Selling to Cost-Conscious Consumers: Build a Promotion Strategy for Buyers Who are Playing Hard to Get - Aberdeen Strategy & Research (original) (raw)
Selling to Cost-Conscious Consumers: Build a Promotion Strategy for Buyers Who are Playing Hard to Get
Vigilance for economic uncertainty has been ingrained in us all since the onset of the COVID-19 pandemic. Now, more than three years later, fears of a recession continue to grow, and consumers are seeking out discounts, coupons, rebates, loyalty points, BOGO, and any other promotions they can find to keep their spending low and their savings high. Plus, layoffs in industries like Technology and Retail continue to wreak havoc on feelings around job security, forcing consumers to think differently about where and how they’re spending their money. Businesses need to adapt to cost-conscious buying trends and provide consumers with deals that will keep them coming back even when their wallets are tight.
Aberdeen’s research with 4,250 consumers globally reveals that lower cost is the most important expectation consumers have for businesses they purchase products and services from today. Using findings from Aberdeen’s study, this blog explains why consumer behavior is changing, what consumers are doing differently, and how businesses can adapt to sell to these thrifty consumers.
Why Consumer Behavior is Changing
Aberdeen’s research shows that, while a recession is among the top five economic concerns, inflation and price increases of necessities are what’s top-of-mind for consumers.
Nearly everyone in the USA has seen gas/fuel prices rise and fall unpredictably over the past few years, supply chain issues have led to higher grocery receipts, and electricity prices as well as food and other items have also skyrocketed across Europe and the rest of the world. Consumers can’t change how much stores and service providers are charging them, but they can change the way they shop and visit businesses that offer greater cost savings. Businesses need to consider promotion strategies that align with this modern consumer behavior without sacrificing their margins.
What Consumers Are Doing Differently for Day-to-Day Purchases
As economic conditions continue to worsen, consumers are going out of their way to find deals. In the last 3 months, over 50% of consumers are cutting back, seeking sales, and buying less expensive brands.
Changes are even more drastic amongst households that have recently been impacted by layoffs. 15% of respondents to Aberdeen’s survey said their household had experienced a layoff in the past year, mainly Millennials and Gen Zers in the USA. These households have shifted their purchasing habits to accommodate for a shift in income. Compared to those who have not experienced layoffs, they are over 2x as likely to use buy now, pay later options, 67% more likely to use rebates, 26% more likely to utilize coupons, 21% more likely to be cutting back on spending, and 10% more likely to switch to less expensive brands. Understanding that layoffs are changing the way consumers approach their day-to-day purchases is essential for businesses looking to sell to cost-conscious buyers, and they need agile technology and strategies to keep up with changing behavior as the job market continues to fluctuate.
How Businesses Should Adapt to Sell to Cost-Conscious Customers
Which technologies are going to be most impactful for businesses as they aim to reach these smart budgeters? One initial idea could be first-time discounts. However, Aberdeen’s data refutes the value of this strategy for the business and their customers. When presented with a first-time discount from a retailer or brand, only 24% of consumers said they would return to shop without a discount in the future.
Instead, try building a digital reward-based program to meet not only customers’ purchasing needs but their engagement needs as well. Rebates and rewards programs can be instrumental in providing customers with personalized rewards and deals to make them feel valued. Aberdeen’s study reveals that the most common attribute consumers associated with deals on products consumers buy most often and cashed in loyalty points (i.e. airline, credit card, retailer, etc.) is that these promotions make them feel valued as a customer. Furthermore, speed of digital reward delivery and ease of redeeming digital rewards are the top two reasons customers prefer digital rewards over other promotions (discounts, coupons, etc.). By giving customers cost savings through a method that makes their lives easier, businesses can build trust and long-term relationships with their buyers. In a survey with 400 businesses regarding their reward and discounting strategies, Aberdeen found that 60% of companies believe their digital reward-based promotions outperform other promotions (discounts, coupons, etc.).
Another strategy would be to implement comprehensive data management capabilities and integration between systems that track sales, inventory, and customer data. Greater connection to this data provides companies with more intelligence to determine where to focus their marketing and discounting efforts. As businesses look to build out reward programs, they should plan to back these programs with data to get the right deals to the right customers at the right time.
Takeaways
Economic uncertainty and frequent layoffs are forcing consumers to change the way they think and act about day-to-day purchases. Those who have been affected by layoffs in particular have had to find new ways to cut back on spending, and deals and promotions play a significant role in helping consumers live within their budgets. In order to sell to these cost-conscious customers, businesses should explore digital reward-based programs along with data management and integration capabilities. Recession fears are still very much in the minds of consumers across the globe, and as they prepare to tighten their belts, businesses who are front and center with appealing rewards and discounts are going to stay ahead of the curve.
Related Research
Four Pillars for a Best-in-Class Digital Experience Program in 2023 (and Beyond)
This report highlights the key factors driving the need for contact centers to focus on differentiation through top-notch digital experience (DX) programs. It illustrates the benefits of Best-in-Class digital experience programs and provides an in-depth analysis of the four pillars business leaders must implement to excel in managing DX across all channels.
Share This Post With Others!
Sarah is the Manager of Aberdeen’s Research and Data Operations team. In addition to overseeing Aberdeen’s survey and content creation processes, she conducts research focused on the intersection of manufacturing and emerging technologies as well as the data systems companies have in place to streamline operations and make informed decisions. Sarah holds a bachelor’s degree in Mathematics with a concentration in Statistics from Colby College.