They can also help a product or category manager to shorten consumer renewal cycles says report from Opia
Effective use of sales promotions don’t just significantly influence the purchase of ‘slow-moving consumer goods’ such as consumer electronics or white and brown goods, they also deliver tangible customer engagement.
In the consumer electronics space in particular, highly engaging sales promotions drive earlier purchases of new models, shorten product refresh cycles, and even lead customers to buy a brand they may not have previously considered. These are among the key findings included in a new white paper from Opia, a global leader in strategic and tactical sales promotions.
In a sample of 500,000 claimed promotions designed and managed by Opia, 30% of people said that the promotion prompted them to purchase the product earlier than they had intended, while 27% were influenced to buy a product that they had not considered previously. A further 18% said they would not have purchased the product at all without the promotion.
Opia analysed data across more than 100 campaigns, such as Samsung, Dell, Google and LG, in order to determine customer perceptions and behaviours towards redemption-based promotions and how promotions can support product and category managers.
It presented the findings in the white paper, which reveals:
- Customers appreciate buying a product with a sales promotion: 78% were satisfied with their promotion (33% very satisfied, 45% satisfied) and only 6% considered themselves to be dissatisfied.
- Almost half (47%) of promotional claims lead to the customer signing up to the brand’s marketing preference, demonstrating an intention of loyalty.
- ‘Gift with purchase’ promotions (e.g. a pair of high-end wireless headphones with an advanced smartphone) drive significantly higher engagement and sign up to marketing communications (close to 50%)
- Consumer electronic brands attract even higher sign-up rates with 67% opting-in to future marketing communications.
Sales promotion experts at Opia believe that these positive results come from using in-depth knowledge of customer behaviour and market activity to design creative and intelligent sales promotion to the product manager’s objective: “What we know from experience,” says Laurent Kretzschmar, Commercial and Product Director at Opia, “is that sales promotions are often most effective when multi-layered, and tailored to a commercial need – and when they stretch beyond simply achieving sales volume.
“In a competitive market, real success requires more imagination and applied intelligence,” he adds.
If, for example, a brand is planning a new product launch then ‘buy and try’ or ‘free trials’ often works best with a strong ‘peace of mind’ message to new adopters; if it is a high value product then an expensive gift or generous cashback could be the most effective; and if the objective is to increase market share, then a trade-in of a competitor’s brand for your new model could be a route to competitive advantage (and one that can support corporate sustainability agendas).
“But whichever style of promotion you use,” says Laurent, “it shouldn’t be just about sales – it should be about protecting your margins and engendering customer engagement and loyalty for return business and future success. Whatever strategy we recommend we are always searching for consumer to sign-up to marketing preference after they have made their claim. It indicates strong brand engagement and that they want to be the first to know about new exciting products or exciting offers for these types of products in the future.”
Laurent agrees that sales promotions, like price discounts, have been described as the hard drugs of the retail sector, and are often misused: “They have a reputation for being a risky or expensive way of achieving sales volume,” he says. “They are often used to ease the pain in the short term but, as use increases, so does dependence and it becomes harder and harder to quit. But ‘quitting’ is not the solution,” he insists. “Instead, better understanding of how sales promotions work and the outputs you can expect are key to using them successfully.”
Laurent believes that some product manager’s thinking around sales promotions starts and ends with the many simplistic ‘cashback’ offers so frequently advertised, but even these are misunderstood:
“Cashbacks can be multi-layered and packaged as ‘Buy more save more’ campaigns based on purchase value thresholds designed using historical buying patterns. And alternatives such as ‘gift with purchase promotion’ for example, where a pair of high-end wireless headphones or smart speakers is given free in combination with the purchase or pre-order of a new smartphone model, performs extremely well,” he says. “They drive high engagement both from the visibility of the promotion and marketing message as well as from the potential future engagement of promotionally responsive customers who sign up to marketing communications – close to 50% – compared to cashback offers which result in 25%.
“The drawback with poorly designed cashback offers or complex trade-ins can be that while they appear to provide a differentiated marketing message, they are often seen by customers as unattractive and not different to small price discounts, failing to drive sales uplift as all as yielding long term engagement.”