The ‘Promoconomy’: Is It Worth It?
10 October 2019
Author: Jasmine Waters
The landscape for buying a product has now changed for good. Many of us are now keen to hunt around for the best deals we can find, not contented with paying full price anymore – even for an item that we might want desperately. This (among other factors) has led to many brands opting for some form of ‘continuous sale’ strategy, trying to keep customers buying from them in spite of continued unpredictable consumer habits. But what effect is the ‘promoconomy’ having on not just the consumers, but the brands themselves?
How did we get to rely on discounts?
Since the recession in the late 2000s, discounts have been something that has continually defined the way that we spend. We now have various apps at our fingertips that can search promo codes for us, or let us know if the price drops for that little black dress we’ve been eyeing for a while. Even social media has changed how it approaches discounts, sometimes rewarding purchases with brand credit. However, as more people look to their texts or apps for said discounts, even sites like Groupon are noticing a decline, as paper coupons don’t hold the same weight they once used to. This leads us to question just how we get sent so many discounts that are perfect for us. The simple answer is that whether we like it or not, we’re giving up a large portion of our personal information. From a company’s point of view, this can be obtained in a number of ways, including through retail partnerships, third-party data or buying information from a data broker. For some, the road to discounted purchase is much more transparent, operating on a ‘you give something, I give something’ basis, such as providing an email address for an ‘exclusive birthday offer’.
How are brands and consumers reacting to this?
Throwing in a few freebies is something businesses have seen and done for years, but there is no doubt now that there is a lot more a stake. Despite this, many shoppers have come to expect such data intrusions as part and parcel of modern consumer life, with the majority happy to shrug it off. From a recent US survey, 47% of consumers are in fact frustrated when they don’t see such personalisation in their shopping engagement. For brands, this can arguably be reasoned away by the fact the consumer behaviour is so statistically unpredictable – sometimes they will go for a discount, and sometimes they won’t. Paying for searches and partnerships with social media companies can be a way to combat this and find the best for both parties, while also identifying key shopping trends, and seeking out which customers could in fact benefit from a discount the most. As an example, many millennial consumers have found that such discounts are a necessity, particularly in the wake of economic downturn.
What is now a fact is that those brands that now solely sell, are largely in the minority. There is no doubt that conquering personalisation problems remains a tough challenge for ‘legacy’ stores, but for soaking up customer value and loyalty, it cannot be denied to be an effective method for all brands alike.