Targeted Marketing
Strategies to reduce post-holiday discounting and improve margins
By Bob Walters
CHAIN STORE AGE, DECEMBER 2005
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Remember when the day after Christmas was a time to clear out excess inventory that did not sell during the holiday season? Well times have certainly changed. Today, post-holiday sales are a highly competitive week-long event— one that consumers not only expect and anticipate, but plan their shopping patterns around.
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Jeannie Gonzalez Account Director of strategic services group at SmartReply |
Yet while post-holiday business has grown, recent conversations with leading retailers show that margins have suffered. The reason: deep discounting. Customers see the post-holiday week as a time to get the best "deal" rather man the best "product.'" In fact, last December paced slightly behind November in retail sales (22.9 points compared with 30.0 points), according to the National Retail Federation and BIGresearch, mainly because retailers relied more on deep discounts to help fuel a last-minute shopping surge.
However, it doesn't have to be that way. Smart retailers such as Boscov's. Nine West, Northern Reflections and Proffitt's McRae's are starting to proactively plan after-Christmas marketing strategies that drive customers into stores for reasons other than discounts. At the center of these strategies is targeted marketing media, including, among others, direct mail, e-mail and voice marketing.
Targeting gives a retailer an edge in being able to relate to customers' wants and needs and to attract their attention. "We try to target our customers based on their past shopping experiences," says Kim Kolakowski. VP of credit promotions and database marketing at Boscov's. "We're not going to send somebody a [message] about men's clothing if they're not a men's clothing shopper during the holiday season. We keep two years' worth of history and we can go back and look over two seasons and say, if the customer has never bought that type of merchandise, the probability of them buying that type of merchandise is next to none, so why clutter them with [messages] that don't relate to them?"
Targeting also addresses the "why" behind the behavior. For instance, Nine West, a division of Jones Apparel Group, knows that, during the holiday season, its customers are buying shoes more to wear to parties than to give as gifts. This type of behavioral information is powerful in helping the shoe and apparel retailer create messages that attract its customers' attention.
Understanding the behavior of your best and most growable customers and focusing your marketing efforts directly to them can play a critical role in reducing your dependency on discount pricing, particularly during points in the holiday season when bargain hunting is strongest, such as Black Friday and the post-holiday selling season. For instance, during traditionally heavy discount periods, Boscov's offers proprietary credit-card holders deferred billing to draw attention away from low-margin competitive offers, while Nine West offers its Easy Spirit loyalty-program members such things as free shipping or a free shoe shine.
Holiday shoppers are a moving target, and it's important for retailers to stay on top of their customers' shifts in behavior in the years ahead. However, the biggest marketing challenge retailers face going forward is the same as it has always been—driving the best possible customer response and building long-term value, rather than short-term sales.
While brand media are necessary for reaching large audience groups, targeted media have proven to be the best way to capture an individual's attention and add value to a marketing strategy. Their customizing ability is helping all types of retailers all over the United States and Canada build stronger, more loyal customer relationships.
Discounts have their place during the holiday season and will never go away. But once retailers have a loyal customer base and understand their wants and needs, targeted marketing can help them enjoy higher profit margins and maintain greater control over when, where and how they attach their message to a discount or sale.
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| “We target the
messages to fit the customer’s transaction
history. We’ve had tremendous success with
our calling campaigns.” |
— Dianne
Binford, SR.
Director of Consumer-based Marketing
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Jones Apparel |
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