If you’re like most retailers today, you’re in a rut when it comes to promotions. You tend to fall back on what you’ve done before, running the same promotions on the same items year after year.
If you’re stuck in a promo routine, that’s not unusual. Most retailers struggle to evaluate alternative promotional options, and they shy away from the risks involved with breaking from traditional promo patterns.
But when, as a retailer, you fail to examine your current promotion strategy and practices, you miss opportunities to enhance your price perception on the items your customers care most about. In doing so, you risk losing customers, market share, and profits.
During our 20-plus years of working in the retail industry, Revionics has identified five actions retailers can take to get out of the rut and dramatically improve promotion planning and optimisation.
Refine Your Promotion Target
Tightening the focus of your promotions to reach your target customers will yield better results. Instead of a scattershot approach, aim highly targeted promotions at nuances of each customer segment, location, and category.
With this in mind, take advantage of sophisticated AI platforms that offer recommendations about which items to promote. This technology can refine the target with details on price, location, customers, and even the length of the promotion.
When designing a targeted promotion, it’s also important to balance multiple objectives. While revenue generation is certainly a primary goal, your promotion should also take into account margins and brand loyalty.
Measure the Impact of Your Promotion — Before, During, and After
Waiting to analyse the performance of a promo until after it’s done may help design next year’s promotion campaign, but it won’t help improve this year’s results.
We have found that best-in-class companies run scenario planning exercises that leverage advanced forecasting tools to anticipate the impact of every offer before the promotion is launched. They analyse performance while the promotions are running in order to evaluate ways they can modify the offer when promotions are not meeting their objectives.
Also, be sure your post-promotion analysis considers the store-wide effects of each promotion. Factors, such as cannibalisation, halo effect, and pantry loading can significantly influence the overall success of promotions beyond the initial impact of the individual items included in each offer.
Design Your Promotion to Go After Specific Competitors
Leading retailers have begun designing promotions to target their competitors with their offers. They’re able to do this because they have made the investment to acquire, analyse, and leverage competitive data.
Using competitive data will enable your pricing teams to gain the insights they need to best structure a promotional strategy to undermine your market rivals. This puts you in a position to measure, react, and hopefully outmaneuver your market rivals with each competitive promotion.
Have the Right Data to Bargain with Suppliers More Effectively
For too long, suppliers have had the upper hand in trade funding negotiations. They get away with it because they have had access to far more data than their retail clients.
But we’re starting to see leading retailers level the playing field when it comes to vendor negotiations. Robust promotions analytics help retailers confidently determine which offers are effective, which offers need more vendor funding to be profitable, and which are neither in the retailer’s nor the vendor’s best interest. More importantly, the offers are probably not in the customer’s best interest.
So, when your pricing teams are armed with the details of past promo effectiveness, you can approach the negotiating table from a position of strength. In addition, when you’re equipped with information on the promotions your suppliers are running with competitors, you can bargain for the same or even better treatment. Finally, when you have highly sophisticated predictive analytics you can simulate multiple options to find the promotion that drives better results for both you and your suppliers.
Collaborate More Often to Improve Promo Execution
As consumer demand for more complex promotions increases, your pricing organisation needs efficient workflows that streamline repetitive tasks to plan, collaborate, optimise, and execute more sophisticated promotions, and more seamlessly.
You can make the process more productive by getting everyone involved. More frequent and efficient collaboration across teams, departments, and partners removes barriers and takes advantage of collective expertise, leading to more efficient execution of complex promotions.
Moreover, by streamlining the day-to-day workflows of promo execution, you’ll find yourself able to respond more rapidly to business conditions as they change in each store, banner, region, or channel.
Take Advantage of Technology to Change Up Promotions
To remain competitive and capture consumer attention in a constantly evolving marketplace, retailers have to explore novel ways to improve their promotion tactics and strategies.
Promo optimisation technology driven by AI lets you see your promotions in a new light. It gives you the insights you need to break out of the promo routine and find new and better ways to maximise promotion effectiveness.
Revionics is a leading provider of price optimisation solutions to retailers, offering advanced, data-driven insights and strategies that help businesses maximise profitability, enhance customer engagement, and stay competitive in dynamic market environments. By leveraging cutting-edge technology and analytics, Revionics empowers retailers to make informed pricing decisions that align with consumer demand and business objectives.
