In a highly competitive retail landscape, stores need to be strategic about how they promote products in order to maximise profits. One of the most effective ways for retailers to create profitable promotions is through the use of data analytics. By leveraging customer and sales data, retailers can gain valuable insights to develop targeted promotions that will resonate with shoppers and drive higher sales.
Analyse Customer Demographics and Preferences
The first step is to analyse customer demographics and purchase preferences. Retailers can examine data from loyalty programmes, website traffic, social media, and point-of-sale transactions to build profiles of their best customers. This includes information like customer age, gender, location, purchase frequency, items purchased, and more. With this data, retailers can identify market segments that have greater potential to respond to certain types of promotions. For example, young families may be more receptive to bundle offers for baby products, while professional men may prefer markdowns on business apparel.
Evaluate Sales Trends and Patterns
In addition to analysing customer data, retailers should evaluate overall sales trends and patterns for the product categories they sell. Examining historical sales data allows retailers to spot emerging trends, such as upticks in certain product segments. It also enables them to identify seasonal fluctuations in sales, so they can plan promotions accordingly. The data can reveal slower-selling items that may benefit from temporary price reductions or bundles. Sales data also shows which products drive the most profit, so retailers can incentivise customers to purchase those items.
Use Analytics to Test and Refine Promotions
Once retailers have used data to develop targeted promotions for their highest-value customer segments, they can employ analytics to continually test and refine promotions for optimal results. A/B testing different offers, discounts, and bundles allows retailers to identify the most effective promotions for boosting sales. As an example, a retailer could test a 15% off offer versus a £10 off £50 offer for a product line to see which one delivers higher returns. They can also experiment with the timing, placement and size of promotional displays in stores to determine what drives the most add-on purchases. Examining the data in real-time enables agile adjustments to promotions to maximise their profitability.
A Retail Express AI-powered promotion solution can provide data-powered insights and automate the process.
Personalise Promotions with Individual Shopper Data
Retailers who can tap into more granular data about individual shoppers’ preferences and behaviours can take their promotions to the next level through personalisation. By integrating their analytics capabilities across channels, retailers can gain a single view of each customer. They can then use this shopper data to tailor promotions and offers to align with an individual’s purchase history, interests, and tendencies. Personalised promotions delivered through targeted digital channels and in-store can help drive greater engagement and increase sales from a retailer’s most valuable shoppers.
The key is using data proactively to inform every aspect of promotion planning, development, execution and optimisation. Retailers who take a data-driven approach can increase the profitability of promotions by targeting the right customers, with the right offer, at the right time. While the analytics capabilities required may demand some investment, the long-term payoff from more strategic promotions makes it well worthwhile.
