Alan See CMO Temps, LLC - Rent a Chief Marketing Officer
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Can a “Surgical Discount” Strategy Scar the Customer Experience?

When was the last time you paid the full retail price?  According to a recent article in The Wall Street Journal (Attention, ‘Discount Junkies’) about 15% of shoppers generally pay full price for items and don’t bother searching for sales.  At the other extreme, a fifth of online shoppers are considered true “discount junkies,” people who make purchases only when offered discounts.
 
Discount shoppers are clearly reluctant to spend on premium brands if value is missing.  In fact, in C. Britt Beemer and Robert L. Shook’s book “It Takes a Prophet to Make a Profit: 15 Trends that are Reshaping American Business” published back in January 2001, Trend 6 states:
 
“Consumers Are Reluctant to Pay Full Retail Price”
 
Their research showed that more than 85 percent of all consumers in America shop for merchandise on sale.  For those who pay full retail, 44 percent said they did so because they didn’t have time to shop.  In addition, they discovered:

• 82 percent said they knew the item would be on sale someday.
• 82 percent also said that somebody always has it on sale.
• 79 percent said they normally wait for sales because they don’t need an item right away.


Consumers and retailers have gotten savvier about how they deal with each other over the 14 years since that book was published.  Social media and big data have made sure of that.  Retailers armed with analytics don’t want to offer discounts to full-price shoppers because that erodes profit margins.  They are now taking a surgical approach by only offering promotions to customers who respond to price reductions.  On the other hand, most consumers would think it’s crazy to pay full price because a simple online search or social post is likely to uncover a discount available somewhere.
 
So what happens when a selective discount strategy goes wrong from the consumer’s perspective?  In other words, they are cut out of a discount offer when they really wanted to be included?  Could that customer experience leave a scar?  It can be difficult to read consumers because their behavior is not always consistent.  For example, one day I’m pressed for time and make a quick full price purchase, and the next day I’m under no pressure and search for the rock bottom quote.  What about the merchants’ expectations?  Is the combination of full price profitability and customer loyalty too much to hope for?

Retailers are going to continue to look at data in order to fine tune their offers and improve profitability.  And despite our technologies customer behavior will remain unpredictable.  It may not leave scars, but there will be some nicks and cuts along the way so keep your customer experience first aid kit handy.





















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