BrainTrust Query: How relevant are continuity promotions during recessionary times?
By Bill
Bittner, President, BWH Consulting
Last week A&P launched
the “Big Red Grocery Giveaway” promotion to celebrate its 150th
anniversary touting $3.2 million in prizes along with discounts. The promotion
offers a variety of ways for customers to win, ranging from instant $1
savings to the possibility of winning a new Ford Mustang. Instant promotions,
weekly awards, and the final Grand Prizes make this whole promotion a sophisticated
continuity program, rewarding customers who visit the store frequently
throughout the game period.
Continuity programs are an age-old method of encouraging repeat business.
They have ranged from the old dishware promotions of the fifties and sixties
to the free turkeys of the late nineties. The fundamental goal is to structure
an appealing offer that gets consumers interested in revisiting the store over
a long period of time. The consumer soon develops a habit of frequenting the
store that will hopefully continue when the promotion ends.
There are a lot of features
of the A&P promotion that reflect the fragmentation of the modern consumer
audience and the difficulty retailers have in reaching them. First, there
are four ways to win:
- Instant winners can win immediately
in the store. - “Enter to win”
customers can fill out a manual entry form and submit it. - Customers with internet access can register online and submit a PIN
number that is displayed on some tickets. The neat thing about the internet option
is that it also capitalizes on viral advertising by giving the registrant
additional chances for each valid friend or family email address they
supply. - Finally, by collecting tickets
over the life of the promotion to complete an image on a game card, you
can win the Mustang, a year’s worth of groceries,
or a $300 shopping spree.
Not bad prizes and a
great opportunity to gather new customer information and update records
on existing customers.
Discussion Questions:
Do continuity promotions still make sense? Are they more or less attractive
to consumers in today’s economic environment?
[Author’s
commentary] I really think A&P is on to something here. With customers
more fickle than ever and shopping for best price whenever they can, a
promotion campaign that offers decent rewards to loyal shoppers makes sense.
The addition of the online portion to collect more data on existing card
holders and spread the word to their acquaintances is a great way
to improve the accuracy and breadth of the customer database. This promotion
has the potential to keep paying back long after the promotion period ends.
Now this is what I call a well-thought-out program. In addition to customers getting chance to win prizes, the retailer will have collected a huge list of email addresses for future direct-marketing programs. And that alone is worth the $3.2 million in prizes.
Promotions make sense when they cause consumers to make an immediate purchase. I’m not sure that in an era of consumer frugality a sweepstakes makes sense, unless it is coupled with strong reasons to visit A&P. Those reasons would include targeted offers that save consumers money, interesting combinations of offers based on previous consumer purchases (Tesco is expert at this) and/or an easier, faster or more entertaining shopping experience. In the current economic climate, a sweepstakes may generate names for the retailer, but it does little for consumers.
One of the biggest threats facing traditional grocery retailers today is channel fragmentation. Shoppers are dividing their spend between different retail formats for different types of shopping trips: Walmart and dollar stores for inexpensive staples, Whole Foods for perishables, club stores stocking up, convenience stores for quick trips, etc. Boxed in on all sides, the supermarket often finds its shoppers cherry-picking items on special and contributing very little to (or even eroding) the bottom line.
Continuity programs attack this threat head on. Superficially, every time a shopper enters your store, they have the opportunity to buy another item from you. But I believe there’s a more important effect. With busy lives and limited discretionary time, shoppers can’t keep adding shopping trips to their week. Each one draws down their bank of “shopping time.” Get them into your store once more, and they may not have time for the Costco run they were planning. All of a sudden, the purchases they would have made at the alternative channel are now up for grabs as well.
When you add in the opportunity to clean their shopper database, increase program participation, gather emails, and increase the share of sales that can be tied to individual shoppers, this program looks like a win all around. Kudos to A&P for making the effort to recapture “share of trips” from their shoppers.
When someone says “I really think A&P is onto something here” I get nervous. If it was a successful grocer with a good track record, I might go along. But back to the program. I think most consumers realize they are paying extra in the store to finance these programs. You wouldn’t see this at the price impact stores like Walmart and Aldi. After a while it gets annoying to keep track of tickets and game pieces. People want instant gratification. It might be easier to simply give away state lottery tickets with a purchase.
Very important. Offering an instant scratch at the till is an excellent way to surprise the customer. Even if it’s only 10 or 20 percent off your already competitive price, customers will appreciate the gesture. The importance of harvesting email addresses or zip codes is a given.
Does $3.2 million sound like chump change in this day of Billion Dollar Giveaways?
Continuity promotions are always relevant. For the retailer, if they can tip the intention of the shopper from going to a competitor, they win. The real question in these times is what it takes to tip that shopper. I speculate that the bottom line is money, not a “chance to win.”
Sweepstakes don’t excite me. Their success is how the back end is executed. That means not just collecting email addresses but using them to provide compelling reasons for a shopper to return. Instant win excites me, as long as it is something to get me back to the store. Don’t give the shopper the dollar now, give the shopper $2.00 on the next trip. Or better yet, don’t give them $20 instantly. Give them $5 when they come back instead.