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Are promotions ineffective?

Chloé Gardent - Lucky Cart

By Chloé Gardent
Communication & Partnerships
On 8 June 2016

When traditional sales levers are overused, they lose their effectiveness. In this opinion piece, published on the blog emarketing.fr, Cyril Marchal talks about the mechanisms that actually work and how the stakes have now changed in the retail marketplace. Building an emotional link between the brand and the customer, providing a new type of buying experience – these are the kinds of challenges that gamification can meet.

“Some brands, having established a regime of constant discounts, see their performance drop off the moment they try to get away from that approach.”

Cyril Marchal, CEO of Lucky Cart

 

Initially posted on Emarketing.fr, please find below the English version of the expert talk « Are promotions ineffective? »

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[Opinion piece] Are promotions ineffective?

Promotional campaigns – of which there are now simply too many – are no longer able to fulfil the purpose they are designed for: building customer loyalty and making retailers/brands stand out from the crowd in the eyes of consumers. Cyril March, founder of “promogaming” specialist Lucky Cart, takes a look at the new mechanisms available that actually work.

In 2015, items on promotion accounted for 18% of retailers’ turnover (according to French marketing blog marketing-pgc.com). Is this substantial figure an indication of the effectiveness of promotional campaigns or instead evidence of their excessively widespread use? The very fact they are so ubiquitous is good reason for us to take a closer look at their cost-effectiveness. Though it is not an easy thing to measure, numerous factors exist that have a tendency to drive this cost-effectiveness down to minimal levels. The time has now arrived, therefore, to rethink promotional campaigns.

Price discounting first appeared in the United States in markets saturated with consumer products that were similar to each other. Promotional campaigns thus played an essential role in making brands stand out from the crowd and generating customer loyalty, the effectiveness of which is evident. Today, various types of promotion exist: “three for two” offers, direct discounts, reductions linked to loyalty cards, etc. Though each category has its own advantages and disadvantages and should be considered individually, what all these mechanisms have in common is that their use has become commonplace and widespread in recent decades, especially over the last ten years, with the advent of e-commerce.

Consumers have become too used to marketing promotions

Today, sales and marketing promotions are everywhere, and it is possible to find one for each of the items on a shopping list. The fact they have become so commonplace has made them ineffective in terms of generating customer loyalty: by only focussing on the financial aspect of the purchase, they run up against consumer opportunism. Additionally, there are many cases where discounts are being offered on products that would have been purchased by the consumer anyway. This makes them clear loss-makers for the brands involved.

Another perverse effect of this excessive ubiquitousness is that consumers become accustomed to it all: some brands, having established a regime of constant discounts, see their performance drop off the moment they try to move away from that approach. So no matter what the type of promotion involved, excessive use becomes damaging to the commercial performance of the brand implementing it. The same logic applies on the internet, where by offering free delivery websites establish a standard that web visitors very quickly come to expect.

To mark themselves out from the crowd, therefore, brands now need to come up with more effective levers than the traditional types of marketing promotions. It is with this aim in mind that the concept of “gamified” promotional campaigns has been developed: having a mechanism that provides fun and enjoyment is more important than offering simple reductions of a few percent, and it gets the customer more emotionally engaged.

Win customers over with gamification

On e-commerce websites and in large stores, therefore, game-based promotional campaigns are now appearing, offering customers a chance to win the items in their shopping basket or products from a partner brand. French supermarket chain Carrefour recently did this with one of the regular television promotions it runs to coincide with major sporting events. In this instance, the consumer got a full reimbursement of the price of their TV if they managed to predict the correct scores for each of the three group matches the French national football team played in the Euro 2016 tournament. Adopting a different approach, Chronodrive, a French click-and-collect supermarket chain, recently launched a promotional campaign named “Cap ou pas cap” that gave all its customers the opportunity to attempt to win €5000 via a game displayed on their order confirmation page. Some distributors run regular campaigns and by doing so generate both loyalty and strong engagement amongst their customers, who thus develop a strong emotional attachment to their brand.

Though it’s important not to forget the advantages of running classic-type promotional campaigns at certain key times (such as during sales or at new product launches, when the important thing is to get the customer to try the item), it is has today become necessary to both adopt a variety of different methods and make use of the new mechanisms available. In essence, having too many traditional type marketing promotions gradually causes them to become ineffective. It is time for brands to reinvent this traditional sales lever. Standing out from the crowd, personalisation, loyalty building and emotional engagement are the factors leading to the new promotional mechanisms becoming the successors to the traditional kinds of discounts and campaigns, which are now finally running out of steam.

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