More than 12 million shoppers hit the high street on the Saturday before Christmas, on the hunt for bargains and gifts. January started early following a disappointing Black Friday. So if you, as a retailer, don't want to end up with dismal seasonal sales and want to ensure success for the New Year, you need to know which marketing strategies to run, which to divest from, which types of offers to promote, and through which channels.
The reality: This is easier said than done! With most retailers selling to multiple generations of customers, each with different expectations and shopping behaviours, it's difficult to correctly allocate the marketing dollars.
Do you continue focusing on Baby Boomers? Data from Synchrony Financial shows that they're the wealthiest generation, holding the most disposable income and accounting for almost half of all retail sales. Or, do you evolve your marketing strategies to account for the spending potential of Millennials, the fastest growing generation, with nearly 80 million entering their peak consumption years?
To be successful, you have to manage both. Though Millennials currently represent just 10 percent of total retail sales, per Synchrony Financial, ignoring them will be future-limiting. The trick is to understand the commonalities and differences in shopping attributes of different generations and embrace them when architecting your marketing strategies.
For example, both Baby Boomers and Millennials appreciate good value and are inclined to buy when offered coupons or sale prices. The difference is that Boomers are more brand-loyal, and tend to stay with a brand across different categories, while Millennials are driven by value, and will not only move from brand to brand, but buy unbranded products as long as they perceive good value.
While a loyalty programme may work in attracting and keeping Boomers, it alone will not yield much return in targeting Millennials. However, making creative changes - such as offering a rewards plan that doubles the points-per-pound spent during a specific time period - will appeal to both Boomers and Millennials. Boomers will also be attracted to preview sales that are only open to loyalty card members, as this will appeal to this group's penchant for exclusiveness, customer experience and service.
Both Boomers and Millennials are web savvy, and use the internet to browse, research and shop. However, Millennials are more likely to shop using mobile devices as compared with Boomers, who tend to shop more online or in-store.
Zeroing in on your omni-channel strategy is critical to attracting and retaining Millennials. How? Ensure consistency of information and experience across channels. Make your content mobile-friendly. Design your fulfilment channels to support online and mobile purchasing. Begin offering context-and-location-based promotions and coupons through mobile devices.
Data analytics can help you optimise your marketing strategies by providing you with deeper insights on your customers. These insights can help you identify and target your most valuable customers with personalised offers and messages -- through their preferred channels. The companies that leverage their data effectively see sizeable returns.
Take the oft-cited example of Rite Aid, the retail drug chain. Based on insights from its data, the company extended its loyalty program – called wellness+, and was able to significantly reduce churn within two months.
In another example, an online and catalogue retailer of women's clothing and accessories used advanced analytics, to tailor its marketing messages. The company was able to identify different attributes of its audience by segmenting customers based on their buying behaviour. It found one segment to be extremely price-sensitive, and focused on scoring a good deal. Conversely, the other group was "image shoppers," who identified with specific brands.
By further subsetting these customers by age, life-stage and purchase frequency, the company was able to personalise its messages, offers and channels. For instance, "price sensitive" and "younger" customers saw messages promoting sales and discounts, while "image shoppers" saw messages emphasising the latest fashions without promotional offers that might be perceived as cheapening the brand. The result? The retailer was able to generate more revenue in six weeks than it had from a previous campaign that was three times as long.
These strategies aren't mutually exclusive. The programs that work for Boomers can easily be tweaked to garner interest of younger audience.
Consider the example of one national electronics retailer, whose customer base includes teens and adolescents - as well as their parents. This retailer used its loyalty program to help retain these two very different types of customers.
Using a two-tiered subscription and non-subscription-based programme, the company was able to enrol about 30 million members. Upon analysing its member data, the company found that subscribers accounted for almost 19 million of the total member base, were five times as profitable as the non-members and represented 70 percent of the retailer's sales. Keeping these customers happy was really important.
Using advanced analytics, the company was able to analyse its subscriber-usage behaviour to figure out which members weren't getting the value from the programme. Combining this information with data on their most successful promotions, the marketing department was then able to provide fact-based insights on offers and promotions that led to engagement which boosted retention. Furthermore, they were able to put the brakes on proposed initiatives that the numbers just didn't support.
Moving through the holiday season, retailers must ensure their marketing strategies make sense. The answers to the most frequently-asked questions lie within your data. Make sure that your marketing analysts have the right analytics tools to mine for the precise customer insights in a timely manner. Getting the retail marketing strategies right will boost sales, and grow the customer base across multiple generations, not just over Christmas but throughout 2016.
By Ritu Jain, Director, Industry Marketing, Alteryx.
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