How Retail Promotions Drive Sales and Customer Loyalty
Posted by Alex Samuely on Oct 12, 2023
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The omnichannel customer experience encompasses several touchpoints, but one remains especially important to driving sales: retail promotions. In looking at the customer journey – spanning brand awareness to researching products to making purchase decisions – retail promotions play a critical role in carrying customers from one touchpoint to the next.
The marketplace remains more competitive than ever as behemoths like Amazon attempt to capitalize on convenience to attract more shoppers. To beat the competition, retail brands can use promotions to help cultivate loyalty and drive more sales. They can also increase purchase volume from existing and new customers.
Retail promotions are tactics that increase sales because they appeal directly to consumers. They also raise awareness about products among customers who may not have engaged with the brand before. This helps drive revenue and fends off competition from similar brands.
Retailers can leverage many types of retail promotions, including the following, which we’ll expand on below:
While these strategies may appear more short-term-oriented, their ability to bolster customer loyalty pays off over time. Per Gartner’s 2022 Consumer Priorities Survey, fostering loyalty among customers is paramount to encouraging repeat business and establishing a base of long-term buyers.
Read on to learn more about the benefits of promotions strategies and how brands can use retail promotions to achieve their sales goals and drive customer loyalty.
Brands can enjoy many benefits from investing in retail promotions strategies, which affect not only their bottom lines, but also customers’ satisfaction. Additionally, retail promotions play a key role in supporting each stage of the customer journey – from acquisition and conversion to retention and reactivation.
If brands want to offload excess inventory or expand their average order value, they can offer several types of retail promotions. These can run for any length of time. Their flexibility enables brands to determine which tactics yield the highest success rate.
Brands can also drive more purchase frequency on regular inventory by offering percentage discounts and buy one, get one (BOGO) types of deals.
Offering retail promotions can raise brand awareness, particularly among untapped audiences. It can also provide incentives for loyal brand enthusiasts to continue making purchases at regular intervals. Retailers that deploy strategies such as loyalty programs and percentage discounts reward shoppers for making purchases. This increases the likelihood of future sales by fostering positive brand sentiment.
Retail promotions also offer the benefit of collecting important customer data on shopping habits. Brands can then better understand what types of deals their shoppers find worthwhile. They can also learn which products are selling well. Lastly, they may gain access to information that can inform future customized promotions, such as customers’ birth dates.
Brands can customize their promotional strategies to suit their objectives and use trial and error to see what resonates with their target audiences. While they can cherry-pick from many types of promotions, the six tactics below are omnipresent in the retail sector.
These types of retail promotions are effective in the acquisition stage, as they entice shoppers with a percentage off a certain item or an order threshold. As an example, brands may advertise 30% off purchases of $150 or more. Percentage discounts are also optimal for reactivation. They drive sales from customers who may not have recently engaged with the brand and incite urgency because of their limited-time activation.
Retailers deploy free shipping options to drive higher purchase frequency. If consumers know they have free shipping available, they may choose to return and buy additional items after making their initial purchase. This helps with conversion, as free shipping options may be the push that a customer needs to proceed with a purchase.
Brands seeking to move inventory often use the buy one, get one (BOGO) type of retail promotion. One common BOGO promotion lets shoppers pay one price for two items, which are usually in the same product line or complementary in some way.
Other BOGO tactics include offering customers a discount on a second item (like buy one, get one $10 off) and giving away a product to shoppers who purchase a certain number of items (such as buy three shirts, get one free). BOGO promotions can help reactivate customers who have previously purchased from the brand but may need an incentive to do so again.
Retail promotions involving a gift with purchase offer shoppers a free item after arriving at a spending threshold. The free item typically displays company branding. Gifts with purchase are effective with customer acquisition and conversion as they help drive higher sales volume, boost loyalty, and promote brand awareness.
This tactic sees retailers give customers higher discounts for buying more products. For example, a brand may advertise a deal of $10 off a $75 purchase and $30 off a $100 purchase. This helps increase the average order value and convert customers who may have been hesitant about making a larger purchase. It also enables retailers to ship orders in bulk and save on associated costs.
Many brands choose to invest in loyalty-oriented retail promotions to build a dedicated customer base. Loyalty programs enable retailers to stand out from their competition by offering customers rewards. These may include points earned for each purchase that shoppers can trade for a discount.
Loyalty programs also help drive higher purchase volume. They motivate shoppers to reach a certain program threshold to access their rewards. Loyalty programs are especially effective at retaining existing customers, thanks to their ongoing rewards offerings.
Gartner’s 2022 Consumer Priorities Survey also revealed consumers’ preferences for loyalty programs. They ranked redeemable points, cash-back perks, and shipping benefits highest. More experience-based loyalty program benefits, such as personalized offers and sneak peeks at new products, ranked lowest. This underscores that shoppers seek more transactional perks from loyalty programs.
Retailers seeking to optimize their promotional strategies should take advantage of a promotions engine, either as a standalone solution or as part of an omnichannel platform. Promotions engines enable brands to run their retail promotions through a campaign manager dashboard. The dashboard offers easy access for brands to oversee their discounts, coupons, loyalty programs, and referrals.
The engine also collects valuable customer data. This may include insights into their shopping carts and the types of campaigns they find most enticing.
Sportswear brand Footasylum recently partnered with NewStore and Talon.One to enable complete omnichannel experiences for its customers. Talon.One is a MACH-certified promotions and loyalty solution. Together with NewStore, it can offer brands like Footasylum loyalty campaigns at scale across both in-store and online channels.
Ultimately, investing in retail promotions yields both short-term and long-term gains for brands. In the short term, retailers can drive more sales and higher purchase frequency from their existing customers. In the long term, they can leverage incentives and loyalty programs to reach and retain new audiences.
The benefits of retail promotions also expand when they’re paired with software that offers a single platform to oversee the entire promotions lifecycle and provide an enhanced customer experience. And in today’s omnichannel world, brands must compete for shoppers’ wallets by investing in a multi-pronged retail promotions strategy that attracts both new and existing consumers.
To learn more about how your company can implement a retail promotions strategy, speak with one of our experts today.
