Smart Promotions Key to Attracting Discount Shoppers

— May 13, 2009

Retailers wishing to attract discount-oriented shoppers during the economic downturn might turn a few more heads in their direction with the right type of promotional messaging. In a new study conducted by Alliance Data, a provider of loyalty and marketing software derived from transaction-rich data, information obtained from a recent survey of consumers uncovered five types of discount shoppers and the offers these discount shoppers gravitate toward most often when making purchases.

By understanding the motivations and behaviors of discount shoppers, retailers can better target and engage these consumers, which includes understanding unique traits associated with different types of discount shoppers. Aside from the obvious fact that all respondents want 'the best deal,' the study revealed insight that indicates it's not so much the specific promotional offer that captures consumers' attention as it is how a retailer messages to them.

Across all discount shopper categories, the study revealed that promotional messages must feature at least a 20 percent discount or $30 off the regular price to be meaningful to consumers. Approximately 57 percent of shoppers also tend to respond very strongly to any message based on the concept of free money -  such as 'buy one, get one free' or 'receive a free gift card when you spend X amount.'

In testing various promotional messages, the study uncovered several broad messaging themes that resonated with all respondents, including the fact that discount shoppers want to spend the least amount of money to get the most discounts, and they prefer the 'spend threshold' ratio of the offer to be no higher than 5:1 (such as a $50 purchase to receive $10 off). The most motivating message of the study was a “free $50 gift card when you spend a minimum of $25, with 77 percent of participants responding positively (because they are getting back more than they spent). In addition, 57 percent of respondents preferred a 'buy one, get one free' offer (because it's easy to understand and offers free money).

The study also found that consumers want no restrictions or thresholds on the offers they receive, as indicated by the difference between a straight dollar-off purchase, which was motivating to 50 percent of respondents, compared with only 21 percent who said they'd be motivated when a spend minimum was applied. Gift cards can promote future trips to the store as long as the amount is substantial enough to justify the trip. With online and catalog shopping, an offer of free shipping is slightly (10 percent) more motivating to consumers than a flat shipping fee.

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