May 09, 2019

Dear Management Analytics Consultant: Promotions

Dear Management Analytics Consultant:

Our email campaigns feature deep discounts. I'm talking about 40% off plus free shipping, or 50% off one item, that kind of thing. I reviewed the past 400 campaigns (we run five a week), and 369 of the 400 campaigns offered at least 30% off. This has to damage our brand. Our sales haven't increased in the past two years, but the average promotional discount increased from 33% off to 43% off. That can't be good. Here's my question: How do we get out of this mess?


Dear Randall:

I don't think your company wants to get out of this mess. If your company wanted to get out of this mess, you'd have clear communication from Sr. Management stating that you will only offer 20% off for the next year, no more, and your sales plan would include a 20% sales decline to account for the business you'll lose.

You are the marketing expert, so change the game. If you have to offer a huge discount, offer a huge discount on ONE ITEM ... an item that has meaning to your business. Or one category. Work closely with your merchandising team and focus on underperforming items, and offer discounts only on those items. Offer a discount for getting a customer to do something that is beneficial to your brand ... if the customer has switched to e-commerce and won't set foot in a mall anymore, offer an incentive for the customer to set foot in a mall. You do not have to have the same promotions in all channels.

Change your discounting strategy into one that pushes the customer places that are beneficial for both the customer and your brand. Back off your promotional percentage by 5% and see what impact that has on sales.

Now, if you want to do all of that stuff and Sr. Management tells you that it's 40% off plus free shipping in perpetuity, then maybe it is time to look for a new job.

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