Targeted promotions are a strategic approach used by retailers to focus on reaching specific groups of customers with personalized offers and messages. Instead of relying on standard promotions and hoping for generic results, retailers can use what they know about their customers (purchase history, website behavior, loyalty program data, demographics from surveys, and even social media interactions) to group them (segmentation) and create profiles for each group (personas). This lets them tailor targeted promotions that resonate with each group’s needs and requests.
Retailers can target a specific region with promotions, or even a particular store. Targeting can be narrowed down to a single consumer level, depending on the pre-defined targeting strategy.
There are two perspectives from which retailers can approach targeted promotions:
Product Centric – retailers know the product they want to promote and aim to find the best group of customers to advertise to. Such strategies are often employed in a vendor-subsidized campaign or to shift customers towards more lucrative products.
Customer Centric – identifies the group of customers the retailer wants to target and then seeks to find the product that best accommodates the interest of the target group. Retailers often use this strategy to attract new customers or to establish loyal relationships with infrequent customers.
When targeted promotions are executed successfully, retailers can expect to influence shopping behavior and achieve these results:
Influence the right consumer
Targeted promotions are able to engage the right users at the right time and place. This increases the chance of a consumer purchasing a product on promotion because it aligns with their specific needs, wants, or values.
Foster customer loyalty
Clients are more likely to identify a retailer as unique from competitors if they offer promotions that meet the shopper’s specific expectations. This increases customer loyalty, gaining the retailer a customer who will buy from that location again and again.
Save money on promotional spending & generate higher ROI
Promotions that are created for a specific audience can result in higher conversion rates, save budget as you are not targeting the wrong customers, and generate increased revenue.
The shift towards targeted promotions is fueled by the ever-growing consumer data available. Here are 5 data-driven strategies that help retailers create promotions that are more relevant, timely, and ultimately, more effective:
1. Advanced Customer Data Platforms (CDPs):
Unify consumer data from various sources into a single profile, which results in a holistic view and a better understanding of consumer behavior and preferences.
2. Hesitancy-Based Recommendations:
Enable data-driven recommendations, tailoring personalized promotions on the items customers linger on their pages on the website without buying.
3. Dynamic Creative Optimization (DCO):
Generate personalized ads in real-time based on the viewer’s profile and browsing history, displaying recently viewed items alongside a discount code.
4. AI-Powered Chatbots
Engage website visitors in real-time, providing relevant product recommendations based on consumer’s past interactions.
5. IoT and Sensor Data:
Capture real-time data on customer behavior and product performance to improve planograms and displays in a store environment based on where each customer spends more time, enhancing product discovery and sales.
Founded by experienced data scientists and retail experts, Cognira is the leading artificial intelligence solutions provider.
