Wanted: Effective Promotions

These days, consumers are more reluctant than ever to part with their hard-earned cash, and virtually every store is offering deals and discounts to get them to spend. We’ve been working with a few retailers to better understand how and what to promote in order to sell more units per transaction at full price (or at least, at less of a discount).

Viewing promotions through a basket-analysis based lens reveals how in touch retailers are with their customers. Take the email I received today from Target, and their most recent store circular. The subject line of the email reads: “Live large: Spend $125, SAVE 15%, plus FREE SHIPPING on select furniture.” The copy is tone deaf to the times. No one is “living large,” and conspicuous consumption is out. Who is Target talking to? How are they responding? Not well, I suspect.

Clicking through to the weekly ad raises more questions about Target's promotions effectiveness. The front and back covers are squandered. The covers should be all drivers proven to add items to the shopping cart. Page 1 is all about towels, sheets and pillows on sale. Are towels a driver for Target? Do pillows sell sheets? If so, then featuring sheets is a waste of real estate, and discounting them is a no-no. The back has a random assortment of food SKUs – not a big statement about Target’s commitment to the food category, which I keep reading about.

The insides of the weekly ad insert don’t seem to be working as hard as they could, either. They should feature drivers and not discount draftees on these pages, too. Pages 2-3 and 4-5 are furniture and related accessories. The office furniture spread attempts to sell “get organized” but the merchandise doesn’t really support that theme. The rest of the circular features random items and touts the great prices being offered on high-ticket items that are value-priced.

Page 17 is the closest thing to a category statement where Target is attempting to own “Clean.” It features 16 well-priced items merchandised together under the banner “Affordable, Clean Fun”. I’m guessing these actually are drivers in all seasons – people come into the store to buy them year round. Good move to promote them with a story behind them. Too bad they’re buried inside the circular.

All in all, the email and circular are a miss. And one Target probably can’t afford right now.

Who do you think is doing promotions well?

Too Much Email!

I am a boomer and for the last 10 years, email has been my favorite way to communicate in writing. However, nowadays, my email box is exploding – as the holidays approach, it’s looking more and more like my offline mailbox: stuffed, mostly with mail I am not interested in, much of which I never requested. I have my SPAM protection set to the highest level Yahoo affords, and it catches the truly offensive stuff. But I am receiving more, and more is getting through. Sound familiar?

According to the Pew Internet & American life Project, 92% of email users define spam as “unsolicited commercial email from a sender they do not know or cannot identify.” A quick look in my Junk folder from today shows I have received email from senders whose names are more like reiterations of the subject line than a sender. I received an email from “Oprah Breaking News” with the subject: “Oprahs #1 Superfood”, and one from “Flat Stomach Pill” about “Get Japanese Skinny! New Discovery shows...” OK, so there’s a pattern here - more than one marketer thinks I’m interested in weight and nutrition. I'm a boomer woman - no big insight there.

Point is, these emails hide the sender’s real identity – for all I know, they could actually be from the same sender. This type of sender naming convention makes it hard to block since it is email specific – I can only block it after I know the sender, i.e., after I’ve received the email. Odds are, the next email from that sender will be promoting another unwanted product or service, and the “from” will reflect that offer.

The Oprah email and others like it are designed to imply an endorsement, but I'm pretty sure Oprah has nothing to do with the Superfood email sender. How many emails have you received offering a gift card from a well-known store, but that is not from the store? I wish I could block these emails.

Unsubscribing is apparently a high-risk activity. While reputable emailers have a working unsubscribe function, they‘re not the ones to worry about. Yahoo recommends that to avoid spam, users should “never respond to the spam email's instructions to reply with the word 'remove' unless you trust or know the sender. Many spammers use the 'remove' or 'unsubscribe' links as a ploy to get you to react to the email. This may alert the sender that your email address is open and available to receive mail, which greatly increases its value. If you reply, your address may be placed on more lists, resulting in more spam.”

So, what alternatives do we have? A few family and friends have resorted to spam blocking software. But a recent Forrester study found that as unsolicited commercial e-mail volume increases, consumers are beginning to turn to social networking sites, texting and other communication channels. I’m not a technophobe – I’m experimenting with Twitter, I’m on Facebook, much to my teenagers’ dismay, and I’m text messaging. But so far, for me they just don’t compare to a long, full-text, late-night email.

Now That Cash Is King (Again)

It's official: Bloomberg reported earlier this month that the record expansion that began in 1992 is over and consumer spending fell at an annual rate of 2 percent in the third quarter. Consumers are shell-shocked – and spending dramatically less these days – as we bear witness to the continuing crisis in the credit and housing markets.

The drop in consumer spending is definitely affecting retailers. “Americans tend to resort to cash in troubling times” according to credit expert Howard Dvorkin and reported earlier this week in Money Magazine, “and they spend 30% less when paying cash than when paying with a credit card." So, retailers are seeing lower transaction volume and lower average tickets. E-tailers are being hit worse, since cash is not an option for purchasing online.

Even the most gung-ho Web enthusiasts are spending less online according to a 10/24 report on Yahoo! Tech News. Desperate to goose their sales, e-tailers are sending email more frequently. Internet Retailer's recent survey of 174 Web retailers, including those that operate stores, found nearly half have increased the number of monthly e-mails they send compared to a year ago.

At the same time, or as a result, consumers are becoming annoyed with e-mail in general. As unsolicited commercial e-mail volume increases, Forrester reports that consumers are turning increasingly to social networking sites, texting and other communication channels. Ironically, while e-tailers are more dependent on email than ever, they are also reducing its effectiveness and speeding the adoption of Web 2.0 social networking tools.

The payments industry is also hurting as a result of the shift to cash. All credit card company stocks are down sharply.

What changes should consumers expect to see in the purchase experience as a result of declining retail sales and credit card volume? Here are my predictions:

• More sellers and merchants accepting PayPal online and off, creation of new PayPal payment tools and solutions like the PayPal Pay Later option introduced in May, and introduction of new solutions like eBillMe
  

• Return of the layaway plan, the ultimate loyalty program. While Wal-Mart phased it out in 2006, Kmart, TJ Maxx, Marshalls and Burlington Coat Factory, have reintroduced layaway plans this year, and I suspect others to follow

• Emergence of sites like recently launched eLayaway.com, luring consumers with iPod Touches for “as low as $42.23 a month”

• Banks and credit card companies offering double points for gas, groceries, and other sweeteners to get us to use our cards!

• E-tailers conducting more frequent, richer promotions to entice online shoppers to continue spending/shift more of their spending online

Do these changes have staying power? Mastercard, Visa and American Express are not standing still. Look for them to fight back with new payment products of their own. Same goes for Facebook, Twitter, and Meebo, et.al.

Between new payment products and Web 2.0 social networking solutions, we have some good tools to take our minds off the economy and the election, at least for a few mintues.