Fiscal fitness begins with a price-match diet
By Rodney Mason, CMO, Parago
When the 2013 holiday shopping season ended, it resulted in sluggish results for U.S. retailers. Price-match policies worked to fend off some showrooming, but these discounts also ate up margins at a very unhealthy rate.
A recent national shopper behavior study by Parago found that:
• The majority of smartphone owners showroom and regularly make purchases on their phones while in-store;
• Amazon is the number-one way consumers showroom; in fact, Amazon is used 2X more frequently than Google; and
• Consumers will purchase at a retailer that offers online price matching.
Introducing the price-match diet
In 2014, retailers need to find better price-match strategies that attract savvy, deal-seeking shoppers without eroding both margins and bottom lines. Our research revealed a secret practice that can get you to healthier margins faster.
Tip 1: Build margin muscle
Customers’ ability to comparison shop far outpaces any retailer’s ability to change prices to match the market. In 2014, retailers have to strengthen their strategies. Research shows price-match rebates will put you back in the game.
Today’s outright price-match policies may drive more traffic, but they significantly erode healthy margins. With price-match rebates, retailers get the best combination of profit-preserving promotional strategies and real-time at-market or better-than-market prices. The result? Shoppers get the discounts they want and you increase bottom-line benefits that are better than instant discounts.
Tip 2: Try a better discount diet
Getting in fiscal shape is going to require some radical new strategies. It means changing old habits. But preserving margins is essential for long-term business growth. Now is the time to start cutting back on instant discounts and replacing some of them with rebates.
Why rebates? With today’s online and mobile submission options, four-out-of-five shoppers favor rebates because they offer deeper savings after redemption. Plus, these promotions allow retailers to advertise the lowest net price, which captures consumers’ attention.
Our research shows that, across retail and product categories, rebates are preferred over instant discounts. We’ve tested them in categories they’ve never been used in before, proving that they can bring more profits in every industry.
Tip 3: Maintain a healthy routine
Attracting shoppers with rebates also gives retailers the opportunity to collect email addresses and social media opt-ins. It’s essential to stay in touch with these customers to generate ongoing purchases and future incremental basket- and market-share increases.
According to the Parago study, one-out-of-two consumers prefer to receive exclusive deals on Facebook and through loyalty programs. Rebates are the perfect tool to incent your customers into regular and repeated engagement.
Tip 4: Get industry-specific data about price-match rebates
Before the next important shopping season begins, make sure you have strategies in place to advertise attractive prices and engage loyal customers. Learn more about how price-match rebates can shape up your margins in 2014.
Rodney Mason is CMO of Parago, a provider for incentives and engagement that delivers over $2 billion in rewards to 50 million people each year for leading brands around the world. Mason has developed loyalty and engagement for well-known in consumer goods and electronics, financial services, travel, restaurant, entertainment and technology sectors. He is one of the most followed CMOs on Twitter. Email Rodney at [email protected].