may be another factor that encourages customers to make an impulse purchase of a product that is part of a limited run, but it’s also a tactic used daily by the likes of Amazon and eBay.
By displaying how many products are left in stock, customers are more likely to purchase through fear of missing out, especially when stock levels decrease.
From displaying stock levels on product web listings to simply placing a sign on the shop floor that highlights the products on display are the last few, this tactic is known for causing sudden flourishes in sales figures when employed.
4) Supersize the Small Things
Building upon the old adage ‘the devil is in the details’, a study by Carnegie Mellon University revealed that small changes can make a very big difference.
When researchers altered the description on an offer from “a £5 fee” to “a small £5 fee” sales of the product increased by 20 per cent.
Clearly, the simple additional of a single adjective draws the customer’s focus in on the value of the deal, and for retailers, altering text in product descriptions and pricing is hardly going to be a big expense, yet it could increase sales significantly.
5) Reframe Value
The customer’s perception of value is further explored in the method of reframing product value.
Take, for example, the annual subscription for a music streaming service.
Have you ever noticed the cost of such subscriptions are presented in their monthly value?
Purchasing an annual subscription for £108 might sound like a costly commitment, yet presenting the same subscription at a monthly cost of £9 suddenly makes it seem all the more attractive.
Not only does the cost feel more manageable to the customer, but the monthly payments feel like a much smaller commitment, even if the minimum subscription available is twelve months.
6) Reduce Pain Points with Bundling
Research conducted by Neuroeconomics expert George Loewenstein reveals that even the most conservative spenders are likely to purchase additional extras if they are presented in the form of a bundle rather than as singular extras.
Loewenstein claims that the brain will go through the process of justifying each individual extra if they are presented individually, and this means additional pain points for the consumer.
The brain, according to Loewenstein, is more likely to compute additional options if they are presented in bundles, and this vast reduction in pain points increases the likelihood of a customer purchasing a bundle of extras.
7) Get Emotional
A study conducted by Wharton School of Business analysed the most popular content that was read and shared online and found that each piece of content appealed to same set of basic emotions.
Among the seven emotions identified in the study, awe, joy, lust and surprise were revealed as the positives, and these could be leveraged by retailers to increase appeal in sales promotions.
Creating a campaign based around any of these emotions could boot encouragement and create wider awareness of a retailer’s creative new sales promotion.
It is growing increasingly evident that retailers must find better ways to keep consumers engaged with sales promotions, but ultimately, any marketing strategy, no matter creative, should be based on data analysis to ensure that any foray that the business makes into new promotional models remains risk-free.