Are promotional offers really the incentive retailers think they are?

  • Regular voices
  • November 3, 2016
  • Michael Goldthorpe
Are promotional offers really the incentive retailers think they are?

Top up and win. Swipe and save. Drive and Fly. You name it, you’ll win it. Does anyone sell anything without a promo these days? Has anyone ever won? But more importantly – do customers really care?

Tactical retail promotions have long been the lifeblood of agencies and marketers everywhere. It’s an always-on marketplace of parity product. The old SMP has been replaced with Swift Marketing Promotion – and incentives give us something to shout about.

But what do they achieve? What’s the real goal? And does selling the cherry sell cake? Read on and you could win an iPad*

Don’t sell the cherry, sell the cake

I’ll never forget the first time I learned about offers and incentives. I was one half of a junior team doing some creative work for the agency chairman. We were respectfully petrified but super proud of the way we’d creatively interpreted the ‘win an iPad’ du jour. Then Uncle Bill told us we’d missed the point.

“You’re not selling the offer, you’re selling the incentive,” he said. And we didn’t understand. So he persevered. “Your promotion will get a reaction,” said Bill. “But if you don’t actually promote the product you won’t convert a sale.” It still took us a while (Matt and I are somewhat slow) but his food metaphor made the point.

In the bakery of sales, incentives aren’t even the icing on the cake, they’re the cherry on top. So if people are only buying cherries, we haven’t done our job of selling the cake.

Sales promotions will spike sales

Sales promos are the marketing equivalent of turning on the hot tap in the bath. They can warm up the water. And if you keep the tap on full for a while, they can even make it hot. But promotions are all about metrics and spikes. Every prepay phone company runs ‘Top Up and Win’. People top up. Someone wins. But do these promotions change behaviour? Is there a repeat purchase? Do people actually get on the blower and use their phones? Given the regular cycle of similar promotions to drive that same behaviour, it makes you wonder.

Another of my favourites is ‘Watch and Win’. Television stations monetise their product by selling eyeballs to advertisers. So if they need an eyeball spike to shout about, we’re all invited to text a code to XXX and win something no-one knew they wanted. But how often do they forget to talk about the ‘content’ they want us to watch?

The pointlessness of points

Loyalty programmes are similar. There’s no question that some people are engaged in some programmes and that drives some repeat behaviour. But most people choose their gas station by location, their power company by price and their mass market electronics retailer by whatever loss-leading deal on whatever widget they’re shopping for.

Don’t get me wrong, points do matter. I’m fastidious about putting every cent through my credit card to build up enough points to pay well above retail for a blender ($20,250 to earn enough FlyBuys for a NutriBullet). But when did rewards points become the sole point of our communications? When did we miss the point of selling the product?

If all else fails, go back to basics

In the old days, we would interrogate a product until we found something we could talk about that people wanted to hear about. In the old days we built products that people wanted to buy. In the old days we put the customer front and centre and ‘marketed’ to specific personas. These days we buzz about content, we quiz consumer panels about customer centricity and we bribe people over the line with promotions and points.

What if we just worked hard to make stuff people want? Like the iPhone. Like Lewis Road Chocolate Milk? Like Whittaker’s chocolate? What if we build strategies around lifetime value rather than tactics for tomorrow’s sales? What if we remembered that people aren’t interested in marketing, they just want a phone that works, a bank that makes life easy and a fair-priced product that ‘does what it says on the tin’.

And once a year on the ‘Black Friday-Super Sunday-Pre-Christmas-Grandparent’s Day’ by all means throw on a promo to shift last season’s stock. But if the only way to sell your product is to run jazz hands, add a scratch and give away an X-Box… well, that’s not really marketing, it’s sales.

That’s what I reckon, what do you think?

  • Michael Goldthorpe is managing partner of Hunch.

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