Promotions transformation: Building the case for a new promotions strategy

Common challenges to implementing a new promotions strategy

• How to identify and prioritize the systems, strategy and technology that will keep them competitive 

• How to test those without harming the existing business or its reputation

• How to implement the project while juggling other priority projects, as well as day-to-day tasks 

• How to align internally within a distributed organisation, especially when teams have complex responsibilities and conflicting interest. 

Promotions transformation: Building the case for a new promotions strategy  

The challenges:

• Promotions run primarily through raffles for specific product drops, or generic discount messages for seasonal campaigns (for example Black Friday, Christmas, and end-of-season stock clearance).

• Generic Search Engine Advertising “always on” process, buying relevant keywords to drive traffic to the website.

• No newsletter personalization, A/B testing or segmentation: all shoppers received the same email communications. 

The solution: 

• First, we implemented a new BI system to connect the brand’s different tools - including its newsletter tool, ERP for sales data, frontend shop system, and Google Analytics. This gave them a better understanding of the current status quo and put them in a better stead to measure future changes.

• We then worked with the marketing team to establish a strong promotions strategy, based on the goals they wanted to achieve, and the tactics that had and hadn’t worked.  We also had to reframe certain promotional tactics, for example offering generic site-wide discounts.
  
  This also meant aligning with senior management on the overall promotions strategy: are we driving revenue no matter what, or are we optimizing for profit?Ultimately, we were able to prove how much a side-wide 20% campaign could hurt profits. We also defined what products sold well at standard prices, meaning there was no need for them to be discounted - while certain other inventories were collecting dust in the warehouse.

• We also defined a new pricing strategy with the merchandize planning team on when and how to define markdowns. Data and tooling is key to making these decisions, but the more aspects you want to include in your pricing decisions, the more complex it gets to handle all of this. When starting on a new pricing strategy, questions to ask include: 

• What’s the current PCII on the product? 

• How much room for markdowns do we have until we reach our own thresholds? 

• What’s the stock level and burn rate? 

• At what price are competitors selling? 

• What is the brand we’re looking to markdown and are we able to do this without getting into discussions? 

• How flexible can we adjust prices and do we have enough resources to do this? 

Looking to overhaul your own promotions strategy? Below are four ways to get started: 

• Start by carrying out an in-depth review of current processes with all team members impacted by the changes. By understanding their current pain points and challenges, you’ll gain clarity over the limitations of your current promotions strategy.

• When starting to implement the new system, make changes in smaller steps: this helps team members see the benefits along the way, without major changes or destabilization.

• Consider building a small pilot group to test the new system and processes, helping you gather learnings along the way and adjust accordingly. You can also measure the impact of the new promotions strategy on the pilot group’s KPIs, which can be a crucial factor in convincing the rest of the organization about the benefits of the new processes.

• Get senior executive buy-in early to help make your project a company-wide priority. Getting distributed teams to dedicate resources to your project and prioritize on your timeline can be challenging without the necessary buy-in “from above”.
  
  One way to get buy-in is to adopt Amazon’s 6-pager format, describing the challenge, strategic fit, and potential customer impact of your project. By involving all stakeholders when writing this paper, you gain maximum transparency and will have little debate over the facts. Senior management then receives an in-depth analyzed proposal, making the decision process easier and less risky.