6 ways to maximise sales this festive season (that aren’t deep discounts)
Forget deep discounts. There are better ways to boost sales and cash flow this holiday season
After three years of pandemic volatility, most retailers were hoping for a more typical festive season. Or, at the very least, a reprieve from the pressure to discount.
Instead, discounts are at their deepest level in three years, according to retail intelligence firm Edited, and shoppers are once again being greeted by a flurry of promotions and offers.
Why? According to LoyPal co-founder Andrew Fisher, a combination of factors has created fresh concerns over cash flow – from rising inflation to large inventory positions and increasing margin pressure, thanks to a post-pandemic return to physical retail. As a result, the pressure to discount is stronger than ever.
“There’s a temptation for retailers to offer discounts early to get runs on the board,” he says. “Many retailers operate under the assumption that there’s a fixed amount of revenue at stake between Single’s Day and the end of the year. So, they discount, earlier and earlier, to secure their ‘piece of the pie’. This is only exacerbated by the fact that Single’s Day and Black Friday are pulling the festive sales periods earlier and earlier.”
In reality, he explains, most consumers get paid several times between Single’s Day and Christmas, so “new dollars may come into play”. “Retailers don’t necessarily need to offer the biggest discount, before anyone else, to compete.”
Besides, he adds, relying on the “constant sugar-hit” of discounting is unsustainable in the long term. Fortunately, there are other, more sophisticated ways to optimise sales.
1. Personalise your promotions
Although retail spending is still strong, surveys suggest that customers are feeling the impact of the uncertain economic conditions, and may approach festive shopping with a sense of caution. That’s why it’s vital that marketing campaigns are as relevant and personalised as possible.
The first step to delivering targeted, engaging campaigns is to segment your audience. With LoyPal, brands can instantly segment customers according to past shopping behaviour, and help identify customers that are likely to be discount-sensitive. These customers can either be suppressed from paid marketing efforts or targeted with a different approach to other, less price-sensitive customers.
“It’s important to identify discount-sensitive customers so you can understand that that’s all they are, and you don’t keep offering discounts and ‘re-buy’ the same customer repeatedly,” says Fisher.
2. Target high-value customers
Segmenting your customer base will also identify top spenders, who may be more likely to respond to VIP offers than discounts.
“Consider offering ‘money-can’t-buy’ loyalty options for high-value customers, such as an invitation to an in-store event or some other type of opportunity that they wouldn’t ordinarily get access to,” says Fisher. “For example, a live chat with a product designer or an in-store fashion launch.”
Offering these perks protects margin erosion, says Bennett, who adds that “there’s little point in offering discounts to customers that don’t ‘need’ it.”
3. Create a sense of urgency
The rise of online shopping has put fulfilment windows and shipping timeframes in the spotlight – and at Christmas, customers are particularly conscious of delivery times.
One way to maximise sales during the holiday season is to lean into that fear of missing out (FOMO) and create a sense of urgency. In the lead-up to Christmas, retailers should clearly communicate their shipping cut-off dates, and highlight the need for customers to order early in order to receive gifts on time.
In addition, suggests Fisher: “Make it convenient for customers to get their purchasing done sooner rather than later, and leverage value-adds – like free express shipping for orders over a certain amount – to appeal to high-value customers and those you want to stretch to a second or third purchase.”
As the Christmas delivery window closes, ensure you offer a range of delivery and pick-up options for last-minute shoppers, from rush-shipping options to click-and-collect.
4. Get exclusive
There’s so much noise in people’s inboxes at this time of year that another discount sales offer can get lost in the Christmas crowd.
Stand out by offering products that are exclusive to your brand, and that customers can’t get elsewhere. “This tactic is very good for mixed-channel businesses that can then use a lever to drive someone towards a particular channel with a mix of exclusivity and time-driven scarcity - then you leverage cross-sell opportunities to drive higher average order value,” says Fisher.
For example, a fashion retailer could drive traffic to its e-commerce site by collaborating with a designer with a large social media following for an online-exclusive collection. To drive customers in-store, the same retailer could invite customers to view a product that is only available in a specific store. This approach works particularly well for products that merchandise better in a physical setting compared to online (such as fragrance).
5. Connect your in-store and online experience
It’s more important than ever to recognise that customers spend across all channels, from in-store to social media and e-commerce.
Collecting and connecting data across all channels allows brands to deliver personalised and relevant customer experiences. Ensure that customer information is being collected online and in-store with the help of electronic receipts. “Consider the customer as a customer of the brand and all its channels,” says LoyPal co-founder Adam Simms.
Being able to identify and look after high-spending customers in-store – for example, with clienteling techniques – is another important way to maximise sales.
6. Stretch spending
And if you are going to offer discounts? “Try and ensure the discount serves a purpose as well as simply shifting stock,” says Simms. Although clearing stock (even if it means sacrificing margin) can be valuable if it frees up cash to invest in other areas, it’s possible to use discounts to encourage customers to try new categories, build loyalty or increase basket size. “Consider a ‘spend-and-get’ discount, where customers are incentivised to increase their average order value in order to secure a discount.”
For more information on how to drive more sales this festive period – or how to segment your customer database and deliver revenue-generating recommendations to shoppers contact LoyPal.