Identifying Deal-Seeking Behavior to Drive Profits
In the classic song "The Gambler," Kenny Rogers sings, "you need to know when to hold 'em; know when to fold 'em." A corollary message could also be applied to retailers seeking guidance on when and to whom to give a discount or a deal. Increasingly, steep discounts offered to consumers across the board are eroding profit margins, in many cases unnecessarily. In order to address the problem, retailers must become savvier at deciding who gets a discount.
A recent analysis by Experian Marketing Services revealed that there are seven major types of deal-seeking behavior, ranging from deal-seeker influentials to deal rejectors. The analysis reveals that deal-seeking behavior occurs on a continuum and one size doesn't fit all. It's critical that marketers know who among their customers really wants a deal, who needs a deal and who outright rejects them. Knowing the difference won't only increase profits by not giving away deals to customers who don't want them, but it may also lead to an increase in consumer buzz by rewarding the most socially connected and influential shoppers.
One segment in particular that marketers need to take note of is deal-seeker influentials. These consumers are generally young, hyperconnected, love to shop and consumed with getting the best deal. Many in this segment — 41 percent of whom are younger than 35 — came of age in the Groupon era and expect to get a deal no matter what. They're regularly drawn to stores they don't normally shop by coupons or sales. A majority say they head straight to the clearance rack when entering a store.
Deal-seeker influentials use coupons from every source at above-average rates and redeem them for just about everything they can, from pet food and pharmaceuticals to restaurants and beverages. The internet and smartphone are key shopping tools used by this segment when it comes to locating the store or website with the best price on an item, seeking out local deals, and getting printable or mobile coupons.