January 08, 2017

Who Aligns With The Discounts And Promotions?

We have an overall depiction of our twelve-month buyer file.

And we know where the discount/promo buyers reside.

The hottest portion of this image is in the far Southwest corner of the image. Who are those customers?

First of all, these customers purchase many items per order ... 5+ items per order.

Second, these customers tend to purchase low-price-point items.

Interestingly, we know that the Northeast corner of the customer file is comprised of newer-to-file customers ... we now know that those customers buy a small number of expensive items on the first purchase, and they are not being offered discounts/promotions at high rates. Keep that tidbit in the back of your mind.

Now, let me show you something interesting. This is the share of historical demand from the call center (i.e. not online, but an actual customer picking up the phone and placing an order).

Ah HA!!

The Southern side of the image is all call-center buyers. The Northern side of the image is online buyers.

So, the area where the most discounts/promotions happen are comprised of the following:
  1. Above-Average Buyers.
  2. Low Price Points.
  3. High Number of Items per Order.
  4. Call-Center Buyers.
It doesn't take a rocket scientist to figure out that this company sends discounts/promotions on the covers of catalogs sent to old-school customers who shop by calling in via the telephone.

But now we know something critical about our customer file.
  • We encourage low-price-point good customers with many items per order incentives to purchase as long as the customer purchases via the "catalog" channel.
  • We encourage first-time buyers to purchase online via expensive items not as frequently tied to discounts/promotions.
Do you see the fundamental difference in how this company treats different customers in the twelve-month buyer file?

I'm not saying this is right/wrong.

I am saying we need to pause and ask ourselves a question ... "Is this the business we wish to manage?"

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