As discovered in the Behavior of Online Shoppers Survey 2021, 70 percent of shoppers say promotions are the most important purchasing trigger when shopping online.
Promotions beat advertisements, live shopping, online events and influencer sponsored content, all of which were deemed far less critical by shoppers.
But does this mean that you should just start slashing prices and expect a big ROI? Maybe in the short term you will drive more sales. But a price war usually ends in a race to the bottom. Instead, you ought to consider how you can use promotions to create long-term value for your business.
There’s no one fixed definition of a promotion. Salesforce defines a promotion, or as they call it, a sales promotion, as “An activity applied for a predetermined, limited period of time, with the aim of increasing consumer demand and stimulating sales.”
So, from a business perspective, a promotion is a product in your campaign. But from a shopper perspective, does that also mean that the product is cheaper?
We asked Hannu Vangsgaard, a Digital Acceleration Consultant with more than 20 years experience in the retail industry for his insights on the subject. Hannu says from a consumer perspective, a promotion typically does mean an offer or a discount.
From a retailer's perspective, a promotion is simply when you give special focus to one or more products — what you choose to promote in terms of visibility."
"So depending on what kind of retailer we’re talking about, it can involve a discounted price or not. For example, high-end brands such as Gucci or Burberry normally don’t use discounts at all.”
Promotions can often be connected to an agreement with a supplier. If you’re running weekly or monthly campaigns, you frequently have products which need to be promoted in your marketing because you’ve been able to secure a good price from the supplier.
In short, a promotion is a product which is part of a campaign, more than likely offered at a special price. Shoppers say it’s the most important purchase driver online. But be careful. Reducing prices may be significant to attract shoppers, but it can be a risky long-term strategy.
Firstly, if your marketing strategy focuses only on price, you can risk getting stuck in a race to the bottom. In ecommerce, the price war favors larger brands like Amazon and Alibaba, who can afford short-term losses. While swallowing smaller brands who can’t compete on price, convenience and assortment.
Price is obviously a critical tool for raising awareness. It is proven to increase short-term sales. But if your promotions are only about price, it will have a long-term impact on your brand perception."
"If you want to be perceived as cheap that’s fine, but if you want to change a shoppers' perception of your brand you need to do more than just reduce prices,” says Hannu Vangsgaard.
Secondly, if you’re a traditional brick and mortar retailer, you make agreements with suppliers weeks or months in advance. You can secure good prices at the cost of flexibility. So if you base your campaign purely on price and your competitor can offer cheaper prices, you can risk being stuck with products you can’t sell.
Finally, the cost of digital advertising is increasing. While the ROI is shrinking.
“As a retailer, there is a limit to how much you can optimize your Google and Facebook ads. Getting the click through and the conversion rate. But there is a saturation point where your ROI becomes smaller and smaller,” says Hannu Vangsgaard.
But how should you present promotions to maximize your ROI? To create a good shopping experience, you need to present more than just a grid of products on a white background. Scrolling through these lists is not engaging or inspiring.
According to Hannu Vangsgaard, the key to successful online promotions is to curate products and use storytelling to engage shoppers on a more personal level.
Your promotions need to be inspirational and engaging. Just like in a store, shoppers should want to explore your promotions and discover more than just one cheap product.”
This is backed up by data, as the survey also shows 67% of shoppers want to be inspired when browsing online. But only 29% say online retail stores are inspirational, and 57% claim a lack of inspiration or poor shopping experience is a barrier against buying products from webshops.
“To make promotions more inspiring, you need to create content that solves the need for the product or educates the shopper about how they get maximum value from the product. For example, if I was selling bikes I don’t know if the shopper is looking for the best price on a specific product, or if they want to be inspired about why they should buy a bike. Do they want it for transport or exercise? I need to cater to multiple needs and offer content that is tailored to specific customer journeys.”
Hannu says that 98% of online shoppers are browsing. They’re looking around for inspiration. Checking out product specifications and product use. Comparing product ‘A’ with ‘B’ within the retailers’ assortment. To cater to them you need to provide detailed product guides, how-to's and highlight contextual product images.
“If you only focus on delivering promotions. Then they’re only relevant to the very few people who are down in the bottom part of the funnel of the purchasing process. And you won't be relevant to the 98% of shoppers moving who want to be inspired.”
Promotions can also be presented strategically to impact either price or quality perception. Instead of just focusing on discounts, you can promote products in the right context next to other cheaper or more expensive products to influence shoppers' perception of your brand.
Hannu explains how retailers strategically place products within their stores and structure the layouts to influence shopping behavior.
“For example, if you go through the IKEA showroom, then you would see at the end of the aisles, many products at very low prices. Such as a basket with coffee cups at a ridiculously low price of €1. So, shoppers know those cups are extremely cheap. Affecting their overall price perception of IKEA. So, the next minute, shoppers come to the bed department. Where the beds are just as expensive as other furniture brands, but shoppers still perceive the beds to be cheaper.”
“Salling Group uses a concept called ‘Good, Better, Best’. Within each assortment, they usually offer shoppers three choices. A good choice means a discounted, cheaper product, which builds price perception. The best choice is typically a more expensive, luxurious product which builds quality perception. The better choice is in the middle, which is often the product most shoppers choose. So placing products in context is essential.”
The challenge for digital marketing is that many ecommerce stores focus only on conversion, not for inspiration and exploration. A grid of products on a white background offers no chance for putting products in context or influencing the shopping journey in the same way you can do in store.
Instead of just making Google Ads and optimizing click-through rates to product pages, Hannu Vangsgaard says digital marketers need to work more with curated or themed landing pages.
You should present promotions in one central place where shoppers can explore."
"A promotion or advertisement form the top of the marketing funnel. They are used for driving awareness and can lead a shopper to your ecommerce store. But there you need to present your promotions in context with other similar, complementary products, storytelling and how-to guides, etc.”
In summary, we’ve seen that shoppers agree that promotions are the most important purchasing driver when shopping online. But while promotions are critical to your campaigns, they’re not always just about discounts.
You need to curate the products you promote. Combining promotions with storytelling can help sell the reason to buy products. You can use your promotions strategically to build long-term brand perception. Either as a value for money, or as a quality brand.
Finally, you need to place your promotions in a way that shoppers can explore and be inspired. Think landing pages instead of product pages. Present an interesting shopping experience and your customers will stay longer and return to your store again in the future.